Alexandria's waterfront Torpedo Factory, deemed a blighted area in the early 1970s, is scheduled soon for more renovation and new construction to complete the transformation of a key section of the city's Potomac River shoreline.

The project's developer, Alexandria Waterfront Restoration Group, is preparing to renovate the last of the original Torpedo Factory buildings for use as an upscale retail arcade and office building. In addition, the developer plans to add two new free-standing buildings to the Torpedo Factory site -- a market building with gourmet food vendors and a 325-seat restaurant adjacent to the waterfront. The complex will be called Torpedo Factory Landing.

Noted for its three-story Art Center that houses more than 80 artist studios, the four-building complex was built as a torpedo-manufacturing plant just after World War I. Dilapidated until redevelopment started in 1982, the complex had been used for various purposes, including serving as a repository for Smithsonian Institution dinosaur bones.

"When the Torpedo Factory waterfront area is completely built out, it has the potential of being one of the premier waterfronts in the region," said Alexandria architect Greg Hunt, a member of the city's Board of Architectural Review. The developer must win final approval for the renovation at a review board meeting next Wednesday, as well as get other city approvals.

Deemed an aesthetic, cultural and economic success by architectural critics and city officials, the Torpedo Factory complex and adjoining waterfront boardwalks and piers have helped crystallize Alexandria's goal of gentrifying the lower King Street-waterfront area.

The multiblock site now boasts some of the most highly sought retail, office and residential addresses in the Washington area, according to real estate brokers. Although still commanding less than the sky-high Georgetown annual retail rents of $30 to $100 per square foot, Alexandria landlords are getting rents in the $35-per-square-foot range for shop space, and numerous national chain stores are now seeking Old Town locations, according to local real estate brokers.

The Torpedo Factory redevelopment group is a joint-venture limited partnership consisting of Realco International Inc. of West Orange, N.J., and Charles R. Hooff III, an Alexandria businessman. They plan to start renovation of the fourth and final Torpedo Factory building in late August, with completion planned for late June next year. The building is on the northeast corner of King and Union Street in the heart of Old Town.

So far, one of the original Torpedo Factory buildings has been razed, another has been turned into an office building, and the third has been transformed into the Art Center. The fourth building will feature a first-floor, open-air retail arcade cutting diagonally from the intersection of ing and Union to the waterfront behind the building. The arcade will contain about 7,000 square feet -- enough space for at least seven retail shops. The two upper floors will each contain about 9,500 square feet of office space. The arcade will also provide access to the interior of the contiguous Torpedo Factory Art Center on the north.

Construction of the restaurant and the market building is scheduled to begin in early fall, shortly after renovation work starts on the Torpedo Factory building, according to development official Tom Reagan. The market building, a steel-and-glass structure with a maritime theme to be located close to the waterfront to the north of the arcade, will house from eight to 12 gourmet food vendors and have interior and exterior seating for about 200 people.

"What we're trying to create with the market building is one large interior space, such as in the Eastern Market building," the large produce market on Capitol Hill, according to architect Marty Denholm of the Keyes-Condon-Florance firm.

The two-story restaurant, to be built just east of the market building on the edge of the Potomac, will be in the style of a "Victorian birdhouse," according to architect Janice Calomiris. Preliminary plans call for a stone and glass structure with wood-shingle roof, along with a four-story lighthouse-shaped structure at the building's south waterfront corner.

The Alexandria Waterfront Restoration Group is developing the three buildings under an air-rights lease agreement with the city of Alexandria. Under the terms of the lease, the city will retain ownership of the underlying land. The developer and associated partnerships will pay the city annual rent based on the appraised value of the buildings. The agreement is complex: The properties will be reappraised in 1992 and every 10 years thereafter, and there will also be annual cost-of-living adjustments to the lease rates

More importantly, ownership of the improvements reverts back to the city at the end of 60 years, allowing the city to retain long-term control of that portion of its waterfront.

Purchased by the city from the federal government in 1969, the Torpedo Factory complex lay dormant until the city renovated the Art Center in 1982.

The Alexandria Waterfront Restoration Group was chosen as the waterfront redeveloper in a city-sponsored competition and soon thereafter began construction on the combined parking garage and condominium building across Union Street from the art center and the Torpedo Factory Office Building.

As with most real estate developments, there has been some friction and public dissent associated with the project. City official Cliff Rusch recalled 19-hour bargaining sessions with the developer and a letter of ultimatum delivered to the city in November 1985 when the parties could not come to terms on the amount of air-rights rent to be paid. But the developer, according to Rusch, finally acceded to the city's terms.

"There's no question {the Torpedo Factory project} took longer than we thought, but negotiations and work on the waterfront were more complex than we had expected," Rusch said.

Some Alexandria residents are not thrilled with the final phase of the Torpedo Factory restoration, however.

Ellen Pickering, a former Alexandria city council member, feels that the remaining Torpedo Factory property should have been razed to allow better access to the waterfront. The arcade, she says, will be a "tunnel," allowing poor access and vision to the waterfront.

"This was our last chance to open our main street {King Street} to the waterfront, without having it be obstructed by a commercial building.

"We've given the river away to commercial enterprises. A people place has become a commercial place," Pickering said.

But commerce seems to have successfully embraced the arts at the Torpedo Factory. Marge Alderson, former director of the Art Center and now a resident artist at the center, says that Torpedo Factory artists generally are pleased with their environment.

"We've got marvelous space here from the standpoint of light and good working conditions -- that's what's important to us," Alderson said.

"The city and developer have been very creative in putting together this massive area of buildings and piers in a way that gives a wonderful mix of purpose."

As Alexandria City Council member Connie Ring said, "I think everybody's pleased."