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It’s a Friday night and just down from the corner of 23rd Avenue and East Union Street, a small knot of smokers is chatting outside the doors of The Neighbor Lady.

Inside the subtly lit bar, with its funky wall hangings and even funkier vibe, rock and soul and some country music jockey for background attention. It feels like customers never stop coming through the door.

And if you’ve been paying attention to this gritty, long-troubled corner at the heart of Seattle’s Central Area, you begin to see something different is happening here.

The most visible changes have come in the last two years or so by a confluence of factors: stepped up engagement by crime-weary residents, focused police attention and new private investment.

Over the years, lots of ideas for revitalizing this corner have been floated. Most went nowhere.

But now a couple of lively new businesses have opened, and there are bigger plans on the drawing board.

By summer, construction should begin for a $20 million apartment complex with ground-floor retail. Capitol Hill Housing is negotiating purchase of a KeyBank building to do much the same, and the longtime family owners of two stagnant corners are in talks with the city for rezoning to also possibly add more housing.

What’s happening here is being embraced by many who live, work and own property in the area. But there’s also an uneasiness among longtime residents about the loss of neighborhood identity.

Yes, the drug dealers and buyers are gone, as are the graffiti artists, gang bangers, wannabes and hangers-on whose constant presence kept this neighborhood on edge. Crime at the corner is down more than 80 percent since 2008.

But gone, too, is a neighborhood landmark — Thompson’s Point of View — the popular soul-food restaurant with its storied past that for more than a quarter-century drew African-American judges, politicians, sports figures and visiting celebrities.

It was one of only a few black-owned restaurants of note in the Central Area when it closed in 2011 for failing to pay $14,000 in taxes — marking the end of an era and cementing a dramatic demographic shift to a neighborhood that is now majority white.

Last year, The Neighbor Lady quietly eased into the old Thompson’s space, a change that might have gone unnoticed but for the understated signage just above the entrance.

Inside, owner Stephan Mollmann had stripped the place to its studs, spending $100,000 — twice what he’d planned — to create what he calls a “brothely” joint. The décor is sort of bordello-meets-saloon. With a vegetarian-friendly menu, the Lady in less than a year has generated a strong, loyal neighborhood following.

This, Mollmann said, “will be the corner to watch.”

Ray Wright, who grew up in the Central Area, was a Thompson’s regular who first alerted Mollmann to the vacancy. Like others here, he mourns the area’s changing face but said, “If we have to lose this spot to somebody, I’m OK with it being him.”

“He came giving everybody respect. He didn’t tell us we couldn’t come; he’s just catering to a different crowd, is all.”

Next door, a Mediterranean-style eatery called MedMix has drawn steady foot traffic since opening last spring in a space once occupied by the Philadelphia Cheese Steak shop, whose owners were gunned down in separate shootings within a five-year span.

Ian Eisenberg, a 45-year-old investor who lives in Leschi and owns both buildings, expects by summer to break ground on the $20 million apartment and retail complex at the intersection’s southwest quadrant — now an empty lot.

Capitol Hill Housing, which operates nearly 1,200 affordable apartments throughout the city, is negotiating the purchase of the KeyBank building at the intersection, on the site of what was the city’s first and only black-owned bank.

Meanwhile, two area families that have long owned property at the intersection’s two other corners — Midtown Plaza, anchored by a post office, and a 76 gas station — are in talks with the city for rezones to allow multistory residential buildings.

This week , postal carriers here were to shift to a new location in Sodo, with the post office retaining retail space for at least a year.

Tom Bangasser, whose family owns the complex and has held property at the corner for 70 years, said about the plans, “We’ve been talking about this for 15 years. We’re finally going to do it.”

The city is also a player, with plans next year for $18 million in improvements along 23rd Avenue. The city is also holding as a series of community meetings — the first scheduled for April 13 — about the future of key 23rd Avenue intersections, including Union.

George Staggers, CEO of the Central Area Development Association, said attracting financing to that corner has long been a challenge because of its past.

He says revitalization is long overdue. “Now the market is slowly catching up to where doing significant development at that business node is financially feasible,” he said.

Long-evolving area

The new property owners — most of them white — are frequently hassled in meetings and on neighborhood blogs as gentrifiers. But what’s happening at 23rd and Union is a microcosm of the changes that have been taking place across the Central Area for nearly two decades.

Once a mostly Jewish neighborhood before Japanese residents began moving in, the neighborhood became largely African American during the 1960s and ’70s. By 1980, some two-thirds of the residents were black.

Now, a majority — about 58 percent — are white; 22 percent are African American and 9 percent Asian.

The number of young drug dealers and gang members hanging at the corner and in front of Thompson’s began to increase about five years ago after a bar they frequented on Madison Street closed.

That same year, Seattle police launched a yearlong initiative to get drug dealers off the corner, working closely with community groups and neighbors, including the restaurant, to clean up the gathering place.

Twenty-third and Union has since fallen from the list of police hot spots, a designation based on 911 calls. Reported incidents of crime within a block of the intersection dropped from 181 in 2008 to just 31 last year, with the biggest declines coming in narcotics and assaults.

As a result, the police have dialed back their focus there to one of maintenance, said Sgt. Christopher Kelley, of the department’s East Precinct.

“That corner is vastly different from what it was three, four years ago,” Kelley said. ““A lot of people were afraid to walk through. Now you see them using the businesses there. There’s an increased sense of personal safety.”

But some of the young guys who used to frequent the corner won’t give the cops that much credit.

Lively debate erupted inside Earl’s Cuts and Styles when the subject was raised one day recently. One man, saying he’s neither a gang member nor a drug dealer, acknowledged that it was the closing of Thompson’s that drove him and his friends away.

“If you’re a teenager in this neighborhood, you can go to Garfield and play ball,” he said. “If you’re older, in your 20s, there’s no place for you to go hang out.”

Bypassed by boom

The residential building boom that seized much of Seattle in the first part of the last decade left the intersection largely untouched. That’s been changing in recent years.

In 2006, real-estate investor Jim Mueller bought a parcel of land at the southwest corner and took it through rezoning. Stung by the economic downturn, he sold it to Eisenberg in December for $2.3 million — more than twice what he paid.

Eisenberg and his developer, Lake Union Partners, will fulfill Mueller’s plan for 90 units of studios and one- and two-bedroom apartments on five floors, with ground-level retail.

“What we are looking at are rents that are achievable for a lot of folks that have been priced out of Capitol Hill,” said Joe Ferguson, of Lake Union Partners.

Eisenberg said he feels confident about the financing for the project and has plans to break ground by summer.

He made his millions through a series of ventures over the last two decades.

For a time, he operated a company that provided billing and telecommunication services that offered everything from prerecorded jokes to chat lines. Blue Frog Mobile, which he founded in 2002, closed amid bitter infighting six years later.

In 2007, he co-founded the zero-calorie soda company Zevia, then sold his controlling share.

Eisenberg said he used to drive by the corner every day, remarking that somebody ought to do something about it, until his wife challenged him to put up or quit talking about it.

He purchased the old Philadelphia Cheese Steak in 2010, where MedMix is now located, and later bought Sea Suds carwash nearby. He invested heavily to clean up both spaces.

He’s moving his office from downtown into space above The Neighbor Lady.

Eisenberg sees promise in a corner where few other investors have. “It’s really a blank canvas a mile from downtown,” he said.

Asked if his investments at the intersection are part of some broader strategy, he laughs.

“A lot of smarter developer types have told me to stay away from that corner, from that neighborhood; that it’s too dangerous and nothing will happen,” he said.

He’s betting millions they are wrong.

Staff researchers Gene Balk and Justin Mayo contributed to this report.

Lornet Turnbull: 206-464-2420 or On Twitter @turnbullL.