WALNUT CREEK -- The downtown here is being remade as a sleek urban center with the moxie to challenge some of California's most famed retail sites.

It began as a sleepy crossroads. It evolved into a collection of quaint shops to serve local residents. Most recently, developers, investors and retailers have dramatically transformed the nature and makeup of downtown Walnut Creek.

"Walnut Creek is no longer a suburban downtown," said James McMasters, a senior vice president with the Colliers realty brokerage. "It is an urban center."

Rents for prime store fronts in downtown Walnut Creek don't approach those for similar sites on Rodeo Drive and Union Square. Nevertheless, demand by retailers has propelled rents steadily higher in Walnut Creek.

About five years ago, rents for the better retail sites ranged from $45 to $50 a square foot per year. Now, effective rents range from $60 to $65, and even as much as $78, McMasters said. Owners of some of the best locations may seek rents as high as $100, McMasters said.

"Walnut Creek is one of the Bay Area's top retail markets," said Gwen White, a vice president with brokerage Cornish & Carey. "It is worthy of being included with San Francisco and Palo Alto."

Time and again, developers have revamped key parcels downtown. They have then cycled in increasingly upscale stores. Mainstay merchants yielded to higher-profile names.

In 2006, H&M replaced Eddie Bauer. In 2003, Tiffany & Co. supplanted Black Sea Gallery in what is called the Corners project. In 1996, Barnes & Noble took over from a Kentucky Fried Chicken. And more than two decades ago, in 1984, Broadway Plaza swapped Nordstrom for Bullock's as a major anchor.

Brian Hirahara, lead developer of the Corners, noted Tiffany's opens only a few U.S. stores per year.

"It says a lot that Tiffany's chose downtown Walnut Creek for its first East Bay store," said Hirahara, an executive with BH Development.

"Nordstrom was how it started," McMasters said. "Tiffany's is the final statement about the evolution of the downtown. That took downtown to a new level."

The evolution may produce additional upper-crust shops.

"We have a sprinkling of those premium brands, and they appear to be very well patronized," said John Cumbelich, an East Bay realty broker. "There's room, there's depth in the market to support more."

In 2007, investors have snapped up several choice retail sites downtown. Sites that seem run-down or underutilized have gained quick attention. East Coast investors with deep pockets are among the new buyers.

The Mark Morris Tire site at Mount Diablo Boulevard and Locust Street is due to be bought this month by a venture of New York-based Vornado Realty Trust and San Francisco-based Patson Development Co. Realty insiders believe the site is selling for about $6 million.

The city seeks upscale retail at the tire site. The new owners were tight-lipped about their plans.

Market analysts believe store openings by Prada, Gucci and Escada would fit hand-in-ermine-glove with the emerging Walnut Creek.

"Walnut Creek is right for the upscale labels," said Shelly Dress, Broadway Plaza's senior property manager. "If we were to add a Louis Vuitton or Burberry, it would be an extra layer on what we already have."

Yet some warn upscale additions bear a price. New retailers tend to drum the older stores out of the core.

"Rents have increased," said Elizabeth Wen, operator of the Elisa Wen women's apparel store downtown. "At some point the small guys aren't going to be able to come in any more."

At the Mark Morris site, a sign bears witness to the tire store's exit. A planned face-lift of an Olympic Boulevard site caused an optometrist and tailor shop to close, and a nail salon to move.

"If the rents are so expensive that only the big major retailers come in, you'll have the same stores you have anywhere else," Wen said. "Then what would make Walnut Creek special?"

Broadway Plaza would seem to be an ideal candidate for new anchors such as Neiman Marcus or Bloomingdale's.

"There's always the potential to add another anchor store." Dress said. "But right now, there's no plan in place."

Still, the Mark Morris site is just one location that's headed for a revitalization to bolster the upscale future.

On Olympic Boulevard, between Locust and South Main streets, developers recently bought sites on each side of the street.

At 1530 Olympic, a partnership controlled by Danville-based Blake Hunt Ventures paid $8.5 million in early 2005 for a building occupied by a Traditions store. Extensive renovations are under way. The building will house Urban Outfitters.

Directly across the street, at 1529 Olympic, Walnut Creek-based C&H Development plans a major face-lift for the Beem Building.

"It's a very tired building," said Basil Christopoulos, C&H president. "We will rip off the facade. We plan to put in a high-end clothing company. That will fit in with a downtown that has a much more urbanized feel to it."

C&H paid $3.1 million for the site, whose recent tenants included a nail salon, optometrist and tailor shop.

"We will undertake a total gut job for the building," Christopoulos said. "We're going to start over with it.

Christopoulos wouldn't identify the tenant, but he hinted that negotiations were going well.

"Without really going to full-bore marketing, we had three or four offers on the space," Christopoulos said.

So how did the suburban Walnut Creek remake itself into an urban streetscape? Some tout a city decision decades ago to scuttle plans to build Sunvalley mall at Shadelands Business Park.

"Sunvalley is a huge shopping attraction, and Macerich made Broadway Plaza wonderful," said Victoria Walker, the city's assistant planning manager. "But our downtown would not be what it is if Sunvalley was at the Shadelands."

Some cities chased a big mall that usually wound up along a freeway at some distance from the traditional downtown. Other cities chose to primarily preserve a quaint downtown of small shops and eateries.

Walnut Creek did both, and added culture such as the Dean Lesher Center and nightlife to spice up the mix.

"It's a unique approach," said broker Michael Cisternino of commercial realty firm Marcus & Millichap. "You have the traditional downtown retail with a mall and upscale specialty retailers in proximity to the others. All doing well and thriving."

"You have a concentrated downtown that is successful and vibrant," said Michael Schneider, a partner with SRS-Walnut Creek, which seeks to redevelop an underused downtown parcel.

The city approved homes to enhance the urban aura. For example, the Mercer condo complex, a 181-unit project, is about 60 percent sold. Prices start at $500,000 for one-bedroom units and $650,000 for two bedrooms.

"There is a dearth of this type of housing in the East Bay," said Jon Moss, an executive with Prometheus Development, the Mercer's builder. "We have a lot of people who want an urban lifestyle in the suburbs."

But what has turned heads is the hot market for the condos selling for at least $1 million. Eighteen of 23 of these were sold by late June.

"We knew we had something special in terms of location, design and amenities," Moss said.

Maybe the best barometer is that prices have jumped for several downtown retail sites. Buyers are spending $450 to $850 a square foot -- record prices for retail sales in Walnut Creek.

That signals investors believe retail rents can rise enough to justify higher property values.

"We are interested in buying more properties," said Garo Keidjian, who with his family began buying downtown sites 20 years ago. "Rents keep improving every year."

An example of the jump in prices is Plaza Escuela, a 154,000-square-foot retail site bounded by California and Olympic boulevards and South Main Street and Botelho Drive. Andronico's Market was until its closure in late 2006 its biggest tenant.

In 2003, the assessed value of Plaza Escuela was $58 million. In 2006, about two years after a sale of the site, its assessed value was $74 million. That's a 28 percent jump in three years.

With Andronico's leaving, numerous businesses have inquired about the site, said Kim Fraser, a San Francisco consultant who represents the new Plaza Escuela owners, a Capital & Counties group. Multiple tenants will likely fill the space.

"It's supply and demand," said Brad Blake, partner with Blake Hunt, Plaza Escuela's developer. "There are a lot of tenants, strong retailers, who still want to be downtown. And they are willing to pay high rents to be there."