Sonder Conversion Application Rejected In Downtown Boston

Boston's Zoning Board of Appeals Tuesday rejected hospitality company Sonder's push to convert 21 residential units at a downtown building into executive suites.

The six-member ZBA passed a motion to deny Sonder's request at 103-111 Arch St. after representatives for city councilors and Mayor Martin Walsh's office argued the move would remove valuable housing units from Boston's limited stock. Councilors also argued Sonder attempted to use a loophole in city code, a notion a lawyer representing Sonder in Tuesday's meeting rejected.

“It is my belief that this and similar proposals to convert housing units into Executive Suites runs contrary to the spirit of the Short Term Rentals Ordinance,” Boston City Councilor Ed Flynn said in a statement this week.

A representative for Sonder declined to comment on the ZBA's decision.

Boston’s short-term rental ordinance was passed in 2019 in response to owner-investors putting unoccupied housing on Airbnb, a move that purported to free up 2,000 units across the city for long-term rentals. Attorney Jeff Drago, representing Sonder before the ZBA, said the executive suites categorization was not listed as a forbidden use at the site, and the proposal got backing from the Downtown Boston Improvement District.

The 17 studios at Arch Street would be between 320 SF and 406 SF, Drago said, while the one-bedrooms are 690 SF. When a ZBA member asked why Sonder didn’t seek a hotel license, Drago said the executive suites include kitchen facilities, excluding them from being classified as hotel space, and have an average stay of four to five days by business travelers and tourists.

Representatives for councilors and Walsh’s office went on record opposing Sonder’s proposal, saying the Sonder didn't align with the mayor’s housing policy. Walsh has made housing a priority for his administration, pledging $500M to create and preserve affordable housing in the next five years and permitting 23,000 new rental units, a quarter of which are income-restricted.

Downtown BID President and CEO Rosemarie Sansone, a backer of Sonder's proposal, said in a statement Thursday the executive suites issue shouldn't be tied to existing housing needs.

"It is unfortunate that they were denied at a time when property owners are doing all they can to make sure their properties are active and vibrant and not empty in these challenging and unprecedented times," Sansone said.

A study by vacation rental researcher AirDNA found short-term rentals were faring better than hotels amid the coronavirus pandemic, with revenue per available room 64.8% lower than 2019, while short-term rentals are down just 4.5% over the same period.

The ZBA as of Thursday afternoon hadn't issued its written decision on the Arch Street building.

Sonder, which touts a presence in Boston with over 100 properties listed for rental, operates in at least 28 cities across the country and earlier this summer landed $170M in Series E funding led by Fidelity, valuing it at $1.3B.