DURHAM -- When Scott Howell opened Nana's almost 11 years ago near the intersection of University Drive and Chapel Hill Boulevard, the commercial area around the restaurant was "pretty dilapidated," he said.

But with Nana's anchoring the Rockwood area and Foster's Market serving as the main draw a half mile west, the stretch of Chapel Hill Boulevard between them is slowly growing into a dining destination.

The strip now features Q-Shack, another of Howell's ventures; Pao Lim Asian Bistro, a pan-Asian restaurant; and the European-style Guglhupf Bakery & Patisserie.

The five businesses, which all have been lauded by the likes of Southern Living, Esquire and Family Circle magazines and FoodTV, represent a more sophisticated selection than once dotted this strip of the retail-heavy boulevard, observers and restaurateurs say.

Now Guglhupf's owners are gearing up to open a hip new European café and lounge, as well.

The bakery's new two-story addition and enclosed courtyard, which are slated to open in February, will serve sandwiches to a lunch crowd before shifting to a coffeehouse atmosphere in the afternoon and a lounge scene at night, said Claudia Cooper, who owns the business with Harmut Jahn.

"We'd like for it to be a little cosmopolitan spot so you can step into a different space and forget what's around you," she said. "It should be a nice, hip lounge where you can dress up or dress down, wear lipstick and heels or come barefoot."

It's all quite a change from the establishments of years past. For years, Yorktowne Twin Theater, Hazel's hot dogs and Rockwood Fillin' Station, a beer joint, were the area's main draws.

Then in May 1990, Sara Foster decided to locate her gourmet market and restaurant in a former lawn mower repair shop at 2694 Chapel Hill Blvd. Two years later, she suggested that Howell consider putting his first restaurant less than a mile away in the Rockwood Building at 2514 University Drive.

Jahn and Cooper opened Guglhupf next door to Foster's in November 1998, offering European-style breads, pastries and desserts.

Also in 1998, Ocean Emmy's seafood restaurant opened in an old refurbished McDonald's. In 2001, the building at 2505 Chapel Hill Blvd. was renovated again and reopened as Pao Lim, a popular restaurant incorporating Chinese, Thai and Indian cuisines.

And early in 2003, Howell and partner Dan Ferguson opened Q-Shack, a "sophisticated barbecue place" in the former Long Meadow Dairy Bar at 2510 University Drive.

Howell said he doesn't understand why that segment of U.S. 15-501 Business, which sits adjacent to some of Durham's wealthiest neighborhoods, hasn't developed any faster than it has.

But with Guglhupf's café and lounge opening soon, the area's time is coming, he said.

"I think something's going to end up happening," Howell said. "It's going slowly, but I think someday it's going to be huge."

Howell credits Foster with much of the area's growth to date, but Chuck White, an economic development associate at the Greater Durham Chamber of Commerce, gives Howell credit as well.

The success of Nana's and Foster's in that area may well have driven other restaurants to try the boulevard, White said.

"Getting one or two destination points in a place certainly builds momentum for others," White said.

A critical mass of restaurants means diners have several options within a small area if their first choices can't accommodate them on busy nights, he said.

But while the growing number of restaurants does create a sort of synergy, it also has increased competition for the area's long-established restaurants, said Foster, who chose her spot on Chapel Hill Boulevard partly because there weren't a lot of other businesses like hers around. There still aren't, she said.

Guglhupf has competed with Foster's Market for years, but Foster's business has continued to grow every year, she said. While she expects her customers to check out her neighbor's new addition, she thinks they'll return to her market in the end.

"We all like to eat at new places," she said. "We like to try new places and go back to old favorites."

Foster said she doesn't see the increased competition as a bad thing. "It's healthy for the economy and all the businesses concerned," she said.

The next staging ground for the upscale trend may be the vacant KFC space between Pao Lim and Jiffy Lube.

Because of restrictions adopted by KFC's parent company regarding selling buildings to competitors, the future occupant can't sell fast-food chicken, seafood, Mexican or pizza, said Jerry Friedman, a broker representative for The Shopping Center Group.

And while there's been some interest in putting a restaurant in the 2,600-square-foot space, the buyer may end up doing something entirely different. Car and motorcycle dealers also have contacted Friedman about the site, he said.

While some of the strip still is a jumble of car lots, fast-food eateries and pawnshops, entrepreneurs are cleaning up a lot of the commercial spaces, the restaurateurs said.

"The businesses in general are just better businesses than what used to be there," Foster said.

When Howell moved Nana's into the Rockwood Building, Nana's lights were the only ones on at night, he said. In 1999, he bought the shopping center. Since then the tenants have included interior decorating shops, architects, a dentist and a hair salon.

Likewise, Sima Rafizadeh, the owner of Guglhupf's building, has enhanced both the building's appearance and its tenant list since she bought it in October 2000.

It's not easy to renovate the existing buildings for any use, Howell said.

"A lot of buildings are old around here, and you've definitely got to have a vision past the brick to make it happen," he said. "You've got to think about it."