Historic Southside hotel is also converting 97 rooms into studio units

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.

Gallery: Choo Choo on track to add more apartments