A San Francisco hospitality startup that leases apartments, often in blocks, and rents them out like hotel rooms has locked down an entire Old Town Alexandria building — its second property in the city.
Sonder USA Inc. has applied with Alexandria to operate the apartment-hotel coming to 805 King St. The 9,700-square-foot, four-story building, owned by North Carolina’s Asana Partners, has a Warby Parker eyeglasses boutique on the ground floor. Renovations are underway to convert the offices around and above that store to residential units, all with small kitchens, ranging from 225 square feet to 527 square feet.
Work is well underway there, with about a month to go on the construction side, said Patrick Weeks, Sonder’s general manager for the D.C. area. The building has a “nice little courtyard,” he said, and local flavor, so visitors “feel like they’re living like a local when they’re staying with us.”
Sonder’s business plan involves leasing, designing, furnishing and maintaining blocks of apartments largely in urban settings. It currently has units for lease in two D.C.-area buildings, The Avenue Flats at 2415 Mount Vernon Ave. in Del Ray, and the Callisto at 816 Potomac Ave. SE in the District. With a new 14-unit phase of the Callisto expected to come online shortly, Sonder expects to hit 60 area units by the end of the year, Weeks said. It is also widely believed to be leasing the entirety of a roughly 60-unit building planned for 1324 N. Capitol St. NW in Truxton Circle.
“We do have some other properties, signed leases that we hope to go public in the next year or two,” Weeks said.
And it is looking to grow more, he said, with an eye toward the office-to-residential conversions — especially as office vacancy rates creep higher in D.C. and other dense locales. While Sonder is not a developer, it typically joins a project early on so it can have a role in its design and construction, and those conversions "are making more sense to us all the time."
Sonder is a so-called “unicorn,” as its valuation now stands at $1.3 billion after a $170 million Series E raise that closed in June — bringing its total venture capital raised to $560 million. It is one of a growing collection of companies, along with the likes of Airbnb and D.C.-based WhyHotel, that provide business and leisure travelers with options outside of the traditional hotel.
The hospitality sector is down across the board, but globally, Sonder is averaging 80% occupancy, the company said. Weeks credits that relative success, and optimism for the future, to Sonder’s platform — contactless check-in and all-around contactless stay (an app opens your door, for example), the social distancing an apartment provides, and a focus on longer-term visits. A couple of weeks is now the average, Weeks said, versus the four or five day typical stay of the past.
