Sonder takes lease for 76-key Gowanus Inn

Rental startup’s first Brooklyn location

Gowanus Inn & Yard at  645-651 Union Street, Brooklyn, Sonder CEO Francis Davidson and Red Pine Principal Michael Federman (Google Maps, Sonder, Federman Steifman)
Gowanus Inn & Yard at  645-651 Union Street, Brooklyn, Sonder CEO Francis Davidson and Red Pine Principal Michael Federman (Google Maps, Sonder, Federman Steifman)

Short-term rental startup Sonder has inked another hotel lease, this one at its first Brooklyn location.

The company signed a long-term lease for the entire 76-key Gowanus Inn & Yard at 645-651 Union Street, The Real Deal has learned. Red Pine Capital Partners, which independently owns and operates the hotel, confirmed the news.

San Francisco-based Sonder has in recent years expanded its portfolio into hotel rooms, after having specialized in offering furnished apartments as short-term rentals. In April, the firm said it will go public via a special purpose acquisition company.

In March, Sonder leased the 43-room Duane Street Hotel in Tribeca after Premier Equities purchased the property. Sonder also operates the Premier Equities-owned Flatiron Hotel.

Details about the Gowanus Inn deal were not known, but Red Pine Principal Michael Federman said asking rent for the hotel was about $70 a foot. Sonder will pay an escalating rent through the life of the lease, he said. Cayuga Capital Management’s Robin Scott brokered the deal.

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The 29,000-square-foot hotel was built in 2018. Its retail spaces — including a full-service kitchen, restaurant, lobby bar, rooftop bar and street-level coffee shop — are vacant. Red Pine is making basic improvements to the property, and will contribute to Sonder’s room modifications, Federman said. The property will be open as a Sonder location after that work is completed.

Federman said the hotel remained open throughout the pandemic, which ravaged the industry citywide. Hotels are still recovering. Across the city, the occupancy rate for hotels that are open stood at 58.7 percent as of the week ending May 29, according to STR. The rate fell to 40.7 percent when counting properties that are open and those that are closed.

But Federman said he has high hopes for the neighborhood, betting that the city’s Gowanus rezoning plan will boost property values and invigorate the area.

Sonder did not return requests for comment.

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