The rich blend of multi-lingual conversations and street corner singers along 17th Street now competes with the hum of power saws crafting new developments in this diverse enclave east of Dupont Circle.

A nearly completed red-brick building on the corner of P Street will house a People's Drugstore on the ground floor, with a Japanese restaurant operated by the owner of Chinatown's popular Szechuan restaurant to open upstairs. Next door, two town houses have been refurbished for a two-story European restaurant and a drycleaner.

A block away, signs announcing the coming of a new "mixed-use" development of stores, offices and apartments grace a parking lot. And for each set of scaffolding in front of an old Victorian row house along this four block stretch of 17th Street NW, there is at least one set of rumors about what other businesses will spring up next.

The construction comes to an area that is now a pleasant melange of three-story Victorian houses, massive old apartment buildings, small restaurants and stores, some with Spanish signs and products.

Beginning in the mid-1970s young professionals spilling east from Dupont Circle discovered the grand Victorian houses along 17th Street and now the neighborhood brims with them, plus older black and white residents, and newcomers who are largely gays and Hispanics.

The new construction and renovations are "revitalizing the area and that's good," said Kathryn Ray, a former Dupont Circle Advisory Neighborhood Commissioner who is very familiar with the neighborhood. But she said she fears that an increasing influx of businesses could displace low income residents and attract more noisy sidewalk cafes. "I have some concern about it turning into a commercial strip without maintaining the residential."

"The community is divided" over development, said Phyllis Nelson, of the Dupont Circle Citizens Association. "It's terribly distressing to see us lose so many good people because they can no longer afford to live here."

Tomy Cheng, owner of Szechuan and a partner in the new Japanese restaurant, said they chose the location because of the "busy" residential nature of the neighborhood.

Yigal Rappaport, an Israeli immigrant whose company renovates and leases property in the area, said he views 17th Street as "the gate for downtown." Connecticut Avenue, nearly two blocks away, has become too crowded and expensive, and the neighborhoods east toward 14th Street are still not "mature" enough for wise investing, he said.

The two-year-old 17th Street Merchants Association welcomes the development surge.

"Seven years ago, this was the slums of Dupont Circle," said Paul Syracuse, the association's acting president and owner of Floral Impressions, located at the corner of 17th and R streets.

His business is housed in the Admiral Dupont, a mid-rise apartment building that was considered a pioneering development when it was built several years ago. "Four years ago this was the new frontier," Syracuse said. "Now, it's the only strip left to grow. So all the development stands to reason."

At the heart of the neighborhood is the Trio Restaurant, an always-crowded diner located at the corner of 17th and Q streets. Owner George Mallios has watched the community's transformation since his family first began serving food there in 1950.

"The beauty of the area is that it's a melting pot, and everybody gets along with everybody. It's crazy," Mallios said. "People have always come and gone in this neighborhood," he said. "To some it's a first stop, to some it's the last. There's something for everyone here."

What has served an ever-changing clientele is a network of neighborhood businesses that today includes everything from Safeway and McDonald's to smaller family businesses such as a health food store, plant store, shoe repair shop, hardware store, liquor store and a barber shop complete with a twirling red, white and blue-striped pole.

The new restaurants will face stiff competition from existing haunts. La Fonda is a 35-year-old Mexican restaurant at the corner of 17th and R streets. Adelina Callahan, who owns La Fonda with her husband, was born in a home nearby and has lived in the neighborhood all her life. The couple has purchased the now-vacant Fish Market restaurant across the street and plans to open another eatery there.

Callahan said the only street that was too dangerous to walk on during her youth was Corcoran Street, which has since become a showcase of renovated Victorian town houses. "I guess this has become the 'Yuppie' area along with Adams-Morgan and Dupont Circle."