Chicago law firm Jenner & Block has answered an accusation by its landlord over unpaid office rent with its own charge: Not only are we not paying, but you owe us money.
That was the Chicago law firm's response to a lawsuit filed in May by the owner of a River North skyscraper that alleged Jenner defaulted on its lease after failing to pay $3.9 million in April and May rent and other expenses.
At issue is whether the COVID-19 pandemic triggered a clause in Jenner's lease giving the firm a break on rent for space it couldn't use at 353 N. Clark St. The dispute is one of the first major legal battles over unpaid rent at a downtown office tower amid the coronavirus crisis. And it could have implications for other office users in the city, as tenants whose employees have primarily worked from home in recent months determine when or if their workforce will be able to safely return.
Chicago-based investment firm Heitman, which owns the 46-story tower, claimed in its Cook County Circuit Court complaint that Jenner defaulted after missing rent payments that were due April 1 and May 1 for the 416,000 square feet it leases in the building. But Jenner responded by pointing to wording in its lease that gives the firm rent abatement "to cover any unforeseen event, such as a pandemic, that could result in Jenner & Block's inability to use and occupy its space in the normal course of business," Jenner wrote in its response to the suit. "Due to the significant health dangers and consequences of the COVID-19 pandemic," and Gov. J.B. Pritzker's stay-home executive order, the firm since March 16 has not been able to use 89 percent of its space, according to the response.
The firm also submitted a statement from developer Richard Stein—whom the firm said represented the building when the lease was negotiated—saying that "the current pandemic is the very type of disruptive event" that would trigger the rent abatement clause.
Beyond that, Jenner argued that Heitman owes the law firm overpaid March rent, property tax and operating expenses, as well as other reimbursements from 2017 that add up to more than $1.4 million. After applying that to the fraction of normal rent Jenner owes for April, May and June, the law firm said Heitman owes it about $840,000.
Heitman this week fired back, rebuffing Jenner's argument that it was unable to use its offices. Attorneys for the building owner said Pritzker's executive order "specifically deemed legal services an essential business that were expressly authorized and, in fact, encouraged to remain open," it said in a motion filed June 29.
"There is no government directive, law or other event prohibiting or otherwise restricting defendant from using or occupying any portion of the premises," Heitman attorneys wrote in the motion, adding that Pritzker's executive order specifically states it shouldn't "be construed as relieving any individual of the obligation to pay rent."
Jenner has been in the 1.2 million-square-foot building since it opened in 2009. Heitman purchased the tower in 2014 for $715 million, the second-most expensive sale per square foot at the time for a downtown Chicago office building.
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July 02, 2020 at 11:59PM
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Jenner & Block says landlord owes it money in unpaid rent fight - Crain's Chicago Business
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