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By Jodi Schwan

The historic office building that used to be the headquarters of Great Western Bank is becoming Hotel Phillips, an upscale boutique hotel.

Kelly Phillips Ventures LLLP, which was formed by Kelly Inns Ltd., bought the property at 100 N. Phillips Ave. and has grand plans for it.

“We want to keep the historic charm and grandeur of the building,” Kelly Inns president and CEO Brenda Schmidt said. “With Phillips Avenue on the front and the Big Sioux River on the back, it’s a perfect location.”

Hotel Phillips will be a 92-room independent hotel with amenities unlike any property in Sioux Falls, starting with what Kelly’s director of development Tom Morris calls “a very elegant lobby” that includes a 24-bolt vault with a 16-ton door. The 100-year-old building began as a bank, and the hotel renovation will incorporate the vault.

“The vault will stay. The columns around it will be redone in wood,” he said. “And we’ve pulled back the flooring, and in a portion of the lobby it’s marble, so we hope it’s intact and can be reused.”

On the east end of the lobby, the plan is to create a lounge that will be open to the public and include a bar with a menu of appetizers and small plates. A kitchen will be built on the first floor and also support a coffee shop with specialty drinks and a light breakfast menu.

The second-floor mezzanine level will include a library for guests, a fitness center, spa and a social room that can seat about 50 people looking out on the river.

Guest rooms will be on floors three through nine. Each room will include a wet bar, wine cooler and fridge, glassware, robes and smart TVs. Ten luxury suites will include additional amenities.

“We want to create an experience for guests like nothing else in Sioux Falls,” Schmidt said.

Perspective is the architect, and Journey Group is the contractor. Kelly Inns will operate the property in addition to its portfolio of 23 hotels in nine states.

“This will be unique,” Schmidt said. “Boutique hotels by their nature are unique. And there are more and more in our industry, especially in growing metro areas. We’re excited to bring this to the heart of a city that is seeing such fabulous growth.”

The company foresees a mix of guests, from corporate travelers to couples looking for a downtown getaway to enjoy on the weekends. There is some parking included with the building, and valet service is planned to accommodate additional needs.

“It will be that place, when people outside Sioux Falls visit Sioux Falls, that friends will say, ‘You have to try Hotel Phillips,’ ” Morris said.

The hope is to open in December 2018.

Kelly Inns looked at several downtown buildings but needed one that could accommodate at least 80 guest rooms, Schmidt and Morris said.

That option became available after Great Western acquired the parent company of Home Federal Bank and moved its corporate offices into Home Federal’s downtown building.

Cutler Law Firm, the other main tenant in the building, is moving to the fourth floor of nearby Equity Square early next year.

The listing drew “a flurry of activity,” said Reggie Kuipers of Bender Commercial Real Estate Services, who co-listed it.

“It’s an iconic building on a landmark site, and I think they will do it right, and it will be really exciting to watch it take place,” he said.

“My gut says it will be the nicest hotel in Sioux Falls.”

The deal marks the second major building sale on Phillips Avenue in the past month. The Beach Pay Building was sold to investor Kevin Tupy and also generated significant interest.