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In Dallas, a proposed high-rise hints at hospitality’s future

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Startup Sonder plans a ground-up, 270-unit building in the city’s Arts District

1899 McKinney, a proposed Dallas high-rise being built by Rastegar Property and Sonder, would be the latest in an emerging trend of ground-up properties designed and built with the express purpose of serving homesharing sites.
Courtesy Sonder and Rastegar Property

Sonder, a hospitality company that offers a hybrid hotel-Airbnb experience in 30 cities around the world, announced the proposed construction of a new 270-unit building in Dallas’s Arts District, its largest property yet and a sign of larger shifts within the hospitality industry.

The proposed building, to be called 1899 McKinney and constructed in partnership with Austin-based Rastegar Property, would be the latest in an emerging trend of ground-up properties designed and built with the express purpose of serving homesharing sites. Airbnb has already partnered with developers in cities including Austin and Miami, providing design guidance to independent developers seeking to create condo buildings where owners can buy into room-sharing as an investment.

The vision of 1899 McKinney, according to Ari Rastegar, CEO of Rastegar Property, is to “institutionalize rentals by creating a high standard that fills the gap between five-star hotels and renting a home, especially with respect to Sonder’s service standards.”

Valued at more than $1 billion, Sonder is a San Francisco-based startup that has signed more than 9,500 units to its platform, which specializes in serviced apartments licensed to run as a hotel. In the United States, it operates in 18 cities, including New York, Chicago, Washington D.C., and San Francisco. Sonder considers itself a “tech-enabled hospitality company,” and refurbishes and outfits residential buildings with its own custom technology to rent out on its own platforms and others sites such as Airbnb.

The new Dallas property, which the development partners expect will open by 2023, will be fully operated by Sonder and not leased or sold to third parties. Guests will have access to storage lockers on every floor, subgrade parking, defined rideshare pickup/drop-off zones, valet parking, a pool and rooftop deck, and common areas on each floor. Sonder will pay all necessary hotel occupancy taxes (HOT) for all stays.

This move comes as more hospitality brands, from startups to established chains, are experimenting with services and offerings that combine homesharing and the hotel experience, while established startups such as Airbnb make an effort to standardize service and attract business travelers.

“We strategically chose Dallas for this project due to its status as a thriving business community and burgeoning tourism destination,” Michael A. Merryman, head of Dallas real estate at Sonder, said in a statement.

“Master leasing the entire property rather than individual units or floors represents the vision for the future of Sonder’s business model and the future of the hospitality industry as we continue democratizing travel by providing luxury accommodations at a great value to guests.”