The historic Market House at 3276 M St. NW in Georgetown has been leased by the District of Columbia government to a group that intends to restore the building, built in 1865, and operate it as a food market. The site has been used as a market place off and on since 1755. Restoration cost if estimated at $350,000.

There will be 2 1/2 floors of shops, according to John David Zimmerman, who heads Market House, Inc. Among the shops, there will be at least three produce firms: meat, fish and poultry markets, a bakery and a delicatessen.

The stone-walled basement will hold wine and beer shops plus pottery, china and kitchen boutiques among the brick arches. There will also be a "farmer's line" of outdoor stalls if negotiations go through to close "East Market Place," a short street on one side.

The building currently is rented to the Southern Auto Supply Co. for about $6,000 a year. The Market House group will pay $29,167, but the restoration cost will be deducted from the rent. The stall merchants will pay the corporation about $12 to $15 a square foot plus 1 to 5 per cent of the gross over a certain amount.

Work on restoring the building is scheduled to begin this summer and the new market is expected to be open by the end of the year.

The exterior of the Market House remains largely as it was originally built, according to Richard Ridley, architect of the restoration. The old gold letters "Market House" can still be seen and will be the model for the new lettering. The big arched windows, now boarded up, will be reopened as will be the handsome circular windows on each side.

Ridley said the original flooring on the ground level will be taken up and used to build the counters. The basement's original dirt floor will be covered with concrete. "For years people have talked about a tunnel from here to the river. We've fund it but it's really only a sewer," Ridley said.

The site, on the south side of M Street at Potomac street has been a marketplace off and on since four years after Georgetown was founded. The first building was erected in 1793, according to Zimmerman's research. A new and larger building was put up in 1796 with extenstions in 1802, 1826 and 1831. At one time, the building bridged over the C & O Canal. One part of the building was the Georgetown debtors' goal.

The present red brick victorian building - the third in the site - was used as a market until 1945, when it was rented to Southern Auto. In 1966, Congress, urged on by a group of Georgetown residents, passed a bill instructing the District to restore the Market House as an historic monument and operate it as a market, or as a museum for the C&P Canal. Unfortunately, Congress interest did not extend to putting up money. So nothing was done until Zimmerman began to put his group together two years ago.

(Besides Zimmerman, the group includes Kay Halle, a Georgetown preservationist; Tony Peabody another Georgetown resident, and attorney William Wickins.)

The D.C. government is now in the process of letting a new lease for the popular Eastern Market, on Capitol Hill at 7th and C Streets SE. The building is being restored at a cost of about $1 million. Also, about $30,000 of work has been completed on the fish-cutting and oyster-shucking house and fishermen's facilities at the Maine Avenue Wharf in Southwest.

There are also a number of thriving private markets, including the Georgetown Market, at 3206 Grace St., run by the Hudson Brothers Co., and the D.C. Farmer's Market between 5th and 6th Streets NE. There are also the Bethesda Farm Women's Co-Op at 7155 Wisconsin Ave., and the Alexandria Market in the City Hall.

The growth of market houses here is a healthy part of increasing interest in natural foods and small merchants. People like to be able to select their strawberries one by one, not in pre-packaged plastic. And they want to be able to complain to the man who picked them.

The Market House, with its handsome stone walls, high glass windows and soaring ceiling, will make a fine and familiar place for that sort of shopping. And it will be, as the Eastern Market is, a natural meeting place for the neighborhood. Every community should have one.