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A pair of Indianapolis developers plans to spend up to $30 million to convert a portion of a massive downtown office complex into a Moxy hotel.
KennMar LLC and The Ghoman Group expect to begin converting part of the 648,000-square-foot Capital Center property later this year, with plans to open the hotel by mid-2027.
Capital Center, downtown’s fourth-largest office complex, is comprised of a 17-story tower to the north, at 251 N. Illinois St., and a 22-story south tower at 201 N. Illinois St. The buildings, completed in 1986, are connected by a glass atrium.
The hotel, which will be located on the top seven floors of the south tower, will be operated by Ghoman under the Moxy brand that is owned by Bethesda, Maryland-based Marriott International Inc. It is expected to have anywhere from 120 to 130 rooms and use around 90,000 square feet of currently vacant office space.
IBJ reported on the possibility of a hotel development in Capital Center last October.
The hotel is part of a larger overhaul planned for portions of Capital Center over the next two years, with the companies planning to spend as much as $45 million during that period, including the cost of developing the hotel. The anticipated investment follows their purchase of the office complex for $35 million last October, through joint partnership Capital Center Properties LLC.
The property’s tenants include Sponsel CPA Group LLC, Fifth Third Bank and accountants BKD LLP, as well as the Indiana Supreme Court.
The complex was listed for sale in December 2023 by Chicago-based Zeller Realty Group, which owned it through a holding company, following talks with its lender, two IBJ sources said last year. Zeller had purchased the two-tower property in 2018 for $63 million.
Brent Benge, CEO of KennMar, said that although his firm and Ghoman explored various hotel brands for the project, they ultimately decided that Moxy was “the best fit” for the property. A brand (or “flag”) of global hotelier Marriott, Moxy is generally associated with younger travelers, as it offers smaller rooms and larger social spaces, and currently doesn’t have a location in Indiana.
Previously, Moxy had been announced as part of a dual-branded project planned by Carmel-based REI Real Estate Inc. and Merrillville hospitality company White Lodging for a parking lot at 125 S. Meridian St. The project would have been split between Moxy and AC Hotel, another Marriott brand.
However, the project never took off due to the coronavirus pandemic, and the firms have since canceled the project. The licenses for Moxy and the AC brand reverted back to Marriott.
A pair of elevators in Capital Center’s south tower will be dedicated to the Moxy. All of the complex’s elevators are being modernized through a $4 million upgrade.
Benge said in addition to the hotel, Capital Center Properties LLC also has secured a licensing deal for a Bar Louie restaurant on the ground floor of the north tower. The restaurant is expected to span about 5,000 to 6,000 square feet.
The firms also plan to add an unidentified second coffee shop and to update the center bar area to cater to hotel guests and office workers. Those and other improvements for office tenants are expected to cost about $10 million.
Benge said the complex currently is about 53% occupied, meaning that about 300,000 square feet are vacant. Adding a hotel will help reduce vacancy to around 200,000 square feet.
Benge said he thinks a hotel is a “perfect fit” for the building, because it will give Capital Center consistent activity beyond office users, making it a 24-hour property.
He said while the hotel is poised to come online alongside several others over the coming years, he thinks its price point and close proximity to Monument Circle—as well as other downtown attractions like the Indiana Convention Center and Gainbridge Fieldhouse—will make it a welcome addition for the market.
Currently, downtown has just under 8,800 hotel rooms, with the two most recent, Aloft Indianapolis and The InterContinental, opening late last month.
IBJ reported last month that seven hotels with a total of 1.056 rooms have opened downtown in the last five years, and that there are 12 more hotels currently under construction or in the planning stages.
“We’ve big believers in downtown, and there’s just a lot of great things happening right now with the potential for Major League Soccer, and our other professional sports teams,” Benge said. “The city is going to do great things, and all of that is going to help attract even more convention business. So we’re putting our capital where a lot of other people are, which is in downtown Indianapolis.”
KennMar and The Ghoman Group have enlisted the Indianapolis office of Chicago-based brokerage JLL to market the office property and manage leasing.
Construction on Capital Center was completed in 1986 by Carmel-based developer R.V. Welch Investments. The towers were designed by Indianapolis firm Browning Day Mullins Dierdorf.
An architect for the hotel conversion has not been selected.
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But, downtown Indianapolis is a dying, crime ridden, scarred by riots years ago place. At least that’s what some on this site would have us believe. Why are businessmen spending all this money developing more hotels? Do they know something others may not know?
The people that act like downtown is so terrible never go and stick to their suburbs.
Seems like downtown is becoming over-reliant on hotels and the events industry.
Would be thrilled to see some more office-housing conversions. Hotels feel like diminishing returns; it’s time for the pendulum to swing the other way.
It’s a matter of finding the sweet spot of how many hotels are needed. One reason Indy was in jeopardy of losing some of its biggest conventions and sporting events like the NFL combine is lack of hotels. Other cities like Nashville, ATL and Vegas are fighting to lure events from Indy. So the city has to compete to keep conventions and sporting events. Indy is even losing the BIG TEN college football championship as well. Yes, Indy is a convention and sports city and rely on it to attract tourism. Nobody is coming to Indy just to sight see. It would help if the city had other major attractions like a huge water and amusement park as well as a downtown casino. Convention goers need something to do after attend an event other than going to a typical restaurant downtown.
The events industry is what Indy has, ever since the Great Inland Sea of the Cambrian era went away. Otherwise, its watching crops grow, and be harvested, and empty fields. Please don’t get me wrong…I love living in Indy. But people don’t generally come here for the outdoor recreation. No Mountains, no Great Lakes, no sea shore. Eli Lilly and other major manufacturers are loath to allow tourist groups in their offices, labs, and plants.
What Indy does really well, and better than most, is events. Sporting events, car shows, game conventions, conventions generally. If we could get more direct flights, it would be better…hard to get to Indy from the east and west coasts on direct flights.
So build the hotels, and bring on the big conventions. Taxes are paid, employees are paid, and the city benefits.
Yep Kevin, a little more retail downtown, and a little more to do — casino would be a good start, maybe a water/amusement park with indoor-outdoor all-seasons components — if not downtown, somewhere in the city proper or the burbs. The amusement park is one entertainment element that I’ve heard several people, especially with younger children, say is a big missing piece for Indy. Ever been to Copenhagen? Tivoli Gardens is really accessible and right in the heart of the city. I know, lots of wishful thinking. *I think there was a day a Tivoli-like space was a part of the early vision of White River State Park.
Spicey Take: Let’s finish Pelli Clarke Pelli’s unfinished “Indiana Tower!”
I thought the original plans for a hotel in this building conversion as reported in IBJ on October called for it to be “luxury.” Moxy is not luxury. It’s at the lower end of Marriott brands. I do agree with the amusement suggestion. At least a Ferris wheel in White River State Park?