Crain’s New York published an article this week showing why its important to have a good tenant rep. The Securities and Exchange Commission has been paying rent on space they haven’t occupied in five years and as a result has wasted $15 million paying rent on empty space. Furthermore they will continue to pay on the space through 2012.
According to the article, the SEC was in dire need of space following the September 11 attacks when their New York office was destroyed. They moved quickly to lease space in the Woolworth Building but after the discovery of asbestos some years later, the agency was forced to relocate and thought the new landlord would assume the remaining obligation on their lease.
However the landlord did not and subsequently, the SEC has been paying rent on two locations for the past few years. Now I’m not fully aware of the entire situation but its obvious that this dispute could have been resolved if both sides had taken the time to iron out the specifics of assuming an obligation.
Asking a landlord to assume an existing obligation during the leasing process is a very complicated and divisive issue and its imperative that the tenant have an advisor that can make sure that if a landlord is willing to assume all or some of the remaining rent, that they have negotiated any such agreement in the correct manner.
I don’t want to lay the blame on either side because as I stated earlier, I am not familiar with the agreements or context with which the deal was conceived but as an advisor I would have made sure that if the landlord had promised to assume the remaining rent that the agreement would properly reflect their commitment.