PHILADELPHIA -- Residents of the Lofts at 509 Vine apartments near Philadelphia's historic Old City are to be replaced with business travelers and tourists, as the property becomes the latest in the city to fall under the control of a new breed of tech-enabled startups that are converting residential real estate into visitor accommodations.
Renters at the 44-unit building have been told by the property's management that their leases will not be renewed when they expire, so that their units can be booked by short-term visitors through hospitality brand Stay Alfred Inc. of Spokane Valley, Wash.
"Unfortunately, I regret to inform you that the ownership has decided to change the use of the building to short-term rental units for travelers and corporate suites effective Sept. 1, 2019," reads a letter sent to one resident by property manager Stonehenge Advisors Inc.
A tally by the Inquirer in March found that more than 1,300 units in existing residential buildings and projects under construction had been designated for hotel-length stays.
That number has likely since grown, with the announcement of new projects such as San Francisco-based Sonder Corp.'s plan for new short-term rental buildings at what's now a shuttered Wendy's restaurant at 1101 Walnut St., with 111 units, and at the site of a parking garage near South 16th and Sansom Streets, with 207 units.
In many deals involving the hospitality startups -- whose numbers also include Lyric Hospitality Inc. and Kasa Living Inc., both also based in San Francisco -- the companies agree to buy or lease entire buildings that are being newly built or renovated with short-term stays in mind.
A message left with the Daniel A. Soblosky, president of Stonehenge Advisors, was not immediately returned. The building's owner, 509 Vine Street TCE LP, shares an address in the Philadelphia Navy Yard with the management company.
A Stay Alfred spokesperson did not respond to an email seeking details of its plans for the building.
In other cases, the companies take over a block of units in a building that otherwise keeps its full-time renters.
Stay Alfred's deal at the 509 Vine apartments, in a quiet, once-industrial pocket near Old City's northern border, is the first known example where all of a building's residents are being told to make way for short-term guests.
"We're going to miss our neighbors," said Leslie Johnson, a graphic designer who has lived at 509 Vine with her boyfriend, a maintenance worker, for about a year.
The couple don't know what they're going to do when their lease expires in March, she said.
"We think it's pretty unfair," Johnson said.
Lauren Gilchrist, a senior vice president in charge of Philadelphia research at real estate services company JLL, said Stay Alfred is likely targeting the building for its proximity to the city's historic district, which doesn't have enough conventional hotel rooms to satisfy traveler demand.
For the building's owner, the offer of having it entirely leased by the operator for years at a time, rather than worrying about leases with individual residents, was probably an attractive proposition, especially with the steady stream of new apartments drawing renters away from older units, she said.
"The landlord would be crazy to enter into this type of relationship if they didn't expect to receive some sort of premium above what they're going to get directly from consumers," Gilchrist said.
Rents at 509 Vine range from an average of $1,800 a month for a one-bedroom apartment to an average of $2,235 a month for two bedrooms, according to real estate data tracker the CoStar Group.
Units during a weekend in October at Stay Alfred's nearest existing offering in Philadelphia -- the Broderick apartments at 400 Walnut St. -- are available at $235 a night for a one-bedroom unit, or $295 a night for two bedrooms, with a two-night stay minimum, according to the company's website.
SundayMonday Business on 08/25/2019