UPDATED, June 20, 10:00 a.m.: Two months after Town Residential abruptly shut its resale and leasing business, its former landlord at 110 Fifth Avenue slapped the firm and its founder Andrew Heiberger with a lawsuit to recoup unpaid rent.
According to the suit, filed Tuesday in New York State Supreme Court, Town surrendered possession of the 16,600-square-foot office on May 10, weeks after effectively ceasing brokerage operations. But court documents allege that Town and Heiberger, who guaranteed the lease renewal in 2013, defaulted on $438,299 in rent, taxes and other fees. The Flatiron office was Town’s first location when it launched in 2010.
“It’s unfortunate that after paying over $7.7 million in rent to my decades-old friends and partner, that the landlord has chosen this path,” Heiberger said.
He said Town vacated its lease and left three months’ worth of security, on top of $1 million in improvements over the life of the lease.
“We also clearly explained how they were going to get their balance due in full, which was minuscule compared to the entire deal,” he said. “Apparently it was not enough for them, they seem to now want more.”
The building’s owners, Westchester-based Rabina Properties and Rego Park-based Samson Management, did not immediately return calls seeking comment.
Town’s monthly rent at 110 Fifth, where it occupied the entire sixth floor of the 11-story building, was $78,696 until March, when it jumped to $85,480, according to court documents. (The rent did not include other charges for common area maintenance, electric and taxes.)
According to a ledger maintained by Samson Management, Town had a spotty track record with rental payments between 2015 and 2018. There were months when it fell short on rental payments, only to make up the difference in subsequent months. In June 2017, for example, the firm paid $48,923 of its $78,696 monthly rent. The following month, Town paid $108,489, according to the ledger.
But Town appears to have stopped paying rent in March of this year, when the monthly rent jumped to $85,480. The following month, Heiberger said he was closing Town because the traditional brokerage model was not sustainable.
Ahead of the closure, Town was hit with two other lawsuits alleging that it owed nearly $300,000 in rent at 33 Irving Place and at its recently-shuttered Upper East Side office.
Heiberger said his lawyer would handle the latest suit.
“Life will go on,” he said.
In April, Compass was in late-stage talks to take over the sixth-floor space, located a block north of its headquarters at 90 Fifth Avenue. The venture-backed firm was eyeing up to 49,800 square feet over three floors at 110 Fifth.
As of last month, WeWork expressed interest in Town’s Union Square office at 33 Irving Place. The co-working company already occupies eight floors above Town’s former digs, an 8,250-square-foot retail space on the ground floor.