Feb. 3 (Bloomberg) -- Joel Schwarz, a 35-year-old attorney from New York, still parties after work at hip spots such as Rosa Mexicano and Bobby Van's. He's just doing it in Washington, D.C., now, where the Manhattan watering holes have set up shop.

``D.C. isn't catering to the stodgy, cigar-smoking crowd anymore,'' said Schwarz, who works for the U.S. Department of Justice's cyber-crime unit and bought a $500,000 condominium in Washington's Chevy Chase neighborhood a year ago. ``D.C. now has a New York feel to it.''

The Manhattanization of the nation's capital, where until 1999 the subway quit at midnight, hasn't stopped at bars and restaurants. Real estate prices are soaring, driving the cost of office space beyond New York levels, and department stores and hotels better identified with Manhattan are adding glitz to a city once described by columnist Russell Baker as ``a marble graveyard after dark.''

``Washington is becoming more like New York, and that's why I enjoyed being there so much,'' said Harvey Goldschmid, who was a Securities and Exchange Commission commissioner in Washington from 2002 until last year and now teaches law at Columbia University in New York. ``The restaurants are so much better now, and the amount of building is just mind-boggling.''

Goldschmid says the value of his Capitol Hill townhouse climbed by 50 percent during the three years he owned it. He sold it last June for $1.5 million, he says.

Jimmy Choo Too

Luxury retailers including Louis Vuitton, Jimmy Choo and Bulgari all will open stores this year in Washington's Chevy Chase Center on the Maryland-D.C. border, joining Saks Fifth Avenue and Neiman Marcus. Two other iconic New York names will appear in D.C. when Federated Department Stores Inc. converts its Hecht's department stores, acquired last year, to Macy's outlets starting this fall. One Hecht's unit will become a Bloomingdale's.

Home prices, which were falling a decade ago, have risen by more than 20 percent for five straight quarters, double the national rate, according to the Office of Federal Housing Enterprise Oversight. Homebuilding in D.C. ``is occurring at a rate not seen in decades,'' an Urban Institute report said last year, citing the more than 1,900 building permits issued in 2004, six times the average for the 1990s.

Many of the housing units are being added in the downtown area, which is drawing restaurants as well as residents. The number of Zagat Survey-rated restaurants downtown -- an area stretching from the White House on the west to the Capitol on the east -- has doubled to more than 60 in three years, according to the city's Downtown Business Improvement District.

`Amazing Transformation'

D.C. has undergone ``an amazing transformation,'' said Howard Greenstone, who chose Washington for his first Rosa Mexicano restaurant outside New York. The 9,000-square-foot, three-level D.C. unit in the downtown Penn Quarter area has been ``very successful,'' Greenstone said. Bobby Van's, which has been in D.C. for six years, plans to open its second restaurant downtown next month.

Prices for D.C. condominiums have reached $500 to $750 a square foot, up from $200 to $300 five years ago, said David Mayhood, president of the Mayhood Co., which has built apartments in the District for 22 years. That would value an average 1,400- square-foot apartment at $700,000 to $1 million. Some new condominium projects will approach Manhattan's typical range of $1,000 to $1,200 a square foot, he said.

Financial Companies

Million-dollar condominiums ``would have been unthinkable'' five years ago, Mayhood said. He attributes the surge in prices partly to an influx of well-paid young lawyers at D.C. offices of New York firms, as well as an increase in consultants, lobbyists and others who feed off a federal government whose budget has grown 38 percent in five years. Jobs tied to the government are creating an ``urban, well-paid and 30-something'' customer, he said.

Financial companies including Washington-based private equity firm Carlyle Group and investment bank Friedman, Billings Ramsey Group Inc., across the Potomac in Arlington, Virginia, also have helped boost buying power, said Gerry Widdicomb, director of economic development at the Business Improvement District.

``There's a growing financial industry here,'' said Widdicomb. ``They're competing with higher salaries.'' Carlyle's employment has jumped 66 percent to 256 since the end of 2000 and the company will hire more people this year, said spokesman Chris Ullman.

Office Space

Office space is becoming more expensive as such businesses expand. Last year, the price for District office space topped that of New York's for the second straight year, at $408 a square foot to $399, according to Real Capital Analytics, a New York- based real estate research group.

An improvement in the city's finances and services has helped fuel the resurgence, as has a $5,000 credit for first-time homebuyers started in 1997. Under Mayor Anthony Williams, the District's debt ratings have been elevated to investment grade from junk status by the major ratings companies.

The mayor has pushed development in neglected downtown areas, such as Chinatown, now home to Gallery Place, a retail center that includes 192 condominiums, a 14-screen movie theater and shops such as Benetton and Ann Taylor. The condominiums sold out before the development was finished, for as much as $864,900.

The rapid development of such neighborhoods has led to a Manhattan-like complaint: Who's got the money to live there?

`Unaffordable'

``It's unaffordable to buy in Manhattan, it's unaffordable to buy in D.C., I don't know where all the money is coming from,'' said Joseph McHale, 36, a former New York stockbroker who now works for the SEC in Washington.

``A lot of people are nervous about this development,'' said Ed Lazere, executive director of the D.C. Fiscal Policy Institute. ``How do you deal with the city's gentrification when the majority of residents are being priced out?'' he said.

The District had 9,900 homes valued at more than $500,000 in 2000, he said. By 2004, there were almost 33,800 of them.

Some D.C. residents find the Manhattan analogies superficial and unwelcome in any case. ``I really don't like that comparison,'' said Joy Zinoman, the founding artistic director of the Studio Theatre, which helped revive a blighted area in Northwest D.C. and contributed to the growth of a performing arts community that numbers more than 80 theaters, up from a handful in the 1970s.

``Washington has its own spirit, its own character,'' she said.

McHale, who complains that it's still hard to get a cab in D.C. after midnight (the subway now runs until 3 a.m.), agrees. ``D.C. is never going to be Manhattan, but it's going to be a great city with a great flavor,'' he said. ``I'm from New York, but this is where I want to be.''

To contact the reporter on this story: Daniel Goldstein in Washington at dgoldstein1@bloomberg.net.

Last Updated: February 3, 2006 00:13 EST