Sonder Signs at Jeff Sutton’s Wharton Properties Planned Midtown Hotel for Under $300M
Main Photo: The current retail store on West 34th Street, planned to become 363 key hotel
Date: December 2021
Name: TBA
Location: West 34th Street, Midtown New York City, NY, USA
Number of Keys: 363
Owner: Wharton Properties, who filed a permit to convert the retail store to a new hotel, in April 2021. Superdry had a seven year deal to occupy the premises back in 2016. Jeff Sutton’s firm owns dozens of retail properties in some of the most popular shopping destinations in Manhattan, including along Fifth Avenue, 125th Street, 34th Street and Times Square. It also owns retail properties around the outer boroughs.
New Leaseholder: Sonder, who bill themselves as “Hotel amenities without hotel formality” The company is headed up by Francis Davidson and Martin Picard.
Jeff Sutton’s Wharton Properties just secured Sonder as it’s tenant at the real estate mogul’s planned 363-room hotel at 25 West 34th Street in a deal around $300 million, USA’s Commercial Observer (CO) has learned.
Sonder — the apartment, hotel and short-term rental provider — snagged the proposed 26-story, 176,375-square-foot hotel for 15 years. The multi-million-dollar transaction comes even as the pandemic has hampered both the hospitality and retail industries.
The Midtown property is currently home to a 16,000-square-foot retail building, previously leased to clothing retailer Superdry. Wharton filed a permit in April to convert the property to a hotel with a ground-floor retail space and rooftop amenity floor, as CO previously reported. Under the deal, Wharton would still control the retail portion of the project, the source said.
Retail businesses were hit hard by the pandemic, with well-known brands like Century 21, Lord & Taylor and JCPenney filing for Chapter 11, but the hospitality asset class didn’t fare much better. Normal occupancy rates for New York City’s hotels aren’t supposed to return to pre-pandemic levels until 2025 and many shuttered during the pandemic — with the state passing a bill to allow converting some underused hotels into residential housing.
Even during this time, Sonder managed to go public via a special purpose acquisition company (SPAC) merger that valued the company at $2.2 billion in April, CO reported. The company offers short-term stays with a focus on a younger clientele comfortable with navigating their visit via a phone app, which allows Sonder to keep costs down. Sonder lists it’s rentals on its own website, Airbnb and Expedia Group’s Vrbo and has expanded into the hotel market as well.
Sonder reopened the Flatiron Hotel in April after leasing it from Premier Equities, which bought the 64-unit 9 West 26th Street building out of bankruptcy in 2019. It also snagged it’s first Brooklyn outpost in Gowanus in June after inking a lease for the entire 29,000-square-foot, 76-room Gowanus Inn & Yard, located at 645-651 Union Street.
Sonder has multiple offices across the globe, with hub cities in Denver, San Francisco, Montreal and London/Amsterdam. They claim to be a very locally driven organisation, with teams on the ground in 35 cities across 9 countries, with 5,000+ listings worldwide and an annual 1m+ guests.
Sutton’s company hasn’t fared so badly either. While Wharton Properties did sell off property last year, none of Sutton’s 120 properties around the city were threatened by repossession or foreclosures.
Price: Undisclosed
THPT Comment: Bright spot on the horizon for NYC’s hotel scene….Sonder making progress on it’s quest to control the standards in it’s airbnb-stlye holiday letting business. Superdry are no strangers to hospitality with Julian Dunkerton’s Lucky Onion small portfolio of boutique hotels in the UK
First Seen: Commercial Observer
The Hotel Property Team (THPT) is a small group of highly experienced business professionals. Between us, we provide a range of skills and experience which is directly relevant to those involved in the hotel property market. For more information – Visit www.thpt.co.uk or email info@thpt.co.uk
