Best Cities 2010: Washington, D.C.

People and companies are relocating to our nation's Capitol and number-three pick for Best Cities for the Next Decade.

Every tourist knows postcard D.C., the city that is home to the White House, the Capitol and all those free Smithsonian museums. But those of us who live in D.C. know better. Our home is chock-full of job prospects, entertainment venues and great neighborhoods, and it is booming.

Blame it on big-government spending or credit Obama mojo, but the federal city is growing. D.C. proper, which now has a population of about 600,000, gained more new residents between July 2008 and July 2009 than in any other one-year period since World War II.

And it’s not just people who are relocating here. Five large companies -- Computer Sciences, Hilton Worldwide, Northrop Grumman, SAIC and Volkswagen North America -- have relocated to the greater D.C. region in the past two years. Fifteen Fortune 500 companies are based in the area, which includes northern Virginia and suburban Maryland. Eleven of the 25 richest counties in the U.S. are located in the region. The area’s unemployment rate is a relatively low 6.7%.

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Only 11% of the D.C. population works directly for the federal government. That said, the Beltway is a hub for large defense contractors, such as General Dynamics, Lockheed Martin and Northrop. Small and midsize businesses blossom here, too, in part because government-contracting rules require the big guys to spread the wealth.The local tech sector has evolved far beyond government contracting. Virginia Tech is building an $80-million technology research center in Arlington, Va., that will analyze the human genome, among other projects. Biotech companies, such as Emergent BioSolutions, maker of the anthrax vaccine, have sprouted along Maryland’s I-270 corridor.

Picture the D.C. region as a lifestyle smorgasbord. You can patronize world-class restaurants, such as Komi, in Dupont Circle, or chow down on Julia’s Empanadas and other cheap eats. Five major sports teams cater to super fans. Rock Creek Park (more than twice the size of New York’s Central Park), the U.S. National Arboretum and the National Mall offer ample green spaces. And there are enough theater productions to fill a library of Playbills.

You’ll appreciate these opportunities for relaxation after battling the region’s notoriously gridlocked traffic, which is admittedly a drag. So is the area’s expensive real estate market, although you do have a wide range of choices of places to live. For instance, you can enjoy condo living in the city’s Dupont Circle neighborhood or nearby Clarendon, Va.; ease into the leafy suburban neighborhoods of northwest D.C., Bethesda, Md., and Fairfax, Va.; dwell in historic homes on Capitol Hill or in Old Town Alexandria; or party in the hipster havens of Logan Circle, U Street and Columbia Heights. A 650-square-foot, two-bedroom condo in Logan Circle near a Whole Foods Market sells for $430,000; a 2,200-square-foot, three-bedroom house in suburban Bethesda goes for $700,000; and you can buy a 3,500-square-foot, five-bedroom brick colonial in Fairfax for $840,000.

VIDEO: Take a Guided Tour of Washington, D.C.

Contributing Editor, Kiplinger's Personal Finance