South-of-Market San Francisco is sinking. This low-lying neighborhood, just south of downtown, was originally a tidally flooded estuary of San Francisco Bay, land that today won't hold high-rises.

Early city planners might just as well have officially set aside the area for transients, bohemians, drinking and strange doings. At least that is effectively what happened. South-of-Market has always been San Francisco's Underground, its arena for the new, the strange and the secret.

Lately--and to the general dismay of the natives--the place has also been "discovered." Just two years ago, Saturdays down here were as quiet as life in the country. But when this summer's Democratic National Convention convenes South-of-Market in July, it will find itself in a suddenly popular neighborhood of restaurants, galleries and nightclubs. Like the ground itself here, though, the old strangeness of the area has a way of reclaiming its territory.

Historically, Market Street in San Francisco came to embody that American tradition of the street with two sides: right and wrong. North of Market Street, the neighborhoods all have proper names: Nob Hill, North Beach, Pacific Heights. Down here, the neighborhood gets the negative, "South-of-Market" (often called SOMA). Consequently, it's hard to say just what the area's boundaries are--bordering the bay on the east, it tails off into the Latino district called the Mission to the west, and into the working docks to the south. What defines it most exactly is the low roofline--more than three stories is pushing it, South-of-Market.

Subsidence, the geologists call it: The buildings sink three or four feet every 20 years. The older ones lean crazily into the earth, going under like swamped tugs. The newest building, the Moscone Convention Center, where this summer's convention will be held, floats on a huge concrete hull.

Three months after the Moscone Center's opening in 1982, a series of leaks appeared in the building. "A dribble and a drab here and there," said a spokesman for the architects. One of the dribbles burst through a crack in the foundation and soaked the opposite wall, five feet away. "The city should not be expected to absorb construction problems," said a city official, not intending the pun.

Because it was "bad" land, this area was settled late, by forty-niners who called the place, in the spirit of ironic pioneer optimism, "Happy Valley." Here was a place to be poor and rowdy in the sunshine. The rich ascended to the hilltops and fog of Nob Hill, while the buckaroos pitched their tents on the flats. The valley sits in the rain shadow of the Twin Peaks, and the fog doesn't often penetrate this far inland. Here the Tar Flat hoodlums lounged in their beige hats at the turn of the century. Here also Dashiell Hammett sent Sam Spade to ditch the Maltese Falcon when things began to get hot.

Before the automobile age, the place was called "South of the Slot," because the streetcar slot ran south to Market Street, then stopped. Today, there are two ways to see South-of-Market by car: from the ground and from the air. I-280, the newer freeway from the suburbs to the south, arcs down from the ridge above Daly City, levels out onto the flats, then jumps four stories into the air, leaping over the neighborhood and the other freeway (I-80) that brings commuters over the Bay Bridge.

So for most people in the bay area, South-of-Market is the place where limited access becomes unlimited. They see South-of-Market for an instant, thrillingly, as they are dumped from the freeway onto Sixth Street at what is, predictably, the most dangerous intersection in the city.

At ground-level South-of-Market, the light is pure, cutting through clear air and leaving sharp blue-black shadows beneath the freeways, where wild anise grows eight feet high through cracks in the sidewalk, and the licorice smell mingles with the sea breeze and the aroma of roasting coffee from the Hills Brothers plant at the foot of Folsom Street.

The Hotel Utah, on Harrison at Fourth, is a bar at the end of a freeway ramp. The Utah is a quake replacement, built in 1907 (as one can imagine, the ground here moves like Jell-O in an earthquake), and the hotel today is a congenial bar with no lodging. Ramshackle and Victorian, the place changed its name to Big Al's Transbay Tavern in the 1940s and changed it back in the '60s, when it was purchased by the screenwriter of the Robert Redford film, "The Electric Horseman."

Many of the current customers came from the Midwest in the past decade. They are mostly young: artists, film and video producers, talky new-wavers and refined types, only a few of whom have green hair.

A local designer has a telling story about the Hotel Utah. She had heard that a guy was selling positive ionizers out of his room there, and she went up to buy one. In the room were hundreds of positive ionizers, all hooked up and turned on. The room was vivid with static electricity. Great blue sparks snapped at her; her hair frizzed as she stood there, pricing these things. The guy seemed equally charged, and she gave him the money and fled, clutching her new positive ionizer.

Besides the Utah, there are a number of other straight bars South-of-Market--the M & M Tavern, a hard-drinking place for newspaper writers at Fifth and Howard, for instance. Hamburger Mary's is a loud hash house and watering hole with a stunningly androgynous population. But in this neighborhood gay and lesbian nightspots outnumber the rest: Fe-Be's, for instance, at 11th and Folsom, San Francisco's original gay bar.

The last time the designer saw the positive ionizer salesman, he had gone into leather goods--black leather goods. That's not surprising on Folsom Street, which could be the black-leather capital of North America. Some evenings it appears that martial law has been declared for the neighborhood, and that Marlon Brando and his friends from "The Wild One" are the marshals. Some of the guys are actually flying colors--wearing motorcycle club insignia--but most are respectable types out for an evening in slightly scary drag.

The Ramrod is a headquarters for this riding-crop set. At Eighth and Folsom, it was formerly nestled comfortably between wholesale foam outlets and welding companies. Now that the neighborhood's gone Yuppie, the Ramrod shares the block with four new restaurants and a conceptual art gallery. The Ramrod is to some degree nostalgic now (in light of the AIDS crisis), and for all its sinister overtones, it feels like an Old Western saloon. Inside it's homier than one might imagine, with a piano bar and a mural that looks like the weight room at the YMCA. The black-leather cowboys, still here though their numbers are diminishing, bar-hop on Folsom, looking fearsome and jingling their chains and spurs.

Lately more straight couples and many more women have appeared South-of-Market. The graffiti has changed. In a nearby alley are the recent announcements that "Women Are Taking Back the Night" and "Fat Women Are Powerful." Gangs of laughing women fill the sidewalks until nearly dawn. The Baybrick Inn, a hostelry and nightclub, is responsible for this female phenomenon, bringing hundreds of women to the neighborhood each weekend for live, all-female rock 'n' roll, cabaret shows and dancing. Recent headliners at the Baybrick included the Contractions, Dogtown and Nancy and the Neighbors. Like the YWCA, the Baybrick has no men upstairs and cheap rates for the big city.

In City Hall, South-of-Market is spoken of in optimistic tones, as "improving." That means that alleys formerly fit only for truck deliveries and sleeping men are now inexplicably filled with people waiting in line. Rents are going up. Sculptor Aris Demetrios, who has kept a studio South-of-Market for 20 years, is watching the warehouse space in nearby buildings go for $1.50 a square foot--a jump straight up from 25 cents. "It used to be a little village down here," he says, "where you could trade tools with the neighbors. The foreman at a corporate operation isn't going to trade you use of a forklift for welding rods. So they're not really neighbors."

The up side, as the developers say, of all this change is exemplified by the fact that visitors can now stay South-of-Market at a French luxury hotel. The Hotel Meridien, a subsidiary of Air France, overlooks the Moscone Center from Third Street. Walter Mondale will stay at the Meridien during the convention, as will the Michigan delegation. Rooms have fine art prints, elegant furnishings and prices averaging about $150 per night. The Meridien features the city's most-mentioned eatery, Pierre (not The Pierre, or Pierre's, I might add), plus a jazz lounge called Justin, where one may eat "sandwiches and viandes." (Viandes, one may safely say, were scarce down here before the Meridien's opening.)

From the convention center, the intrepid traveler may walk west up Folsom Street, once a notorious boulevard, into a neighborhood of light industry, dark bars and high culture. New Langton Arts, a nonprofit and the bay area's most challenging gallery, between Eighth and Ninth streets, shows work in site-specific sculpture and performance art, among other things. In July, NAL will present Los Angeles artist Marguerite Elliot's work called "Recyclers/Street People," featuring "two life-size figures made of plaster and resin, shopping carts with various paraphernalia and dumpsters loaded with debris." The gallery's other exhibit will display behind-the-scenes photographs of special effects from the movie "The Right Stuff," much of which was shot on sound stages South-of-Market.

Three doors from New Langton Arts is the Billboard Cafe, which has just had that curse-of-restaurant-curses fall upon it, a four-star review in the local paper. "South-of-Market miracles continue with this new lively art-colony hangout," wrote the food critic. The cafe is a good quiche and hamburger place, which its owner describes as an "Art/McDonald's," hung with big paintings by neighborhood artists. At last visit, the cafe was still charging South-of-Market prices (a good lunch for five bucks). Other recommended eateries South-of-Market: the Folsom Street Grill, Augusta's, the Half Shell, Ruby's and the Castle Grand Brasserie. Gloria's Country Kitchen, a country-and-western extravaganza hard by the freeway, is not to be missed, though eating there is hardly recommended.

Even with all this new-found culture, South-of-Market is still a mecca for adventurous tourists, travelers who really travel. Every block has something to offer: Filipino delicatessens, performance art and rock-video clubs, armature winding shops, the infamous baths, old bullion at the Old Mint and San Francisco's wholesale flower exchange. Also the Automatt, recording studios of the Jefferson Starship and others, the big ships passing by the foot of Folsom Street and the stupendous underdecking of the Bay Bridge.

But one recommends one's own neighborhood at some risk.

For instance, an artist friend of mine who has lived in lofts South-of-Market for seven years, refused to be interviewed. "It didn't used to be so cool to live here," she said. "And the old neighborhood is already going fast. So if you're trying to get people to come here, you can keep your linguine and clams--I'm leaving." So much for inside sources.

From the beige-and-gray phalanx of skyscrapers downtown, South-of-Market looks pretty good. The developers gaze down at all this under-capitalized activity and munch thoughtfully on their designer cookies: "Big buildings sink down there, but if the city can float an 11-acre convention center, maybe we can float a shopping barge."

Actually the Moscone Center more closely resembles an ivy-roofed submarine. Perhaps one day it will submerge and depart, leaving us to return that acreage to $6-a-night transient hotels, artists' lofts, machine shops and humble drinking establishments. Some people here would consider that the neighborhood's--and the adventurous traveler's--gain.