|By Josh Flory, The Knoxville
News-Sentinel, Tenn.McClatchy-Tribune Regional News
Aug. 21, 2012--A new hotel is in the works for an undeveloped lot at the corner of State Street and Church Avenue.
Atlanta-based Paramount Hospitality Management recently purchased the site for $1.1 million, and company president Nick Lakha said Monday that his firm is planning a 120-room Residence Inn by Marriott.
Lakha said Paramount is currently in the preliminary planning and design phase, but he expects the structure to include a three-story parking deck that begins on the ground floor. The hotel lobby would also be on the ground level.
The site purchased by Paramount was formerly home to the News Sentinel, but was acquired by the city when the newspaper moved to the Mechanicsville neighborhood. It was later acquired by Knox County, and in 2007 a group of local investors announced plans for a 21-story, mixed-use project called Sentinel Tower. That project -- which had no connection to the News Sentinel -- was abandoned in the face of the economic downturn.
Lakha said his firm plans to start construction in six to 12 months. "The whole revitalization of Gay Street was one of the reasons that we looked at the site," he said.
While downtown Knoxville has seen a resurgence of development activity in recent years, it has mostly centered on the rehabilitation of old buildings rather than new construction. The Devon Group gave up on Sentinel Tower, while developer Nick Cazana eventually backed away from plans for Metropolitan Plaza, a mixed-use project on Henley Street that was slated to include a boutique hotel.
It's been more than six years since a new hotel opened downtown. An 85-room Hampton Inn & Suites opened at the corner of Henley and Main streets in 2006, while the 130-room Cumberland House Hotel, in Fort Sanders, opened in 2005.
There has been significant renovation activity, though, including work at the Holiday Inn World's Fair Park, on Henley Street, and a major redevelopment of the Oliver Hotel, a boutique hotel on Union Avenue.
Gary Prosterman, president and CEO of Memphis-based Development Services Group -- the managing partner of the Cumberland House -- said his company is happy with that hotel's occupancy, but added that "if you're an owner you would like to be able to have a little higher rates than what we're getting in downtown Knoxville."
The Atlanta-based firm that's planning to develop the new Residence Inn isn't a newcomer to the Knoxville market. Paramount also is redeveloping a building on Lake Avenue which is slated to become a 112-unit Hilton Garden Inn. Lakha said the planned opening for that project is in March or April.
(c)2012 the Knoxville News-Sentinel (Knoxville, Tenn.)
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