A boutique hotel will soon begin to rise on a downtown Anchorage block that’s now home to the bus terminal and parking garages, sprucing up the site and supporting the growing tourism industry, project organizers say.

Hotel Indigo, a national chain, will operate the 178-room, aviation-themed hotel along Sixth Avenue between G and H streets. The 13-story building will be the first major hotel construction in Anchorage since the Anchorage Marriott Downtown was built in 1998, tourism officials said.

Construction is expected to begin in May and finish in mid- to late 2021, organizers said.

To speed up construction, rooms for the $60 million project will be pre-built in China. They will be shipped by barge to Anchorage, complete with furniture, art, plumbing, electrical and heating features — everything but the tourist, joked Monica Sullivan, one of the building’s designers.

The building will also feature 32 one- and two-bedroom apartments, which will also be pre-built in China. Plans also call for a ground-floor restaurant, meeting space and other amenities. It’s a short walk from the Alaska Center for the Performing Arts and the Dena’ina Civic and Convention Center.

Ideally, the hotel will create a “domino effect” that spurs other property improvements in the area, said Andrew Halcro, director of the Anchorage Community Development Authority, the city agency that owns the block.

“The development will add new property taxes to the tax rolls,” Halcro said. “It will provide a hotel product that doesn’t exist in the market. And we believe it will revitalize that entire city block.”

Mayor Ethan Berkowitz said he hoped more people living in downtown Anchorage will help make the area "a safer, more vibrant place.”

“This is part of the momentum we’ve had in terms of adding residential units to downtown and making sure there’s more economic vitality there,” Berkowitz said.

Officials said the apartments would be offered at market-rate prices but declined to give specific figures for how much it would cost to live there.

For years, the bus terminal, a large indoor public space where anyone could warm up, was a magnet for public drunkenness, drug-related activities and unruly behavior, Halcro said.

But the Anchorage Community Development Authority has worked to improve the site, in part by closing off “nooks and crannies,” Halcro said. It also pushed social service groups to move elsewhere because the location wasn’t proving to be a safe environment for them to operate.

Their exit hurt the agency’s lease income. In 2017, it sought bids for redevelopment.

“At the end of the day, it was like, ‘This building is totally broken,'” he said.

David Irwin of Irwin Development Group pitched the idea of a housing-hotel mix to the city agency and won the bid, said Melinda Gant of the authority.

EKN Development Group, a real estate firm from California, is also an investor.

The Indigo hotel chain is known for high-end accommodations, Halcro said.

“I’ve never been to one, but I hear (Indigo hotels) are very nice,” he said.

Project organizers last week filed an initial application with the municipality, launching the permitting process for zoning, said Francis McLaughlin with Anchorage’s planning department.

The building will be anchored against and supported by the eight-story EasyPark parking garage that’s run by the authority, Halcro said.

That garage, and the smaller EasyPark garage on the block’s south side, will remain, officials said. Tenants and guests in the new building will boost use of the parking garages.

The People Mover administrative space and customer service area will be downsized after a temporary relocation during construction. After the work ends, buses will continue to line up on the street.

The city has about 8,500 hotel rooms, but Alaska tourism is growing, according to Jack Bonney, community engagement director at Visit Anchorage.

“The demand is there," Bonney said.

The authority won’t charge rent for the building’s first three years before payments kick in, Halcro said.

The project will add more than $2 million annually to the city’s property and bed tax revenues for 30 years, according to an estimate provided by the authority.

Canadian company Stack Modular will build the prefabricated rooms, known as modules, in Shanghai, China, officials said.

Designers, engineers and others have been working on the project for more than two years, organizers said.

The parking garage will be strengthened to resist earthquakes as it supports the hotel. Modular units will be specially built to protect them against earthquakes.

“It’s one of the most complex projects I’ve done,” said Sullivan, with RIM Architects.

The modules are being built in China because no modular company in the U.S. could meet the project’s requirements, said Samuel Barber, project manager with Roger Hickel Contracting, which will lead construction.

A steel frame will be built in Anchorage to support the modules, Barber said. The units will be stacked using cranes and then locked together.

Modular construction is gaining interest in the U.S. after successes in Europe and Asia, he said. A 21-story modular hotel opened in New York City in 2018.

Specialists in Alaska will tie together the plumbing, electrical and heating systems.

“To be clear, 60 percent of the work is done locally,” Gant said.

An estimated 160 jobs will be created in Alaska during construction, the authority said.

The project is expected to go before the city’s planning and zoning commission in April.