A downtown building that's been vacant for more than two decades in an otherwise active part of the city's business district has been sold and will be redeveloped into a luxury hotel.

Construction is just beginning on the restoration of the old Melrose Building at 1121 Walker. The property is being redeveloped into a Le Meridien, originally a high-end European chain now owned by Starwood Hotels & Resorts.

The 21-story building was constructed in 1952 and was recently listed on the National Register of Historic Places. The interior will be gutted, while the façade will be made to look as it did years ago.

"We're going to try to restore it to its original '50s vibrancy," said Gary Prosterman, president of Memphis, Tenn.-based Development Services Group, which is developing the project.

The company paid an investor $11.5 million for the 219,000-square-foot building. The total project cost is in the $75 million to $80 million range, Prosterman said.

Designed by Hermon Lloyd & W.B. Morgan and built by Melvin A. Silverman, the property was Houston's first tall building "to be designed with modern architectural attributes," according to the AIA Houston Architectural Guide.

"We are so happy," said Central Houston's Laura Van Ness, whose offices overlook 1121 Walker.

"This transforms this area because it's the last abandoned building in that immediate area," she added, mentioning other properties that have been or are being renovated.

The hotel is expected to have 255 rooms, 8,000 square feet of meeting space, a rooftop pool and a ground-floor restaurant and bar.

The downtown site is small, and all parking will be off-site and handled through a valet. The hotel is expected to open in April 2017.

'Upper upscale'

Air France launched the Le Meridien brand in the 1970s. Prosterman said it's considered an "upper upscale hotel" in the industry.

"The brand really appeals to the business and leisure traveler who wants the best of both a business-class hotel but one that has the fresh, current designs and food offerings that you're going to find in a lifestyle hotel," he said.

Building permits were obtained last week by the Beck Group, a Dallas-based construction and architecture company.

The project received $15 million from the Atlantic American Opportunities Fund, a Tampa, Fla., company that provides financing for real estate developments using the federal EB-5 visa program that offers green cards to foreign nationals who invest in job-creating businesses. The hotel is also being funded by Historic and New Markets tax credits and equity from the developer. The project is also eligible for certain sales tax rebates because it will offer rooms during conventions at the George R. Brown Convention Center.

Tax credits

Prosterman said plans for the project began to move forward earlier this year when his company put the building under contract. The fall in oil prices has been a concern.

"It certainly caused a few folks to pause, on all sides of the transaction," he said. "While none of us would ever suggest that what happens with oil would not impact what's going on there, it will. But we're comfortable that there's enough diversification in the CBD that the project merited moving forward."

Financing the project would have been more challenging, as well, were it not for state and historic tax credits, Prosterman added.