Mantra Group has secured the leasehold of the building on the corner of Northbourne and Macarthur avenues and will open a new Mantra branded full-service hotel in late 2016.

With a mix of 136 hotel rooms and 40 suites across eight accommodation levels, Mantra Canberra will offer a restaurant and bar, conference rooms, gym and car parking.

The development is part of the revitalisation of the garden suburb with a vibrant mix of residential, commercial and entertainment developments.

The Mantra Group operates 300 rooms across three hotels in Canberra - Peppers, Mantra and BreakFree hotels - which offer luxury, mid-range and economy hotel options.

Mantra Group director of acquisitions Michael Moret-Lalli said Turner's proximity to the central business district, the Australian National University and future light rail transportation infrastructure made it an attractive prospect.

The suburb's demographic profile of largely young professionals was also key.

"As the nation's capital, Canberra is a key CBD location and therefore fits perfectly with our stated strategic growth mandate of building scale within a market," Mr Moret-Lalli said.

"The opportunity to add an additional 176 rooms to our existing room base in the city represents an increase of nearly 60 per cent and increases our ability to leverage improving market fundamentals."

Development is set to begin later this year. Mantra Group will partner with Canberra developer HTI Group to deliver the project.