While tea partyers dream of a smaller government and a shrinking federal workforce, local real estate developers are betting the other way.

Even as some agencies trim their sails a bit, developers say Washington, D.C., is generally thriving amid the economic suffering that afflicts much of the country.

“[People] want to live where they work. They want to work where they live,” said Doug Firstenberg, principal of Stonebridge Associates, which is building residential and commercial real estate in the area. “Capitol Hill’s got everything.”

New residential and commercial properties are on the rise across the area. Along First Street Northeast, the landscape, now an eyesore of construction, will soon give way to gleaming new towers. Nearly 362,000 square feet of office space will soon be available along the Capitol Riverfront.

“We are incredibly resilient as a city because we have a federal government that plays a huge role in that,” explained Julia Christian, executive director of the Capitol Hill Association of Merchants and Professionals. “People are here for most of the year, and the city has to function no matter what.”

The numbers help tell that story: D.C. ranked 35th in rate of population growth from 2000 to 2010, according to the Census Bureau. It also experienced faster growth than any state from
April 1, 2010, to July 1, 2011, netting a 2.7 percent population increase. On the downside, the local jobless rate for November was 10.6 percent, a couple of points higher than the national rate.

“We have a spectacular talent pool in terms of residents here, in terms of education and experience … and I think the real estate market has responded to that,” said Robin-Eve Jasper, executive director of the NoMa Business Improvement District.

And all of these people, of course, need places to live and work. The Capitol Hill neighborhood and surrounding areas, close to where the action is, seems to many people like an obvious choice.

That’s the reason for so many new office spaces along the Capitol Riverfront, according to Michael Stevens, executive director of the Capitol Riverfront Business Improvement District.

Located near Department of Transportation headquarters and defense agencies, the riverfront area is home base for contractors in both sectors.

“The federal government is a very stable economic base, and they have outsourced more and more, through contracts with private firms. It’s a big job creator,” Stevens said. “That’s one reason our neighborhood has so many offices popping up: because lots of contractors with the Navy, for instance, want to be able to walk to a meeting or do a quick Metro ride, be able to say, ‘I’ll see you in 10 minutes.’”

It’s important to note that the federal government itself isn’t growing and is unlikely to grow much in the years ahead, said Stephen Fuller, director of the Center for Regional Analysis at George Mason University.

But that doesn’t mean the government isn’t an economic magnet.

“We still have lobbyists, the Congressional workforce, we still have associations and special interests groups and tourism, of course,” Fuller said. “I think we are somewhat protected here. The federal government is a safety net. It protects us.”

Del. Eleanor Holmes Norton (D-D.C.) said she has been working on developing NoMa for almost a decade. She also hopes the Senate will soon clear for the president’s signature a bill that is necessary to complete development of the Riverfront.

“Once industrial sites, they are becoming the most valuable sites on which to build housing, office, retail and all that goes along with making a new community,” Norton said. “In D.C., we’re excited whenever we see a brand new community sprout up in a city that cannot move up because of height limits and is bounded by the river … and it’s a very, very big deal in terms of revenue for the city.”

Demographics also play a part in explaining why people continue to move to the District to live and work, sparking something of a real estate boom while much of the rest of the country is still trying to recover from the bursting of the real estate bubble.

The baby boomer generation reaching retirement age, Fuller said, is one factor, as older government employees retire and leave positions open that need to be filled — primarily by young people.

Their presence has helped fuel new restaurants and shops that are growing in the area alongside residential and office spaces.

“They don’t cook a lot at home; they like to eat out. … They like access to restaurants and theaters and the lights of the city and the culture,” Fuller said.