A long-dormant spot along the Mississippi River in downtown Minneapolis soon will be the site of a 123-unit luxury apartment building.

Called the Encore, the $36 million project will fill the last gap on a prime block near the budding Downtown East neighborhood where the new Vikings stadium and Wells Fargo headquarters are rising.

"This is without a doubt the best [remaining] site in Minneapolis," said George Sherman, the project's developer.

Downtown Minneapolis is in the midst of an apartment boom that's being driven by a growing economy and a deep interest in urban living. The Encore project is among thousands of new apartments in the city, mostly in the North Loop and Uptown neighborhoods.

As of early June, there were 1,322 proposed apartments, 451 that received approved and another 2,073 under construction, according to Mary Bujold of Maxfield Research.

Nestled in the heart of the Mill District, the Encore will share a block with an Aloft Hotel and the Zenith Condominiums, which Sherman developed before the recession. The area is now the city's newest cultural corridor that includes the Mill City Museum, Guthrie Theater, the MacPhail Center for Music and the Open Book literary center.

For years, Sherman had been marketing the Encore site, at 10th Avenue and 2nd Street S., for commercial use. Eventually, he determined that a luxury apartment project was the better play.

"We have this lofty goal of ­dramatically increasing the population of downtown, and this is a prime location to do it," said City Council Member Jacob Frey.

Tony Kuechle, senior vice president of development for Sherman Associates, said neighbors were generally enthusiastic and didn't raise any major issues. After making minor modifications based on neighborhood feedback, the plan will work its way through the city approval process with an anticipated groundbreaking in November. The developer will ask for a slight variance from the current setback and height restrictions.

Even though for-sale condos are in short supply downtown, and the nearby Stonebridge Lofts condominiums are nearly sold out just months after completion, Sherman predicts that it will be four to five years before the lending environment will support a new wave of condo building.

That's why, Sherman said, the building was designed so that it could eventually be converted into condominiums with high-end finishes and amenities that will appeal to either future buyers or renters. The apartments will have larger floor plans, quartz counters and upgraded heating and ventilation systems. And the building will have two-story townhouses on the first floor with their own entrances, nine penthouses on the upper levels and a rooftop gathering space.

David Graham of ESG ­Architects said the building has been sited to preserve views of the park and the river for residents who live in nearby buildings by creating an L-shaped building with a large courtyard between it and Gold Medal Park across the street.

And because this is considered a signature site in a historic district known for its architecturally interesting buildings, his team created a concrete-and-glass building that will take some cues from surrounding buildings, but have its own architectural identity.

"It's a design that will stand the test of time," Graham said. "This is a very special site and this is a great opportunity."

Jim Buchta • 612-673-7376