"That's a work of art you're sitting on," said the man pouring drinks behind the counter at the McIntosh/Drysdale gallery, and a woman leaped up, embarrassed, from a knee-high, flat-topped piece of sculpture that did look like an unorthodox but comfortable sort of chair.

Sitting room was almost nonexistent (including toilets, some of which were conveniently "broken") and even standing room was hard to find last night when thousands of visitors streamed through the half-dozen galleries of the 406 Associates, who were celebrating their first anniversary dealing in art at 406 Seventh St. NW. A few of the guests wore black tie -- those who had been invited to various private parties after the public celebration, and then to Harry Lunn's pied-a-terre on Capitol Hill for dancing until dawn. But most of the people who streamed through the galleries sipping jug wine (or harder liquors in a couple of places) were just plain Washingtonians, unlikely to shell out thousands for a Karsh photo in Lunn's, a bronze sculpture by Martin Silverman in the Diane Brown Gallery, an antique weathervane at Newcomer/Westreich or photorealistic painting by Richard Estes at B.R. Kornblatt. Paupers and potentates alike were warmly welcomed, and the wine flowed more freely than the traffic through the crowded halls and stairways.

"It's less expensive having a gallery on the third floor," confided one gallery proprietor (not for attribution). "People do most of the heavy drinking downstairs, and the real heavy drinkers have trouble making it to the third floor." The stairways at 406 are, in fact, uncommonly steep -- no doubt because of the 18-foot ceilings that help to make the building ideal for art galleries. The 406 is the pivotal development that is helping to make Seventh Street, between the National Portrait Gallery and the Smithsonian complex, the new focal place for art galleries in Washington.

"The center of gravity really shifted quickly, didn't it?" said Diane Brown. "Across the street now they're developing Gallery Row. I'm opening a space for large sculptures on the site of Bargaintown. We'll change that image." Brown is one of the three tenant galleries renting space from Harry Lunn, Ramon Osuna, Nancy McIntosh Drysdale and Robert Lennon, joint owners of an eight-year lease on the property. Unlike most tenants in Washington, she has no complaints about the landlords. "Every day I'm out of P Street is a triumph," she said. "This is the first professional space the galleries have had in Washington."

Landlord and gallery dealer Osuna agreed. "The most intelligent thing I ever did was to start this thing with my partners. Now, everybody is coming down here. In another year or two, there won't be any more places on P Street." Landlord Lunn, who has grossed just over $2.8 million in the year since he moved downtown, recalls his old Georgetown gallery as "charming but small," and like the building's other gallery dealers he finds their ghettoization in a small area an advantage, not a handicap. "If you're any good at all," he says, "you're not afraid of others who are good. We reinforce one another." Landlord Drysdale, comparing her new space to what she had before, says it is "treating the art like a Cadillac instead of a used car."

Tenant Terry Westreich, in a room full of museum-quality American antiques, was talking to friends in a small corner devoted to young contemporary artists -- painted replicas of flattened cardboard boxes by Dan Bradford, who has done for Pabst, Heineken and BP motor oil cartons what Andy Warhol did for the Campbell's soup can, and a large painting, "Bison in Orange Field," that might almost have been done by Paul Klee but was actually done by Valentine Dubasky. "Our real focus," she said, "is decorative arts and Americana. The reason we have this is that I have a passion for young artists."

One of the browsers in Lunn's gallery, architectural photographer Harlan Hambright, was wearing a black tie with tails, blue jeans, Adidas running shoes and an orange chrysanthemum boutonniere. "You're improperly dressed," someone told him. "You're supposed to wear a white tie with tails." "I don't have a fashion consultant yet," he apologized, "but I'm looking around." Then he went back to looking -- wistfully, but with a professional's sharp eye -- at the Karsh photos lining the walls. "I'd like to buy every photo in this room," he muttered, wandering off.

Out in the street, where a steel band had nonstop music filling the air, curious crowds were shuttling between the elegance of 406 and the more down-to-earth atmosphere of the corner building next door, where the Washington Project for the Arts is opening galleries upstairs and a theater downstairs. It does not have the whole building, however. The first floor front is occupied by Making Waves, the first rental hot tub facility in Washington. "A California hot tub experience," proclaim the signs. "For singles, couples, and families."

Upstairs, where a photo exhibit shows changes in that corner of Washington through the years since 1865, WPA was still accelerating to cruising speed. "We hope to open our theater on Nov. 1 with a one-person show by Marianne Marcellin," said Melinda Lewis-Matravers, "and we will have an exhibit of Washington photographers in November."

Downstairs, Making Waves had much more immediate plans, with a formal (or is it informal?) opening scheduled for today. "It's $6 per person for the first half-hour," said co-proprietor Cal Klausner. "We give you a key, you go in, lock the door, and enjoy yourself." Above his head, a sign proclaimed "Gift Certificates Available -- Reservations Accepted." About half a dozen hot-tub rooms were open for inspection, handsomely furnished in redwood -- most with tubs that looked big enough for two people, perhaps four if they were very friendly.

"We're planning to open a 30-tub facility in Prince George's County," said co-proprietor Eric Rudel. Above his head, a printed list of cautions for hot-tubbers ended with the advice, "keep all breakable objects out of the area."

Outside in a light rainfall, a double-decker bus was disgorging more sightseers to crowd the scene, and people were dancing in the partially roped-off street to the music of the steel band.