Alexandria's waterfront, once home to colonial traders who sailed the Potomac River, today is witnessing a rapid building boom that is adding to it hundreds of thousands of square feet of commercial complexes.

Replacing the river captains of earlier times are defense contractors, high-tech corporations, lobbyists, law firms and professional associations.

Many are fleeing the higher rents and congested areas of downtown Washington, Crystal City and Rosslyn in search of a waterfront location in a city that its business leaders say provides a cheaper place to do business.

Businesses "come for transportation access, more reasonable tax rates, the ambiance, quailty construction, extensive opportunities for leasing and a responsive City Council," said Richard Flaherty, director of Alexandria's Economic Development Program, an office jointly funded by the city and Chamber of Commerce that tries to attract companies to the city.

The rebirth of the north waterfront area, which stretches north from the Torpedo Factory at King Street for 12 blocks to the Pepco power plant, began about five years ago when a number of land-title disputes were settled between the federal and city governments and private property owners.

Since then, a number of major projects have been completed, including a 104,000-square-foot office building at the Torpedo Factory and the TransPotomac Plaza, a five-building commercial complex situated in the 1100 block of North Fairfax Street that totals more than 300,000 square feet of space. Both projects were completed in mid-1983 and today are nearly filled.

The building craze that has transformed the look of the Alexandria waterfront remains as strong as ever. The only factor that promises to slow the growth of the area is the fact that only one major parcel of land remains to be developed along the north waterfront.

The building boom has altered Alexandria's historically small and cautious commercial construction market into high-intensity -- and risky -- projects. Builders no longer are afraid to construct massive complexes before obtaining commitments from prospective tenants or buyers, a practice traditionally left to downtown Washington developers.

A number of projects have been started in the King Street waterfront area by the Alexandria Waterfront Restoration Group, the same firm that renovated the Torpedo Factory arts center and constructed the adjacent office building. Across from the arts center on North Union Street, the firm is completing a 111-unit residential complex that includes flats, duplexes and town houses in the $136,000 to $320,000 price range. The project, about one-third occupied, is the only residential construction occurring in the north waterfront area.

Other projects planned for construction later this year are the renovation of a section of the Torpedo Factory on the corner of King and N. Union streets into a 20,000-square-foot office-retail complex, according to Philip Stringer, the company's project executive.

Construction also is scheduled for the end of this year on a 200-seat riverfront restaurant and international food market directly behind the Torpedo Factory office building, which Stringer said will be similar to Baltimore's Harborplace.

The area will be complemented by a city-run public marina, which will open in two months and will surround the Torpedo Factory area. The dock site, which earlier this week was being dredged, will accommodate recreational boats and larger vessels, such as tour boats.

North of the Torpedo Factory, a 75,000-square-foot, three-story office building is being constructed by Peter N. G. Schwartz. Half of the building, which is to be completed in June, already has been leased by an international lobbying firm. But a plan that would have put a restaurant on the first floor overlooking the river fell through recently because of neighborhood opposition, according to Schwartz. He said he is now considering leasing the entire building for office use.

Further north along the river, construction is nearly complete on the new headquarters for the Sheet Metal Workers National Pension Fund at 601 N. Fairfax St. The 150,000-square-foot, solar-powered building will be ready for occupancy in a week.

"Downtown prices were just out of control," William Voight, the fund's operation manager, said in explaining his firm's relocation from Washington to the Alexandria waterfront. He said the fund paid $47 a square foot for the Alexandria land in 1982, compared to quotes up to $900 a square foot in Washington.

A 74,000-square-foot, five-story building is being constructed at the corner of N. Fairfax and Madison streets. The building was completely leased before construction started, according to Charles E. Hudson of Gates, Hudson & Associates, the building's developer and owner. A defense-contracting firm will be the site's major tenant.

Hudson said the area is popular because it offers views of the Potomac River, proximity to National Airport and downtown Washington, and "the ambiance of Old Town." Most buildings along the waterfront lease for between $22 and $26 a square foot a year, he said. That compares with Washington rates that range up to $40 a square foot.

The largest project by far in the north waterfront area is a 500,000-square-foot, four-building commercial complex being developed by Savage/Fogarty. Located directly on the banks of the Potomac in front of its own TransPotomac Plaza, the site will house offices, restaurants and a museum in buildings ranging from four to seven stories. The complex, called TransPotomac Canal Place, will be ready for occupancy in the fall, according to Jeffrey Riddel, Savage/Fogarty's vice president.

The 10-acre site also will include a waterfront promenade and a plaza area that will have as its centerpiece a section of a C&O canal lock from the mid-1800s.

Lease rates have not been set, Riddel said, adding that the complex "will compete especially with the downtown market area."

The canal center project firmly establishes Savage/Fogarty as the major developer in the north waterfront area, many business leaders said. "We saw the opportunity and acted upon the belief that the demand for major development on the waterfront was strong," said Riddel.

While business leaders and city officials generally praise the recent building boom along the waterfront, some residents said they fear the area is becoming inundated with office buildings.

"The old character of the riverfront has been lost," said Ellen Pickering, a former Alexandria City Council member who has also served as chairman of Alexandria's Beautification Commission. "I just think it's an absolute crime that these buildings were allowed to be constructed."

Pickering said the office construction, the majority of which is within a few blocks of Old Town, ruins the character of the nearby historic district. She contended that residential buildings and more park land would have been ideal for the river area.

The commercial beachhead on the riverfront will also increase property values for nearby homeowners, "making it more difficult to live in the area," she said. "It prices people out of homes."

She added that the extra services that the city must provide to the new commercial area offset any income that might be generated for the city treasury through additional tax revenues. "There was an awful lot of people who fought all of this development, but they've just thrown their hands up in the air," she said. "They know that money talks and we don't have it."

Rear Adm. Kleber S. Masterson Jr., president of the Old Town Citizens Association, said he has "mixed feelings" over the development of the waterfront area.

"I wouldn't say, 'Stop the development,' " he said, but added that a number of problems must be considered. He said that lack of parking, increased traffic and higher land values eventually will force out many family-run stores and restaurants and worries many Old Town residents. He added that vacant buildings at night, especially along North Fairfax Street, will lead to a "cold and arrid" atmosphere along the waterfront.

"Old Town doesn't want the area to develop into another Crystal City," said Masterson. While he praised the city government for its overall handling of the waterfront's development, he added that "more restraint would be better."

Savage/Fogarty's Riddel disagreed that the area is being damaged by the commercial development.

Alexandria Mayor James P. Moran said zoning laws, limited roadways and lack of parking will prevent the area from ever becoming overly saturated with office buildings.

With most of the available waterfront already developed or undergoing development, Moran said, "What we have to ensure is that the area west of the new commercial waterfront site continues to be predominantly residential. We don't want to see residential mixed with commercial."

Moran echoed some of the residents' concerns that a few of the buildings don't fit the architecture of the Old Town area. "I think we've had relatively attractive development, with some notable exceptions," he said.

Some people have criticized the Sheet Metal Workers Pension building, a massive structure with 10,000 solar collectors on one side of the building and unusually small windows on the other three sides, which help make it more energy efficient.

George Colyer, who recently left the post of Alexandria's chief of comprehensive planning, said there is no design-approval process for the new buildings along the north waterfront because most are outside of the city's historic district, where architectural design approvals are mandatory.

"Many might question that if the city . . . was keenly interested in making architectural styles consistent , the north waterfront area would have design review procedures," Colyer said.

As a result, Colyer said, the area "doesn't welcome you as a pedestrian. Walking down Fairfax Street is not what I consider an exciting urban experience."

One of the last remaining large tracts yet to be developed along the north waterfront area is a four-acre site just south of the TransPotomac Canal Center.

Although the area recently has been sought by developers who see its moneymaking potential, Randy Norton, the property's owner, said this week he most likely will hold onto the land and develop it himself.

"I'm not interested in selling the property unless . . . someone came in and made a foolish offer," said Norton, who owns five restaurants in Northern Virginia and Rockville.

He added that he is considering developing the site "within the next year" into a hotel, which would require a zoning change from the city.

With most of the north waterfront already purchased or set aside for parks, the natural movement of future development projects in the area will be away from the river toward Washington Street, according to developers and city officials.