Jeff Sutton’s Midtown hotel project snags Sonder as first tenant

Short-term rental company signs at 25 West 34th Street

Jeff Sutton of Wharton Properties, 25 West 34th Street in NYC (Google Maps)
Jeff Sutton of Wharton Properties, 25 West 34th Street in NYC (Google Maps)

Developer Jeff Sutton’s proposed Midtown hotel has reportedly scored its first tenant.

Short-term rental provider Sonder signed on to the planned 363-room hotel at 25 West 34th Street in a 15-year deal, a person familiar with the deal told the Commercial Observer.

Sutton filed a permit in April for the construction of the 176,000-square-foot hotel. A 16,000-square-foot retail space on the ground floor operated by fashion company Superdry will be controlled by Sutton’s Wharton Properties.

Developing a new hotel was seen as a risky proposition when plans were filed, as the hospitality industry struggled under the weight of the pandemic. With Sonder, Sutton is aligning with a company that has been withstanding the effects of Covid well.

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In June, the hospitality startup inked a long-term lease for the 76-key Gowanus Inn & Yard at 645-651 Union Street in Brooklyn. The deal was the first in the borough for the San Francisco-based company, which previously specialized in offering furnished apartments as short-term rentals before it expanded into hotels.

The deal came just two months after the company confirmed that it was going public by merging with a SPAC backed by Alec Gores and Dean Metropoulos. Reuters reported at the time that the company had a valuation of $2.2 billion in the deal and anticipated reaping $650 million from the offering.

Sonder and Sutton are likely hoping for a better hotel picture by the time the place gets up and running. CBRE last week forecast hotel occupancy in the city to reach 56 percent during the fourth quarter, only a slight increase from the third quarter and below historic holiday levels.

[CO] — Holden Walter-Warner

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