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Denver targeted by fast-growing Sonder

While each Sonder unit is individually designed and decorated by a San Francisco-based team, the unit above is indicative of the type of accommodation offered. Booking is done through services including Expedia and Airbnb, as well as through its own website.

A hospitality company with more than $400 million in funding is on track to add multiple new locations in some of Denver’s most desirable neighborhoods.

Sonder, which provides residential-style accommodations at a lower price point than traditional hotels, has established 8,500 units around the world in the past six years. Its first Denver location, a 19-unit property in the 1905 Essex apartment building at 630 E. 16thAve. in Uptown, opened in April.

Kevin Roth

“It’s been amazing, actually,” said Kevin Roth, Sonder’s general manager for Denver. “We’ve been averaging between 85 and 90% occupancy, meeting our rate goals. The feedback from customers has been fantastic. They love the location. They love the fact that each unit is individually designed and decorated by our team in San Francisco. They’ve done a great job of taking this historic building and making it feel like home.”

Sonder, which recently announced a Series D funding round of $210 million, operates out of buildings that it master leases for anywhere from three to 10 years. “We can take whole floors or whole buildings,” said Roth, adding the company works primarily with luxury multifamily residential properties.

Properties typically have full kitchens, full baths and living areas, so they are more spacious and homelike than a typical hotel room.

“What Sonder really offers is the best of the hotel world mixed with the best of the residential living world in terms of the consistency and quality in standards across markets that you would see in a hotel chain, combined with the benefit of location,” said Roth. “We don’t offer a lot of the conference services or things like that because, frankly, our customers aren’t looking for that. They want really nice space that’s well-designed, at an affordable price, and that’s what we offer.”

Sonder has five new locations lined up in Denver and is scouting additional opportunities.

This year it will open 32 units at Atelier at University Park, next to the University of Denver, and 20 units each at 3022 Zuni St. and 3206 Osage St. in the Highland/Lower Highland neighborhoods. It has another 20 units in Highland that will open in approximately 18 months and will take an entire 93-unit building at Tessler Developments’ multifamily community on the former La Loma site in Jefferson  Park.

In addition, “We’ve been talking with a number of developers with properties that are in various planning or construction phases (in River North). We haven’t landed on a deal yet, but we definitely anticipate having a presence there in the not-too-distant future,” said Roth. Also, “We have a number of properties that we’re talking to in the CBD and core area as well.”

According to Roth, Sonder is a “highly analytical company” with various tools to help identify locations. But, “I live in Denver. My head of real estate has been in Denver for many years, and we just think about where we would want to stay as guests.”

While traditional hotels might have a hard time getting into a neighborhood because of required density, zoning or other issues, “We tend to look at properties that other hotel companies wouldn’t be able to look at – the example being our Uptown property. There are no hotels around it, but it is a highly desirable location, and it’s very central,” Roth said.

Roth stressed that, “Everything we do is completely above board with the city. We don’t operate until we have some type of license in place that allows us to do so. It seems like an obvious thing, but I think that’s something that’s not always done.”

Sonder locations include toiletries, kitchen utensils and cookware, and washer and dryer combinations but don’t provide daily room service. Instead, the company has service teams in select locations around the world – including a 200-employee team in Thornton – that dispatch people to provide services 24/7. “We get alerted when there is any need at all – whether a customer is having an issue or whether there’s simply a request for more towels,” Roth said.

Rates at Sonder Essex average around $180 nightly for a one-bedroom unit and $250 for two bedrooms. The average guest’s age is 40, and there is a “healthy mix” of business and family travelers.

In locations like Atelier and La Loma, where there are amenities such as swimming pools and fitness centers, guests have access to those amenities during their stays.

Co-founder and CEO Francis Davidson launched Sonder in 2012, when he was  just 19. The San Francisco-based company is valued at more than $1 billion.

“Denver is a fantastic market for Sonder,” said Roth. “It’s a market that’s prime for real growth in our area, and I’m very excited to be here. I think we’re going to have a number of really interesting locations throughout the city for guests to visit.”

Featured in CREJ’s Aug. 7-20, 2019, issue

Kris Oppermann Stern is publisher and editor of Building Dialogue, a Colorado Real Estate Journal publication, and editor of CREJ's construction, design, and engineering section, including news and bylined articles. Building Dialogue is a quarterly, four-color magazine that caters specifically to the AEC industry, including features on projects and people, as well as covering trends…