Probe signs at Midtown hotel planned by Jeff Sutton for less than $ 300 million – Commercial Observer
Jeff Sutton‘s Properties of Wharton just scored Probe as a tenant of the real estate mogul’s 363-room hotel in 25, 34th Street West in a deal for less than $ 300 million, Commercial Observer has learned.
Sonder – the provider of apartments, hotels and short-term rentals – has taken over the 26-story, 176,375-square-foot hotel project for 15 years, according to a source familiar with the deal. The multi-million dollar transaction comes even as the pandemic has hampered the hospitality and retail sectors.
The Midtown property currently houses a 16,000 square foot commercial building, previously leased to a clothing retailer Very dry. Wharton filed for a permit in April converting the property to a hotel with retail space on the ground floor and amenity floor on the roof, as previously reported by CO. Under the deal, Wharton would still control the commercial part of the project, the source said.
Sutton declined to comment and Sonder did not respond to a request for comment.
Retail businesses have been hit hard by the pandemic, with well-known brands like 21st century, Lord and Taylor and JCPenney filing for chapter 11, but the hospitality asset class isn’t doing much better. Normal NYC hotel occupancy rates aren’t meant to return to pre-pandemic levels until 2025 and many closed during the pandemic – the state passed a bill allowing convert some underutilized hotels into residential accommodation.
Even during this time, Probe managed to make public via a special acquisition company merger (SPAC) that valued the company at $ 2.2 billion in April, CO reported. The company offers short-term stays with a focus on younger clientele who are comfortable with navigating their visit through a phone app, helping Sonder keep costs down. Sonder lists its rentals on its own website, Airbnb and Expedia Group‘s Vrbo and has also spread to the hotel market.
Probe reopened the Flatiron Hotel in April after having rented it to Top-notch stocks, who bought the 64-unit 9 26th Street West construction of bankruptcy in 2019. He also landed his first Brooklyn outpost in Gowanus after signing a lease for the ensemble. 29,000 square feet, 76 rooms Gowanus Inn and Courtyard, located at 645-651 Union Street.
Sutton’s business isn’t doing too badly either. Although Wharton Properties sold properties last year, none of Sutton’s 120 properties in the city have been threatened with repossession or seizure.
Celia Young can be reached at [email protected].