Hospitality is supposed to be about comfort, leisure and service, not guests using words like “stranded” or “homeless.” Yet those were the terms popping up in headlines this week as Sonder’s collapse rippled through buildings around the world.
The short-term rental operator, once a proptech darling and a $2 billion public company, announced it’s preparing to file for Chapter 7 liquidation in the U.S., with parallel insolvency proceedings abroad. Operations ceased almost immediately.
The collapse didn’t come out of nowhere. By the time interim CEO Janice Sears stepped in earlier this year, the company was juggling $1.5 billion in liabilities against $1 billion in assets, negotiating with creditors and watching its cash position shrink to fumes. Still, the speed of the unraveling has caught a lot of landlords and guests off guard.
The final blow came last weekend, when Marriott abruptly terminated its year-old licensing agreement, pulling roughly 9,000 “Sonder by Marriott Bonvoy” units out of its system overnight. For Marriott, the move barely dents projected net room growth. For Sonder, it was catastrophic.
The 20-year deal was supposed to be a lifeline, delivering $126 million in financing and the credibility of a global brand. Instead, integration tensions, reporting errors, investor lawsuits and an already-shaky balance sheet pushed Sonder past the point of recovery.
And once operations stopped, the fallout began immediately. In New York, the Moinian family sued Sonder for at least $10 million, alleging the company abandoned two properties — 2 Washington Street and 37 West 24th Street — mid-crisis. Guests reportedly refused to vacate or found themselves locked out altogether, unable to access their rooms or belongings. Similar scenes played out across other owners’ buildings, from Silverstein to BLDG Management, all suddenly left to figure out stranded occupants and unclear lease obligations. Even employees said they were left without any meaningful direction.
It’s a messy, very public end to a company that sold itself as a sleek alternative to Airbnb. And it leaves the industry with two questions: what happens to these master-leased properties, and what happens to the model Sonder helped popularize?
In the near term, landlords with Sonder exposure are likely staring down months of legal wrangling. Chapter 7 means a court-appointed trustee will liquidate assets rather than restructure them, so owners may be waiting a while before they fully regain control of their units. Operators that competed with Sonder for inventory may see short-term opportunity as units come back to market, but that also depends on how many need work before they can be repositioned. Longer-term, the sector is likely to rethink how much risk it wants to take on from operators with aggressive growth plans and thin margins.
Demand for flexible, hotel-style apartments isn’t going away, but owners and lenders may push harder for management agreements or hybrid structures that don’t leave them holding the bag when an operator stumbles.
There was plenty of other real estate news this week. The Alexander brothers dealt with a legal setback, Michael Shvo faced RICO conspiracy accusations and record-breaking listings hit the market in South Florida. These stories and more below.
Judge denies Alexander brothers’ motions to dismiss sex trafficking charges
A federal judge has ruled that sex trafficking charges against the Alexander brothers will move forward to trial in January, denying most of the defense’s motions to dismiss. Judge Valerie Caproni of the Southern District of New York said prosecutors had sufficiently alleged that the brothers “conspired to entice women and girls to travel” for sex using “force and drugs.”
Shvo foes unite to accuse embattled developer of civil RICO conspiracy
A new lawsuit accuses developer Michael Shvo, who made a dramatic exit from a trophy Miami project and fended off lawsuits at a number of his developments, of being engaged in a yearslong Racketeer Influenced and Corrupt Organizations (RICO) conspiracy. The lawsuit was filed by some familiar foes for Shvo, including the Core Club and its founder and CEO Jennie Enterprise, and two disgruntled residents at Shvo’s troubled Mandarin Oriental condo project at 685 Fifth Avenue in Manhattan.
Trophy properties for sale: Record-breaking listings hit market as South Florida’s busy season revs up
Nine single-family homes are on the market in South Florida asking $100 million or more, with some ranging as high as $285 million. Sellers are seeking unprecedented prices for sprawling compounds that include amenities like shooting ranges, bowling alleys, jazz lounges, theaters, spas, gyms and massive garages for storing and displaying car collections.
Blackstone Real Estate co-head Kathleen McCarthy to depart after 15 years
Blackstone’s Kathleen McCarthy, who helped grow the firm’s property arm into a $320 billion behemoth, will depart by year’s end after 15 years with the company. McCarthy, 47, has served since 2018 as global co-head of Blackstone Real Estate — the world’s largest private property investor — and will step down to “explore new opportunities,” the company said.
FARE Act, one year later: Here’s how the broker fee law has played out
One year after New York City passed the Fairness in Apartment Rental Expenses (FARE) Act, the rental market is still adjusting to a rule that flipped who pays brokers’ fees. The law, which bars landlords from forcing tenants to cover brokers they didn’t hire, immediately caused listings to vanish from StreetEasy and REBNY’s platform as landlords scrambled to comply.
Malibu exception: Boutique hotel deal among priciest in California history
Luxury fashion brand Chrome Hearts, owned by Richard and Laurie Stark, purchased a small Malibu hotel called the Surfrider for $37.5 million to notch one of California’s priciest per-key deals ever. It’s an exception to the general rule of the hotel market these days in Los Angeles, where numerous properties are facing foreclosure and a tough sales environment.
Fannie Mae sues Jon Venetos’ Lurin Capital over $77M default
Fannie Mae slapped Jon Venetos’ Lurin Capital with a lawsuit accusing the firm of defaulting on a $77.2 million loan tied to a Houston apartment complex. Fannie Mae further accuses Lurin of failing to keep the property in good condition. In addition to mold, roof leaks and cracked stairs, Fannie alleges some residents at the Houston apartments don’t have access to running water.
Vornado, Rudin’s 350 Park office tower files for construction
Vornado Realty Trust has filed a construction permit application for a high-rise at 350 Park Avenue. Vornado is partnering with Rudin Management and hedge fund Citadel on the development of the tower located between East 50th and 51st streets.
Here’s what you missed at The Real Deal’s Miami Forum
Miami’s status as a top destination for real estate developers, brokers, foreign investors and New Yorkers was on full display at The Real Deal’s Miami Real Estate Forum last week. The two-day conference attracted thousands of attendees and dozens of developers, brokers, lenders, architects and other vendors who featured their products and projects at the showcase component.
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Sonder to file for Chapter 7 bankruptcy, liquidation
Marriott terminates brief partnership with Sonder after “default”
Moinian family sues Sonder over “chaos” at Manhattan hotels