Buzz growing strong for boutique hotel at old City Hall

For years, city officials have looked for an interested buyer for the former City Hall, the vacant, 105-year-old, neoclassical building on the corner of Alabama and Ohio streets, just a stone's throw from the bustling Indianapolis City Market.

Some possible uses bandied about for the once-grand, now-dilapidated building have included a motor-sports museum, a distillery and an innovation center for startup companies.

Now a buzz is growing about the four-story building possibly being converted into a boutique hotel. And a potential buyer whose name keeps coming up: 21c Museum Hotels LLC, based in Louisville.

Several brokers and hotel officials say they have heard that 21c is interested and are excited by the prospect of turning the abandoned old building into something vibrant again.

Meanwhile, the fast-growing company is doing nothing to tamp down speculation that it's giving the building a serious look. It operates three artsy, upscale hotels in Louisville, Cincinnati and Bentonville, Ark. Two more are scheduled to open this year in Durham, N.C., and Lexington, Ky.

Other projects being designed or under development are in Oklahoma City, Nashville and Kansas City.

What 21c does is buy historic downtown buildings and rehabilitate them into a combination of boutique hotels with about 150 rooms and contemporary art museums. The buildings typically have high ceilings, exposed brick walls and lots of high-impact visual contrast between the old architecture and the modern art.

That would seem to be a natural fit for the stately building, whose features include an 85-foot stained-glass dome and grand staircases.

But the 65,000-square-foot building has fallen into disrepair in recent years, with cracked and peeling paint and plaster. Water leaks in an upper-floor office area have damaged flooring and a wall. City officials have said the building would need a costly renovation on the order of $10 million to upgrade steam heating or other utilities and restore an interior that's falling apart in places.

"If they could do that, it would be a neat transformation," said Jon Owens, an office broker for DTZ, a commercial real estate brokerage. "It's an important piece of property."

Owens said that whole side of Downtown is undergoing a renaissance, with work underway for the Cummins office tower and Market Square Tower apartment building on the site of the old Market Square Arena.

"Cummins will generate a ton of vendors and service providers, and they would love to have an interesting hotel nearby," he said.

Phil Ray, general manager of the JW Marriott, with more than 1,000 rooms Downtown, said has heard the 21c Museum Hotel speculation and thinks it makes "a lot of sense."

He called the former City Hall a good location for a boutique hotel, close to the artsy Mass Ave district and other Downtown sites.

"They're the type to do something creative with that building," Ray said.

Since old city offices moved out in the 1960s, the building has had a revolving list of tenants. For more than three decades, it was the first permanent home of the Indiana State Museum. Then, from 2002 to 2007, it served as the interim Indianapolis Central Library while the main library underwent an expansion.

In 2013, the Indiana Landmarks Center hosted an affair in the building to explore potential uses. One of the leading recommendations was to use the hall as a component of a boutique hotel, said Marsh Davis, the center's president.

"We would be thrilled if something along those lines happens," he said on Friday.

The company said it had nothing to announce. But Stephanie Greene, a spokeswoman for 21c Museum Hotels, said the company is looking at lots of opportunities, including Indianapolis.

"We are definitely impressed by what's going on there," she said on Friday. "It would be a fantastic market."

The city, which owns the building, said it has no news about the property. No permits, plans or other paperwork have been submitted by 21c or anyone else, said John Bartholomew, public information officer for the city's Department of Metropolitan Development.

"We continue to consider a myriad of alternatives for old city hall," he said.

Call Star reporter John Russell at (317) 444-6283 and follow him on Twitter @johnrussell99