One of Memphis’ oldest Downtown buildings is getting a modern motel makeover.

The historic Dermon Building, located at 46 B.B. King Blvd., will be transformed into a 150-room Holiday Inn Express. On Tuesday, Sept. 12, the Center City Revenue Finance Corp. board awarded developer Dermon Building OZ a 10-year payment-in-lieu-of-taxes (PILOT). The Center City Revenue Finance Corp., is an affiliate board of the Downtown Memphis Commission (DMC).

"We really want to bring the project back to vibrancy and be a beacon for 50 years," Nick Patel of Dermong Building OZ said.

Dermon Building OZ consists of Nick Patel and Sam Patel. Dermon Building OZ bought the property in September 2022 for $1.5 million. The company also purchased the adjacent parking lots along Court Avenue for $1.75 million, according to the Shelby County Register of Deeds.

The proposed Holiday Inn Express will have two entrances along Court Avenue and B.B. King Boulevard along with an active ground floor concept, DMC senior vice president of planning and development Brett Roler said. The hotel will utilize the adjacent lots for a 25-vehicle parking. All other parking will be allocated to the garage at 156 Court Ave.

In August 2022, the pair were previously awarded a 12-year PILOT by the board for proposed renovations that would’ve converted the Dermon Building into a 103-unit mixed-use space. With the new PILOT approval, those previous plans are void.

During the meeting Patel said while they looked at multifamily uses for the hotel initially they realized their expertise was in hospitality and they were more comfortable bringing the building back online through a hotel concept.

"We're excited about this project because this group are hospitality professionals," Roler said.

Both Patels are also part of the development group behind the six-story, 145-room hotel project at 380 Beale Street project. In 2018, the Center City Revenue Finance Corp., awarded a 15-year PILOT for the Beale Street development and later approved a financing extension in 2019. During the meeting, Center City Revenue Finance Corp. board member Sean Norris asked how the former project was coming along and if financing for the Dermon Building would be any different.

Nick Patel said the Beale Street project is ongoing and continues to take shape including the addition of a rooftop bar and other amenities that have made it into a more mixed-use project. In regards to the Dermon Building the developers have already received letters of intent from two banks (contingent on PILOT approval), Patel said.

The proposed Holiday Inn project is expected to cost an estimated $22.34 million. Construction is expected to begin in early 2024 with a tentative opening date in 2025. The project is expected to generate over $490,000 in taxes over its ten-year PILOT period. The hotel is expected to generate over $2.2 million in gross operating profit annually, according to staff reports.

The Dermon Building dates back to 1925 and is listed on the National Register of Historic Places. Memphis-based CNCT design is the architect for the project.

Neil Strebig is a journalist with The Commercial Appeal. He can be reached at neil.strebig@commercialappeal.com, 901-426-0679 or via X/Twitter,@neilStrebig

This article originally appeared on Memphis Commercial Appeal: Downtown Memphis Dermon Building set to become Holiday Inn Express