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The First Federal Building in downtown Roanoke, which currently houses Pinnacle Bank, has been sold to a company that is considering turning the property into a hotel or offices.

A Virginia-based hospitality company purchased the First Federal Building this week, opening the door for another hotel in downtown Roanoke.

The building, at the corner of Church Avenue and First Street Southwest, was purchased Tuesday for $3.1 million, according to Matt Huff of Poe & Cronk Real Estate Group, which handled the sale.

New owner Kalyan Hospitality is considering turning the property, currently occupied by Pinnacle Bank, into a hotel or offices. Kalyan already has a footprint in the region, with hotels in Roanoke and Salem under brands including Marriott and Hilton, according to the company’s website. But this would be its first located downtown.

The company’s portfolio also includes some commercial development, but hotels appear to be its priority.

“I think the seller had a motivation to do something good for downtown,” Huff said. “We knew this buyer had a good track record of similar development projects, so we felt good about it.”

Nick Patel, president of Kalyan Hospitality, said he’s watched the city change since he started doing business in the Roanoke Valley and wanted to get ahead of it. He noted there’s a limited supply of land and buildings downtown.

“We liked the market, and we didn’t have a hotel downtown,” he said of the company’s decision to purchase the First Federal Building.

Patel said he’s still exploring options for the best use of the building and has not yet committed to redeveloping it as a hotel.

The 48,000-square-foot First Federal Building was constructed in 1958. Pinnacle plans to move out of the building next year, when it relocates to its new home on Campbell Avenue.

Huff said he feels the property is well-suited to be transformed into a hotel, noting the availability of parking nearby and the revival of the long-vacant Heironimus building just down the street.

“We’re seeing a lot of hotel interest and activity in Roanoke,” Huff said.

For years, the Hotel Roanoke offered the only lodging downtown. But there’s been an increased interest in bringing hotels to the city’s core in the last few years. The Hampton Inn & Suites opened on Church Avenue in 2016, and lodging projects are in development at the Liberty Trust Building and historic Fire Station No. 1.

Fairfax-based JS Project LLC, which is affiliated with Savara Hospitality, purchased the Liberty Trust building on Jefferson Street for $950,000 in July 2018. Savara spokesman Vishal Savani said renovations should begin soon and the company hopes to open its boutique hotel in late 2020.

Developer Dale Wilkinson said he expects renovation work to begin at the old fire station on Church Avenue in March. The plan is to turn the upper level into Airbnb units, he said, and bring Black Dog Salvage and a craft brewer in as tenants on the first floor.

There’s also the possibility of another hotel project downtown that would be similar to the Hampton Inn project, with a hotel built atop a parking garage. The city entered into a contract in 2018 with a developer and the owner of a parking lot that would be affected, but the project’s feasibility is still being studied.

Earlier this year, regional tourism group Visit Virginia’s Blue Ridge released data showing hotel room demand and revenue in the Roanoke area grew in 2018. Demand increased by 8.9% and revenue grew by $7.5 million, or 7.9% compared to the prior year. Officials expect the trend to continue.

Landon Howard, president of Visit Virginia’s Blue Ridge, said in a statement the addition of new hotels, coupled with that data, indicates the region’s tourism economy is strong.

“New hotel developments are a positive sign that Virginia’s Blue Ridge is well on the way to achieving $1 billion dollars in direct travel expenditures by 2021,” he said.

In 2018, the most recent year for which data is available, direct spending by visitors was calculated at $892 million, Howard noted.

Casey Fabris covers business for The Roanoke Times, where she has been a reporter since 2015. Previously, Casey covered Franklin County.

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