Dive Brief:

• 2 Washington, a New York City building master leased by Sonder, saw its value drop 25% to $162.5 million after that short-stay provider filed for bankruptcy and rejected the lease, according to an Oct. 22 Morningstar report shared with Multifamily Dive. 
• The property was valued at $217 million when its loan was originated. The loan is levered to 80%, “which likely portends a modification as the likely resolution,” according to Morningstar.
• Sonder declared bankruptcy in November 2025, Hotel Dive reported. The 2 Washington property in New York City went into servicing in June due to Sonder’s bankruptcy, “effectively cutting off the majority of the cash flow at the property,” according to a previous Morningstar report shared with Multifamily Dive. 

Dive Insight:

In the years before the pandemic, several entrepreneurs developed business models that leased apartment units and rented them on home-sharing platforms such as Airbnb and Vrbo, according to the National Apartment Association.

Despite skepticism after a mixed history with corporate housing and concerns about noise, some apartment owners agreed to let these firms sublet their units, according to the NAA.

However, when COVID-19 shut down the economy in 2020, these firms struggled. “We had heard stories during the pandemic of STR companies going under and abandoning furnished units, etc.,” rental housing economist Jay Parsons told Multifamily Dive in emailed comments.

Fortunately for the apartment industry, these firms never really rented enough units “to move the needle on a regional or national level,” Parsons said.

“I think it's one of those things that was a big deal for some properties that used STR services, but was never at a scale big enough to move the needle on a broader level,” Parsons said.

Even before companies like Sonder started facing issues, short-term rentals were a double-edged sword for apartment operators. While they can help juice occupancy during difficult lease-ups, they can also lead to excess noise and ultimately hurt a property’s reputation.

Chris Finlay, founder and CEO of Vienna, Virginia-based apartment owner, manager and developer Middleburg Communities, told Multifamily Dive in 2022 that he eschewed short-term rentals. His primary concern was safety.

“When you rent a home, the No. 1 thing you want is safety and security,” Finlay said. “You want something where you feel safe and recognize your neighbors. If you have different people walking down the hall every day, that’s not something most residents want.”

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