Eddie Lane sits in the DJ booth at Choice Gentlemen's Club in Minneapolis and scrolls through pictures on his smartphone. There's his 12-year-old daughter, then cakes from his side business as a baker — a tiered baby-shower cake, all blue ribbons and bows, a red Elmo from "Sesame Street."

Lane spins a dial and Duran Duran's "Planet Earth" gets louder, although the club's shiny black stage is empty. Above his head, security cameras show a desolate front entrance, a vacant parking lot and the black-and-white feed from a VIP room where a dancer grinds atop a seated customer, the only one in the house.

To call it ironic that Lane beams with pride over his family and cutesy cake designs while DJing at one of Minneapolis' fully nude strip clubs would be an understatement. Outside Choice's front door, too, there is a collision of two worlds, one wholesome and family-oriented, one risqué and shrouded by dim lighting.

Video (32:30)

It's the story of the North Loop, the city's hottest neighborhood, which is undergoing a residential renaissance while living out its days as a zoned adult entertainment district.

What might seem to be a tense brew of high-paying condo dwellers and the city's titillation industry hasn't boiled over. Instead, the two worlds seem content to share the same streets — so far.

"It's been a pretty peaceful coexistence," said David Frank, president of the North Loop Neighborhood Association.

Lane, general manager at Choice for nine years, has worked in adult entertainment venues all over the country, and nowhere has he seen what he sees here: a residential neighborhood and an adult district not just butting up against each other but cohabitating. Over the nasal "da ba dees" of Eiffel 65's "Blue," he said, "the neighborhood grew into us."

But the high-end needs of a fast-growing, upscale residential community could strangle out what's left of the adult industry.

One mainstay, Sex World, recently announced a major downsizing. Audiences at Choice and Deja Vu, the North Loop's two nude strip clubs, can be sparse, even on Saturday nights. Some of the downtown clubs that make up Minneapolis' slice of the nation's adult entertainment industry have been folded into large corporations in recent years.

As the local sex scene shrinks, the number of North Loop residents grows.

The population has exploded since 1980, rising three times the rate of the metro area as a whole. And the young professionals who move here tend to stay put after they have kids, a reversal of decades of suburban flight by new parents. While people once flocked to these streets for lap dances and stripper poles, family-friendly real estate is increasingly the commodity they seek.

Sex sells, as the saying goes, but so do playgrounds and good brunch options.

A view from the street

Many "birds and the bees" conversations start on the sidewalk on Washington Avenue N. in the North Loop.

Laura and Daniel Mays often walk down this strip on their way to Whole Foods with their 4-year-old son, Asher, and their 1-year-old twins, Trygg and Annika, in a dual stroller. They haven't had to have "the conversation" just yet, but Asher has noticed all the neon.

"He is old enough to say, 'Mommy, what's that?' " Laura said. "He sees the blinky lights when we walk by, but to him, it's just another storefront. He's never asked."

Like a growing number of the young professionals who picked this area for its walkability and access to downtown arts and culture, the Mayses decided to stay in their two-bedroom loft after having kids, rather than relocate to the suburbs. Part of that decision, they say, is the acceptance of everything urban living has to offer, including the not-so-family-friendly elements.

During their 10 years here, Laura and Daniel have stepped into the clubs from time to time, including the now-defunct Sinners Gentlemen's Club, where they went after their wedding reception. But with three kids, the days of popping into clubs have passed. Now, living amid the adult entertainment industry, said Daniel, "it's not even something we think about or consider."

The adult businesses do their part to try to control what families see from the sidewalk. On Twins game days, when families walk past Choice to and from Target Field, manager Lane makes sure that dancers on smoke breaks stay clear of the front of the building.

"I'm just a protective parent," said Lane, who dwells in Edina. "To live down here? Myself, I hate the city."

A newfound vibrancy

When it opened 30 years ago, Sex World — with its live dancers and mechanical penis ride — immediately became a landmark in what was a desolate stretch of Washington Avenue N.

Back then, the area was inhabited by a handful of residents, mainly artists in cheap housing. The city of Minneapolis had zoned the district for adult businesses in an effort to keep them out of other, more rapidly developing neighborhoods. Deja Vu, owned by adult entertainment entrepreneurs who had been cast out of St. Paul, opened in 1989. Choice and Sex World opened their doors soon afterward.

To this day, Sex World is useful for giving out directions: Just look for the huge red neon X's, which the business successfully fought to mount on its historic facade.

Last year, the building was sold to developer Falcon Ridge, which agreed to keep a small version of the store. Most of the square footage on the prime corner of 2nd and Washington avenues N. will become office and retail space.

Falcon Ridge's William K. Hoeg said he wants the building to reflect the newfound vibrancy of the district. "We're just one of the important dominoes for the neighborhood, and we're trying to activate what we think is the most important corner," he said.

Since the announced downsizing, there have been rumbles that the adult district has reached its twilight.

Frank, the neighborhood group's president, sees Sex World's downsizing as a casualty of massive residential and retail growth in recent years.

"Only in the North Loop are property values going up enough that it is no longer as profitable to operate an adult business as it is to renovate and put it to other uses," he said. "That's kind of a moment."

Not only are there more residents, but they are wealthier than ever. The median household income in the northeast quadrant of the neighborhood — the longest inhabited — rose from $43,882 in 1980 to $110,203 in 2013, adjusted for inflation.

"We're hardly this fringe neighborhood anymore," said Fritz Kroll, an Edina Realty agent and head of the neighborhood group's livability committee. "I'm surprised that this hasn't been moving more quickly with the transition of these businesses to more conventional or mainstream businesses."

The assumption that adult businesses hurt property values doesn't seem to apply here. Many neighborhood leaders say the adult businesses run a "tight ship." They keep sidewalks clean, have security and keep lights on in buildings that had for too long been dark.

"They have the best vending machines," said Laura Preston, who lived across the street from Sex World until her rent doubled last year. Preston said she thought of Sex World as "great neighbors," especially because the bouncers provided 24-hour eyes on the street, and because snacks, smokes and other conveniences are available at all hours.

That's not to say all of the neighbors have embraced the strip clubs and novelty stores. Plans to add another topless bar about 10 years ago were met with "pitchforks," Frank said.

But the overall attitude is one of resigned acceptance — and, in some cases, a touch of pride.

"Maybe it keeps narrow-minded people out of downtown," said Joe Grunnet, a broker with Downtown Resource Group and a North Loop resident.

City Council Member Jacob Frey, who pushed to establish an elementary school in nearby Northeast for the growing number of children in his district, said he rarely gets complaints from constituents about the adult businesses. In fact, when Sex World's downsizing was announced, "I got quite a few calls from people concerned that they were leaving altogether."

Adult entertainment economics

It's after dark on a Wednesday, and Choice owner Tom Hoskamer sits at a table in a club that's still mostly empty. He wears a tan Stetson-style hat and a denim shirt unbuttoned to his belly; a gold chain hangs from his neck with a pendant that gets tangled in his chest hair. His entertainers cluster around a high-top and eat dinner from takeout containers. No one dances.

Hoskamer opened the place in 1993. He wanted a jazz club, but he didn't think the business would survive. So, he went with a nude strip club. Now he thinks a restaurant akin to his favorite, nearby J.D. Hoyt's, would do well. "If I was doing that now, we'd be full right now," he said.

He isn't too worried that the club is so quiet tonight. Most of the money is made from a stable of high-spending clients, regulars who come in for one-on-one time with a certain dancer the way hairstylists draw their own clients to a salon. Just one regular spends enough in two days to pay the property taxes on the place, said Lane, the DJ and manager.

But the economics of the industry are changing. "The Internet is killing us," Lane said.

A dancer who goes by the name of Buena takes a spin on the pole to a Justin Bieber tune, but only Hoskamer and his girlfriend are watching. Her long braid whips around her body; her neon yellow shorts, plastered with the words "South Beach," glow under the black light as she flips upside down.

She has danced here for 10 years, during which time the rapid changes outside of Choice's doors have transformed her workplace.

"The hipsters are taking over," Buena said. "Everyone is organic, healthier." She pointed to the nonalcoholic bar stocked with iced teas and Mexican Coke. "We have juice and stuff."

Buena is herself embedded in hipster culture. When she's not working, she likes to go to Red Cow, the high-end burger joint across from Whole Foods. The Edina native lives in Northeast, another cool Minneapolis neighborhood. In the past year, she launched a food truck that sells fried pies at farmers markets and festivals. Her dream is to get a spot at the State Fair.

"My friends from Edina have been waiting for me to do something normal that they can endorse," she said.

As the night ticks on, the main stage remains quiet. A middle-aged man comes in and quickly moves to a leather sofa in a backroom for a lap dance. Another guy, white-haired, chats with a stripper at the bar. No one dances.

"It's not what it used to be," Hoskamer said from his spot in the one-man audience. "Yet we're still plugging along."

Sharyn Jackson • 612-673-4853