A story about development around the D.C. Convention Center in Saturday's Real Estate section incorrectly stated the number of room nights already booked at the new Grand Hyatt Hotel over the next five years. The correct number is 400,000. (Published 6/30/87)

When the Washington Convention Center was hailed at its 1983 opening as the old downtown's economic savior, H Street restaurateur Tung Lam Shu envisioned booming business from the millions of conference-goers promised for the area.

Since then, more than 4 million trade show attendees and conventioneers have come and gone through the center. But Shu, like other small-time retailers nearby, is barely hanging on to his Great Shanghai Restaurant at 809 H St. NW.

Today, Shu is on the verge of being pushed out by a ferocious development squeeze and land rush that is rapidly transforming the entire neighborhood surrounding the city's $100 million convention center.

"I had hoped a lot of people would come here, but since the convention center {was built} business has gone down," said the Shanghai-born Shu, whose 10-year-old daughter, Sandy, served as translator. If diminishing business doesn't shut down his operation, the sale of the building he has rented for 12 years, which is on the market, certainly will.

"Maybe I'll be here three more months," said Shu -- who, like a growing number of nearby merchants, operates on a month-to-month lease.

Shu has lasted longer than most. In recent years, sandwich shops, clothes stores, shoe repair shops, topless bars and bookstores in the area around the convention center have been razed to make way for the city's newest wave of development, which is stretching into the once neglected old downtown.

In their place have come shiny new office towers, an elegant convention hotel, several construction pits and acre upon acre of parking lots owned by speculators waiting to see what the future has in store for the convention center area.

"We're extremely pleased with some of the things that have happened there, but there's a lot of work left," said John Fondersmith, the city's chief planner for the downtown area.

For many developers willing to plunk down millions of dollars, the future has already arrived. "We're obviously extremely confident in that whole area," said John Sarpa, senior vice president of the Hadid Development Co.

Hadid is planning a massive office building for a site just north of the convention center, and last week signed a purchase contract for the Maharishi International University College of Natural Law at 1111 H St. NW. That site will be developed into an office project if the deal goes through.

Hadid, one of the major players in the development of the area, is not alone in his plans, according to a survey this week of recent land tract transactions and interviews with developers.

In the past 18 months, more than 2 million square feet of space has been built or renovated in the area, including the new Hecht's department store, the refurbished Woodward & Lothrop store and the new 950-room Grand Hyatt across the street from the convention center.

The Hyatt, which recently opened as the city's third-largest hotel, has 4,000 room nights booked over the next five years, said Richard Nelson, its managing director, adding that 70 percent of the Hyatt's business is related to the convention center.

Another 2 million square feet of office and hotel space are being built, including the controversial Techworld project that, when completed three years from now, will contain 1.5 million square feet of office, conference and hotel space.

Techworld, developed by International Developers Inc., has been opposed by several citizen groups because of its mass and design, but was strongly backed by city leaders for the economic jolt they hope it will bring to the area.

Alan Bogatay, senior vice president of marketing for the project, said Techworld "will settle once and for all whether this part of town will be viable. It will be."

Lofty land prices and rising office rental rates -- once reserved for the area west of 15th Street NW -- have already struck the convention center vicinity. A review of land records for properties within two blocks of the center shows that more than 50 separate sales have occurred within the past two years.

Land prices have hovered in the $400 to $700 per square foot range, with the Techworld developers paying $915 per square foot for one small lot to complete their site. Office rental rates quoted by commercial agents range from $27 a foot per year to $33.

Big land deals settled recently include $22 million paid by Quadrangle Development Corp. for a lot next to the new Hyatt. Quadrangle developed the hotel and is ready to start construction soon on an office building that will be linked to the hotel.

The Greyhound Bus terminal at 1110 New York Ave. was sold two years ago for $21.3 million.The building's facade has since been declared a historic landmark, making future development trickier for Carlyle Associates, the site's owner.

John Kyle, a principal of Vector Realty Group, said that within the next five years the area surrounding the convention center will be "very much like the rest of downtown."

Developers are scheduled to begin construction of another 3 million square feet of office, hotel and retail space over the next two years. Moreover, development of land that cautious investors and holdouts are sitting on could bring another 2 million square feet of offices to the area.

Developer Richard S. Cohen, co-owner of two large parcels next to the center, said he is waiting to find out if the convention center will be expanded, as is being discussed by city officials, before developing the property.

"I'd have definite plans at that point. Also, a lot of people are waiting to see the success of Techworld," said Cohen.

John Clegy, chief financial officer of The Woodner Co., said his firm plans to develop the sizable lot it owns at the southwest corner of 12th Street and New York Avenue into an office complex. "But we don't feel any great rush to pioneer that area," he said. "We'd like to see the neighborhood stabilized before we spend a lot of money there."

Bernard Greenfield, a Washington attorney who owns the last remaining town house in the 800 block of H Street, said that despite the development sites being assembled all around him, he does not consider himself a holdout. "I don't lie awake at night worrying that someone will build around me," he said.

For Prissy Williams Godfrey, who lives in the H Street town house and operates what she described as a "safe sex clinic" where her clients "learn by experience," the possible sale of the house could be bad news for her business, which she described as "booming" since the opening of the convention center.

Other land holders said they are waiting for the right offer. Bill Lewis, executive vice president of Local 2336 of the Communications Workers of America at 746 9th St. NW, said it is "just pure dumb luck" that his union is sitting on a potential gold mine. Lewis said his group has "had no offers we can entertain" for the building, which houses the union office and the Chesapeake House, a gay bar.

Despite the frantic pace of development, the convention center area, with its mix of shops, boxy office structures and a new pricey hotel, is still a study in contrasts.

Only one block in the area -- bounded by I and K and 11th and 12th streets -- still has many of the merchants who have survived the metamorphosis. But because many of them rent their buildings on a month to month basis, their future is uncertain.

Jane Frenkil, whose family has run the Washington Uniform Shop at 900 11th St. NW for 35 years, had mixed feelings about growth in the convention center area. "We're hanging on until the last minute," Frenkil said of her rented store. "But it {the building} should come down some day so they can make something wonderful in its place."

A nearby Gypsy palm reader, who requested anonymity, said the rebirth of the neighborhood means she'll be forced out of the 9th Street home and business she's occupied for 12 years. "I'm not jumping for joy, but this city needs improving. Maybe the move will do me some good," she said.

Neighborhood activists, who generally support the area's growth, cautioned that the office construction frenzy must be prevented from spilling over into residential areas north of the convention center.

"We don't want to live in a K Street-type neighborhood," said Elizabeth Blakeslee, an Advisory Neighborhood Commission member for ANC 2C who said her group is concerned about increased building height and density, the lack of on-street parking and increasing traffic congestion.

But for David Presley, a 28-year-old street person who has been living in an abandoned H Street town house, the area's economic rebirth hits closer to home. Last month, Presley's shelter was sold. "I guess I'll just have to move again," he said.