CBRE sues for $380K commission in Plaza District building

By Adam Pincus | May 08, 2009 02:06PM

Commercial sales and leasing powerhouse CB Richard Ellis says its brokers are owed a sizable commission after putting in months of work showing space to a directory assistance firm that moved to a larger floor in a Plaza District building it already rented in.

CBRE is suing KGB USA, a provider of directory assistance formerly known as Infonxx, for unpaid commissions calculated to be $380,983 for a lease the company signed at 655 Madison Avenue, a suit filed May 4 in Manhattan State Supreme Court says.

The 25-story office building at Madison Avenue and 60th Street, built in 1951, is also home to the Loews Corporation and Estee Lauder and is owned by FirstService Williams executives. The suit does not name FirstService Williams or any of its executives or brokers in the complaint.

Crain’s reported in September 2008 that KGB signed a 10-year lease for about 13,400 square feet on the third floor of the building, where asking rents were $99 per square foot. KGB was formerly on the 21st floor in a space about half that size. Brokers with GVA Williams, now known as FirstService Williams, acted as the landlord and tenant brokers, Crain’s said.

But CBRE said it should have received a commission check for its work. The real estate firm signed an exclusive brokerage contract in July 2007 with KGB — which at the time was on the 21st floor of the building — to find space either in a new building or the same one, court filings say. That contract ran until December that year, but included a six-month extension to June 30, 2008, the papers said.

Through May 2008, CBRE brokers, not identified in the filing, worked on behalf of KGB to secure space, including submitting a renewal lease proposal to its current landlord, giving tours at other buildings and even negotiating with another landlord, the filing says.

A tenant representative broker is generally paid a commission of between 2 percent and 4 percent by the tenant, real estate experts said.  

But sometime before June 30, 2008, KGB signed a new lease with the landlord, “and failed to designate CBRE as the procuring broker, in direct contradiction of the agreement,” the papers say. On September 15, CBRE sent the company the first of two letters seeking payment, but was never paid, the suit alleges.

Spokespeople for KGB and CBRE declined to comment. A spokesperson for FirstService Williams did not immediately provide a comment.