It is the home of designers, artists, hipsters, writers, and dreamers alike. And for those of us not fortunate enough to live in this charming-while-grungy part of town, we walk its streets and admire all the unique boutiques, escaping the high street chains for a little while...
Nest (Plaza San Ildefonso, 3) is probably my favorite little gift shop in this area. Hand-made cards, jewelry, and random, colorful objects are all unnecessary but incredibly fun for your best friend's birthday present.
There are tons of vintage stores in the neighborhood, mostly clustered on Velarde street. My favorite by far is Biba Vintage (Calle Velarde, 1). The owner has amazing taste, and their collection of black, doctor bags is enough to make you want to sign up for med school.
Another vintage place, just up the street, is great for deals as they usually have bins full of items for under 10€... You know, for those of us really on a budget. Magpie (Calle Velarde, 3) sells pretty much everything visible in the store - except for the neighbor's bike who leaves it there for decoration/storage purposes.
I have a soft-spot for beautifully decorated stores... And Divisa (Calle Hortaleza, 102) is not only a boutique carrying unique Scandinavian lines and an eclectic mix of romantic dresses, but is also a pretty store to just look at. The owner is incredibly friendly, and ready to give you advice (an attribute extremely rare for sales assistants in Madrid!).
[Photo credit: all images are mine unless otherwise stated here]