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Flexible-Stay Apartment Company Makes Big Entrance Into Philly Market

The Witherspoon, a historically protected office-turned-apartment building, in Center City Philadelphia as of July 2017

A flexible-stay apartment company has snatched up over 500 apartments in Philadelphia in a few months' time.

Sonder leases blocks of apartments from building owners, furnishes and designs them, services them like hotel rooms and rents them out to tenants for as little as one day and as long as several months.

The company began hiring in the city in June, installing Eric Kravitz as general manager, and has since leased all or parts of six apartment buildings in Greater Center City.

Sonder announced its largest deal yet on Wednesday: a partnership with SSH Real Estate to renovate the historically protected Witherspoon building at 13th and Walnut streets and manage all 186 units of the residential portion.

The Witherspoon was built in the 19th century as the headquarters for a religious publishing company. Sonder expects its apartments to open next spring.

Of the 500 units that Sonder has leased in the city, 51 are already open for leasing between two buildings: 10 townhouses attached to The Alexander apartment tower at 1601 Vine St. and 41 units in the 1600 Callowhill St. apartment building. Under contract but still to open are the 14 units at 1704 Walnut St., seven apartments at Civetta Property Group's 257 North Third St. and 96 units at PRDC Properties' post-industrial conversion Heid Building at 13th and Wood streets.

Though Sonder brings its own style touches to all of its apartments, how much influence it has on more fundamental design elements like floors, walls, appliances and fixtures depends on how early in a building's development or redevelopment it signs the lease.

In the case of 1600 Callowhill and the Alexander, the buildings were already operational, while the Witherspoon is still near the beginning of its construction — giving Sonder more input with SSH than it has had with any other landlord in Philly so far. 

The Alexander units were the first to come online in mid-January, and the 1600 Callowhill units went live Feb. 28.

A rendering of the conversion of the Heid Building from an old hat factory into an apartment building with a block of units master leased to Sonder.

Sonder also has an agreement to lease 45 units at Pearl Properties' The Harper development, the Philadelphia Inquirer reports, but Sonder would not confirm the deal to Bisnow.

Including Philadelphia, San Francisco-based Sonder has locations in 16 cities across the U.S., as well as operations in London and Rome. Philadelphia is part of a recent wave of expansion financed by $135M in outside investment, led by an $85M Series C funding round in October, according to Forbes. Across its portfolio, the company has leased 4,000 units, with 2,500 of those currently operational for guests.

Every Sonder is designed by one central team, but Kravitz leads a local team that manages the units and identifies properties to lease in Philadelphia, with roots in the city.

"I’m from the area, and 95% of my team is from the area, so we’re very committed to being a great partner to the city, the developers and the tenants,” Kravitz told Bisnow.

Sonder has local competition from other flexible-stay operators like Korman Communities' AKA and Method Co.'s Roost. But whereas those two mostly operate in new construction buildings, Sonder has so far targeted historic redevelopments, even moreso than it does in many of its other cities.

“We’re blessed in that the city has amazing architecture, and there’s a wealth of beautiful, unique buildings ... [S]o we have more of a distinct palette to work with than more newly built cities around the country,” Kravitz said. "I personally might lean towards a historic building if faced with a choice [between that and new construction], but what matters most is that it complies with the law and what an area is zoned for.”