Miami Beach? Even at midday, even with the famous Florida sunshine streaming down, the locals are having trouble understanding what they’re seeing. One recent afternoon on Washington Avenue - arguably now the hippest stretch of shops, clubs and restaurants south of New York’s Canal Street and east of Melrose Avenue in L.A. - Dad-the-tourist in Bermuda shorts and his kids do double takes as a pair of giddy drag queens in fake leopard tops, Riviera sunglasses and drop-dead minis canter by loaded down with shopping bags. Flattered by the attention, the transvestites blow kisses as they sweep away. “Nice, nice, those were some girls,” says a little old man with eyes clearly not what they once were, watching from across the street. “You wish you could be young again.”

Which is exactly what has happened to Miami Beach. The onetime geriatric haven has become the setting for a never-ending movable fiesta. Three quarters of a century after Midwestern head-light-king Carl Fisher pumped ashore 3 million cubic yards of muck to start “the most beautiful city in the world,” Miami Beach - or more specifically, the square mile of 1930s and ’40s art deco hotels and apartments usually known as South Beach - is having a riotous second coming of age. Signs of the revival are everywhere. Deadpan young artists sit in trendy restaurants watching street-side fashion shoots. Hot little hotels have sprung up, as have uncountable clubs of the week; in some the music starts only at 4 a.m. The wide, white beach itself has gone unofficially topless. French and German tourists sip champagne and pina coladas at white-clothed tables outside reclaimed crack houses. Blame party-set New Yorkers bored by the Caribbean, or sun-starved Europeans with cheap dollars to burn. This is downtown Manhattan with palm trees, a Soho by the sea. “Not even Los Angeles has this much real urban fabric - people living, working, eating and playing all in the same place,” says Miami architect Andres Duany. “It’s fantastic what’s been happening here.”

At 2:30 in the morning on the sidewalk outside Boomerang, the fashion crowd’s hangout of the minute, stands a nice kid with glasses still trying out a new name. Buck Lunch says he is 22 and drove over from Nacogdoches, Texas, nine months ago “because I want to be famous.” He is wearing a coonskin cap and carrying a red-plaid lunch box. “The Beach is hot, and the Beach is cool,” he says. “And every week someone keeps turning up the volume.”

They started at just about zero. Until its “rediscovery” in the mid-’80s, Miami Beach had gone about as far out of fashion as possible. It was old: the 1980 census ranked it with St. Petersburg as the wrinkliest city in the nation - more than half of its 100,000 residents were over 65. Moreover, South Beach in particular was shockingly poor. Some 20,000 retirees were living out their golden years, the worst-off crowded four to a cheap hotel room, on social security, a lawn chair and a prayer. Rounding out the mix were several thousand of Cuba’s least desirable ex-criminals, who arrived with the April 1980 Mariel boat lift and established a reign of terrifying robbery, drugs and murder that persisted through much of the decade.

One person - a local art deco enthusiast named Barbara Baer Capitman - almost singlehandedly saved South Beach from the bulldozers. Capitman, who died last year at 69, formed the Miami Design Preservation League and had most of South Beach added to the National Register of Historic Places as the Art Deco District, encompassing 800 buildings. This was a little pastel lie: the local style is actually a whimsical melange of Bauhaus and art moderne. But “art deco” sounded better to the public and the politicians whom she cajoled and sometimes sued until they agreed to a full architectural-protection code.

Trendy refugees began arriving around 1985, just as South Beach was simultaneously invaded by European high-fashion photographers in search of a fresh backdrop and dependably good year-round weather. Tony Goldman, owner of Greene Street Restaurant in Soho, found himself with an hour to kill on his way to the airport from Coconut Grove one afternoon. “I drove over the causeway, made the left turn off Fifth Street onto Ocean Drive, and fell in love,” recalls Goldman, who bought his first hotel in December 1985, then 14 other properties in 1986. Restaurateur Gary Farmer, a veteran of Odeon and Indochine in New York, opened the Strand, now the local landmark dinner spot, in December 1986. It didn’t hurt that real-estate prices were ridiculously low by New York standards: $400,000 bought a 45-room oceanfront hotel. Even today, redone deco apartments in fashionable Flamingo Park can be had for $40,000 - a fact not lost on a more serious crowd of New York weekenders, who fly in on air fares that have dipped as low as $138 round trip.

New York gallery owner Robert Miller came down because “one of our artists, Roberto Suarez, had taken a storefront on Washington Avenue and was living and painting there.” Two years ago he saw his spectacular ocean-view apartment and bought it on the spot.

Since then, the terminally hip in Miami have developed a food chain of their own. “The models bring in the Eurotrash, the playboys,” says Luis Canales, who runs the fashionable South Beach piano bar Semper’s. “And the playboys in turn attract older women with money. But the real party crowd goes wherever they hear it’s happening next, and right now it’s Miami Beach.” How long it will last is anybody’s guess, but some of the recent arrivals are settling in for the duration. “I had a house in Bridgehampton, a really lovely place, but the Hamptons changed in ways I wasn’t crazy about,” says New York designer and food writer Lee Bailey. “This is a place that’s starting over. And it should last in its present condition at least as long as I will.”