TEXT OF STORY

Kai Ryssdal: The streets may be largely deserted in Washington D.C. today but underneath all that snow the nation's capitol is hopping. Not only is there a new or, new-ish administration in town, but the bad old days when Washington's murder rate was the highest in the country and the mayor was busted for smoking crack with a prostitute -- they all seem like a long time ago.

Brett Neely explains.

BRETT NEELY: It's karaoke night at the Rock and Roll Hotel in Washington's northeast district. The singalong has drawn a lot of tattooed hipsters. But just five years ago, you couldn't beg a cab to take you to this neighborhood in northeast Washington, says club manager Evan Preller.

EVAN PRELLER: And forget about trying to get a cab back like calling a cab to come down here at 4 or 5 in the morning, they would never do it.

Now Preller says bars, restaurants, and expensive condos have replaced the empty storefronts and abandoned buildings. Newcomers are driving the transformation. So many people have landed in D.C. in the last decade that its once-declining population is set to pass 600,000 for the first time in 20 years. And that's thanks to an expanding federal government.

One new Washingtonian is Andi Lipstein. I spoke to her as she was making dinner with her fiance.

After finishing her master's degree in public policy last summer, she moved here and started working for the federal Centers for Disease Control. Lipstein thought she would work for a small nonprofit organization in some other part of the country. But when she went looking for a job, all roads led to Washington.

ANDI LIPSTEIN: I think almost half my class is in Washington and that's not typical.

In addition to government workers, the region has always attracted law firms and lobbying shops. But in the past decade, media, telecom and financial services firms diversified the region's economy, says Margery Turner, a demographics expert at the Urban Institute.

MARGERY TURNER: That gives the District a huge advantage over some other cities around the country, where the economic anchor was once manufacturing and that economic anchor is declining in size, importance and vitality.

Many companies are now expanding here as President Obama tries to channel resources into new areas like renewable energy. And as the government steps up efforts to regulate, lots of financial services companies have bulked up their D.C. offices.

That's driving up rents: office space in Washington is now nearly as expensive as in New York, says Mitchell Shear. He's president of Vornado Charles E. Smith, one of the biggest commercial real-estate firms in town.

MITCHELL SHEAR: If companies aren't necessarily relocating here right now, they are for sure putting their hooks a little bit deeper, putting some more people here.

Those newcomers are enjoying a higher standard of living thanks to the local government's efforts. It lured big chains like Target and Best Buy to the District, which had very little shopping. And aggressive policing has cut crime. But even as the quality of life has improved, long-time D.C. residents have suffered.

Mary Spencer was born and raised in D.C. She grew up right around the corner from where the Rock N Roll Hotel stands and lived in the same house for almost all of her 65 years.

MARY SPENCER: When we first moved into our house, it was an all-white neighborhood, and we were the first black family to move on that street.

She watched the neighborhood go downhill and improve again as the city recovered. But gentrification brought a shocking jump in property taxes; they more than doubled. Spencer and her husband decided they couldn't afford to live there anymore.

SPENCER: I think the stores that have come in in the various areas are wonderful, but at whose expense?

Last year, they rented the house to a British couple, and moved deep into suburban Maryland. She likes the new D.C., except for the fact that she can't afford to live in it.

In Washington, I'm Brett Neely for Marketplace.