US: A Denver building leased by hospitality start up Sonder has been sold for three times its initial purchase price.
Run as The Essex Hotel by Sonder, the former hotel building is noted to be the first Airbnb-hotel hybrid of its kind.
The building, which was first purchased by a Denver based property firm GM development in 2017 for $2.1 million, was reported by Business Den as sold for $6.25 million.
The building underwent significant renovation to remove the major fire code violations which closed the initial building, as well as to fit neatly within Sonder’s business model.
“We completely renovated the entire building up to the historical standards,” said GM principal Ben Gearhart, noting that the renovation had allowed the city to designate the property as a historic site in 2018.
The property was Sonder’s first investment in the Denver area, which has since expanded to a second nearby the university.
Its involvement in the renovations in the building, alongside GM Development, has been praised by locals involved in the procedure, with attorney Don Conty, responsible for the sale, saying: “They really had a great attention to detail … and turned it into a real gem.”
The purchase also soothed local concerns about Sonder’s business model, with the company’s due diligence proving it has sustainability for the future.
Conty told FOX31 Denver: “Although they’re new to Denver, when you look across the country, they’re really solid in the major outlets.”
The news follows criticism of Sonder in cities such as Boston for attempting to circumvent local regulation in order to continue conversion of apartments, a decision it has not made in Denver. The company has successfully applied for a hotel licence in the city, meaning it falls under similar regulations to local hotel chains, rather than apartments.
Sonder has been consistently expanding recently with announcements of rentals in Detroit and in Chicago. As one of the short-term rental industry’s rising stars, only time may tell if that growth will transform into profit.