First major leasing lawsuit
Chicago law firm Jenner & Block is sued for $3.8M in unpaid rent for office
One of Chicago’s largest law firms is itself getting sued after skipping rent payments on its sprawling riverfront office during the coronavirus pandemic.
Jenner & Block failed to make April 1 and May 1 rent payments and is in default on its lease at 353 N. Clark St., alleges a lawsuit filed by its landlord, an affiliate of Chicago-based real estate investment manager Heitman. The suit seeks to collect more than $3.8 million.
The lawsuit, filed May 20 in Cook County Circuit Court, is the first known major legal spat between commercial landlords and tenants in Chicago since companies began sending workers home in the wake of the health crisis.
Office tenants, restaurants, retailers and other companies have been in ongoing negotiations with their landlords since most businesses in Illinois shut down amid a stay-athome order designed to slow the spread of COVID-19, which has killed more than 5,000 Illinoisans and more than 100,000 nationwide.
Tenants have sought rent reductions, delays in rent payments and other concessions, and the extent of rent reductions and defaults is unclear.
Some publicly traded property owners have estimated 10% to 25% or more of their office tenants were late on rent payments in April and May. Those are lower percentages than retail rent defaults.
Jenner & Block, with about 330 lawyers in Chicago, leases some 416,000 square feet, or about one-third of the 46-story tower just north of the Chicago River, where it has been a tenant since 2009.
The firm concedes it has held back rent payments, but says it is allowed to do so under terms of the lease signed in 2006.
“Our Chicago office lease includes a negotiated provision for rent abatement in the event of a situation, like the global pandemic, that renders the firm unable to use and occupy the space for its intended purpose,” Jenner & Block co-managing partner Randy Mehrberg said in an emailed statement. “The firm has invoked that provision.
“We have credited the landlord for the limited space we have been able to use for its intended purpose. Jenner & Block has a very strong financial position; this dispute is exclusively about the enforcement of that provision in the lease.”
John Riccione, a lawyer representing Heitman, declined to comment on terms of Jenner & Block’s lease or other aspects of the case.
He said it’s likely other real estate lawsuits will emerge from the pandemic. “How they work out is really dependent on the specifics of each company’s lease,” he said
Heitman seeks more than $3.8 million for unpaid rent, late fees, interest, attorneys’ fees and other expenses, including more than $92,000 in unpaid cafe costs, according to the complaint.