Historic high-rise in Center City to be converted into apartment building, formerly operated as a Sonder.

One of Philadelphia’s historic architectural landmarks, the Witherspoon building located at 1321 Walnut Street, is set to transition from a hospitality-focused property to a traditional residential apartment complex featuring 186 rental units. Originally constructed in 1896 to serve as office space for the Presbyterian Church, the 11-story building has had a varied history. Most recently, in 2019, it was repurposed for short-term rental use in collaboration with Sonder Corp., a company that specialized in the hospitality sector.

Despite initial success in this configuration, the operational model faced disruption when Sonder declared bankruptcy last year, resulting in abrupt evictions of guests with little notice. In response, SSH Real Estate, the building’s owner, has opted to shift its focus away from short-term rentals. Leasing for the new apartment units has commenced, with anticipated move-ins scheduled to begin in early April.

The current conditions in the apartment rental market indicate a robust demand, with SSH Real Estate’s partner noting the cyclical nature of the hospitality industry compared to the more stable residential leasing environment. The newly converted units primarily consist of one-bedroom apartments, although the configuration includes 18 studio apartments and nine two-bedroom units, strategically placed at the corners of the building.

Rental rates for the one-bedroom apartments have been set at approximately ,500 per month, while the two-bedroom options will range from ,500 to ,000 per month. While the project does not offer on-site parking, its location in a transit-friendly and pedestrian-rich neighborhood may mitigate this drawback for prospective tenants.

The Witherspoon also features two commercial storefronts on its ground level. One of these spaces has already been occupied by a design studio, while SSH Real Estate is actively seeking a suitable tenant for the remaining 2,000-square-foot space, ideally a coffee shop or a service that would benefit residents.

Market conditions in the Center City area indicate an apartment vacancy rate of 7.5%, according to Cushman & Wakefield, a real estate services firm. This decline in vacancy rates has encouraged new developments following a period of stagnation, which had been caused by increasing interest rates and a challenging environment for profitable rental prices that followed the pandemic.

As of late last year, 208 residential units were under construction in Center City. Several more projects have since received permits, including the conversion of existing office spaces into residential apartments. SSH Real Estate anticipates that their pricing strategy will place the Witherspoon competitively within the market, particularly in contrast to newer, luxury residential options that command higher rents.

The evolution of the Witherspoon building reflects broader changes unfolding in South Broad Street, including the development of a new campus for Temple University and significant renovations at the Bellevue. Other former Sonder properties in Philadelphia are in the process of being either redeveloped as apartments or repurposed for hotel use. This move towards stabilization within the rental market is indicative of shifting dynamics influenced by both economic and social factors.

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