The Tennessean LLC will have 120 rooms.
To purchase and renovate the Henley Street State Office bulding, it is estimated to cost $16.5 million.
Plans are moving forward for a new upscale hotel in Downtown Knoxville.
It would be called The Tennessean LLC.
On Monday, the Industrial Development Board (IDB) approved The Tennessean to enter exclusive negotiations for the purchasing of the Henley Street State Office building.
Developers Nick and Justin Cazana, who also redeveloped Holiday Inn on Henley Street, submitted the proposal.
To purchase and renovate the building, it is estimated to cost $16.5 million.
The hotel will have 120 rooms; each will be 460 square feet.
The Tennessean will include a private lounge with outdoor seating, as well as valet parking.
Parking space will be shared between Holiday Inn and The Tennessean.
IDB is focusing on plans that will enhance the use of Knoxville Convention Center.
"What's happening is we are growing as a region and downtown is growing. We're getting far more visits, not just visits from people going to restaurants but we're attracting a lot of business travel to Knoxville," said Mike Edwards, Knoxville Chamber president.
Developers will now conduct a feasibility study.
They must close on the property by July 1.