Two Indianapolis developers will spend $25 million to turn a portion of a massive downtown office complex into the state’s first Moxy hotel by Marriott as high levels of vacancy in a struggling commercial real estate market continue to plague downtown offices.
KennMar LLC and The Ghoman Group are partnering to convert the top seven floors of the south tower at the corner of Illinois and Ohio Streets. The developers bought the office complex with towers at 201 and 251 N. Illinois St. for $35 million in October through Capital Center Properties LLC, a joint holding company, according to property records.
The Moxy hotel will include roughly 150 rooms in addition to meeting rooms and a hotel bar with a patio, said CEO Alex Ghoman. The overhaul will also add a Bar Louie restaurant and a coffee shop serving Starbucks to the ground level.
Ghoman said developers decided on a Moxy hotel because it will add a different boutique name to the Indianapolis downtown market, which thrives on traditional large-name hotel brands for guests in town for large events or business trips. Moxy hotels have smaller rooms and larger gathering spaces than many other hotel brands, with an emphasis on drawing in a younger demographic with bright neon decor.
“These days people need something untraditional,” Ghoman said. “Moxy is going to stand by itself. That will attract a lot of tourists because they will enjoy something untraditional.”
For instance, at Moxy hotels guests check in at the front desk located inside a bar and are treated to a drink upon arrival. Ghoman said that’s one way he believes the hotel will become a tourism draw.
“This will be the only hotel with check-in at the bar,” Ghoman said.
The Ghoman Group specializes in hospitality projects, having worked on several hotel renovations, including the Holiday Inn Express and Delta by Marriott near the Indianapolis International Airport.
With a 40% office vacancy rate, the Capital Center has felt the effects of work from home that has exploded in the past five years. The trend also severely devalued the office complex, one of the largest downtown. Just six years earlier, the complex sold for $62 million, property records show.
The new owners always planned to convert at least a portion of the building into a hospitality spot, in line with downtown’s hotel boom, Ghoman said.
“We acquired this building knowing, as everyone is aware, that the office market has not come back since the COVID-19 pandemic,” Ghoman said. “Many cities across the country are a headache, and we were aware of the low occupancy of this one.”
After the partial conversion, Ghoman said he expects the office space inside the building to fall to a 10% vacancy rate. KennMar recently moved its own offices to the building, and the Ghoman Group plans to do the same, he said. Current office vacancy in Indianapolis hovers around 21%.
Ghoman said he thinks the hotel will be a draw for the building’s tenants who may have business partners or guests in town needing a convenient place to stay.
“One of the important things is having a boutique hotel that is a Marriott adds so much value to the building itself. These businesses have folks visiting them, so it is easier to do so when there is a hotel in the building,” Ghoman said.
The renovation is in the design process, with final approval needed by the city to start construction. Ghoman said he anticipates the hotel to open in the first half of 2026.