One of Chattanooga's biggest and best known hotel and entertainment facilities will soon make way for downtown's biggest apartment complex.

The Chattanooga Choo Choo plans to relocate its popular Track 29 concert venue next year to its Centennial Theater to open up more than 7 acres along Passenger Street for the development of 300 or more luxury apartments on the Southside of downtown.

The popular hotel, restaurant and entertainment complex is already converting 97 of its hotel rooms into studio apartments in one of its three hotel buildings. Adam Kinsey, the newly named president of the Choo Choo, said the Choo Choo wants to sell nearly one fourth of its 24-acre layout for another developer to build more upscale apartments to meet the growing demand for Southside rental housing.

"We have a lot of vacant land that is now just used for parking and is ripe for development," Kinsey said. "There is a huge demand for rental housing downtown and on the Southside and this is a prime site near the growing entertainment district in Chattanooga. So we're going out and trying to find the right partner to do a real upscale apartment complex."

The new apartment project, which Kinsey estimated could bring $40 million of investment into the central city, is among nearly $200 million of new and proposed housing projects in and around Chattanooga's downtown. If all the proposed projects are built, more than 1,500 more apartments and college dorms could be added to Chattanooga's downtown housing stock in the next couple of years, doubling the number of downtown rental units.

A housing study done last year for the River City Co., by Robert Charles Lesser & Co. Real Estate Advisors projected there is an annual demand for up to 905 more housing units in Chattanooga's downtown, including at least 500 more apartments every year. The study concluded that the biggest demand for market rate apartments will be in the $700 to $1,000 a month range, although there is also a demand for some higher-priced units from empty nesters and other professionals wanting to live downtown.

Photo Gallery Choo Choo on track to add more apartments View 10 Photos

"People of all types are wanting to move into our downtown and this site is especially appealing in the redeveloping Southside," said Jon Kinsey, the former Chattanooga mayor who is a principal owner of the Choo Choo.

Marcus Lyons, a vice president for Berkadia Real Estate Advisors LLC in Chattanooga, called the site "a trophy property" within walking distance of downtown offices, shops and the city's emerging entertainment district.

"We'll be marketing this on a national platform to developers all over the country because this is truly a unique and great opportunity for a high-end apartment project," Lyons said. "This site deserves a special partner; one who will appreciate the location, the history, and the landmark known to many who have visited Chattanooga at some point in their lives."

The change is the latest in the redirection of the Choo Choo over the past couple of years. The historic railroad depot was reopened as a hotel and restaurant complex in 1973 and through most of its history was walled off from its neighbors. But with the recent redevelopment of Main Street and the Southside, the Choo Choo is returning to its original layout with new entrances planned along 14th Street and new development along the backside of the Choo Choo along Passenger Street.

The Choo Choo is already converting some of its former restaurants, shops and kitchen areas into space for new upscale restaurants, nightclubs and the relocated Comedy Catch. A new concert venue, known as the Revelry Room, and two new restaurants, including the new Hush lounge, are scheduled to open by September along 14th Street near the Choo Choo's Market Street entrance. Another upscale restaurant will be added by November and at least two other nightclubs and restaurants are being built by other restaurateurs within a couple of blocks of the Choo Choo.

The biggest venue at the Choo Choo, Track 29, was added in 2011 when the Choo Choo converted an old ice skating rink into a 1,700-seat concert hall. Monica Maples Kinsey, who manages Track 29, said the popular concert venue will remain a key part of the entertainment district in its relocated location in the Centennial Theater in the Choo Choo convention complex.

A map shows the Chattanooga Choo Choo hotel complex.

Kinsey said Track 29, which draws more than 100,000 patrons a year, will stay in its current 22,000-square-foot site through the end of 2015 and won't relocate until a new and similar-sized venue is built in the renovated theater site.

"It will still be known as Track 29, but at its new site it will be located closer to our entrance and the parking garage," she said. "We think that will provide a better overall experience for our guests — both patrons and artists."

Ashley Capps, head of A.C. Entertainment which has booked concerts at Track 29 since its 2011 opening, said the 1,700-seat venue "has helped put Chattanooga on the map" in booking many artists and attracting bigger crowds than in most nightclubs in a more intimate atmosphere than larger arenas or auditoriums.

"Having Track 29 in Chattanooga has been an incredible blessing for developing the music and cultural scene in the town," Capps said. "I love the new building they are moving into. I think it offers an incredible opportunity for continuing to build on what Track 29 has accomplished so far. It feels like a great move that will really complement all that is going on around that area."

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340