An influential Manhattan retail brokerage, Lansco, claims it was cheated out of at least $1 million in commissions for arranging one of last year’s high-profile commercial deals, the 20-year lease by Bowlmor at the former New York Times Building in Times Square.
Lansco alleges competitor GFI Capital Resources Group and Bowlmor’s parent company Strike Holdings conspired to cut it out of the deal for two floors at 229 West 43rd Street, which Lansco says was worth between $3 million and $4 million per year.
The charges were leveled in a lawsuit Lansco filed April 28 in New York State Supreme Court against GFI and Strike Holdings, seeking at least $1 million as well as rights under renewal and extension clauses.
“Strike and GFI conspired with each other to interfere with Lansco’s right to be the broker,” the suit says. The court papers do not provide a reason why Lansco was replaced. Africa Israel and Futterman were not named as defendants in the suit.
Brett Parker, Strike Holdings’ CFO said: “The claim is totally baseless and we plan to vigorously defend our interests.”
Lansco says in court papers that it began representing Strike Holdings as early as June 2008, when the bowling company sent a lease proposal to property owner Africa Israel and its retail representative Robert K. Futterman & Associates, expressing interest in leasing at the Times Square location, and noting that Lansco and Futterman were the only brokers involved.
Through August 2008, the complaint says Strike Holdings sent a total of four lease proposals, with different floor configurations for the property, and each time noting Lansco and Futterman were the only brokers, the court papers say.
But the situation apparently changed in the fall of 2008. The suit says in November or December that year, Strike Holdings authorized GFI to discuss the third and fourth lease proposals with Africa Israel.
In fact, in November 2008, GFI sent out a press release saying it was representing Bowlmor in the company’s plans to expand in the city.
Then reports in August 2009 said Bowlmor was likely to take 70,000 square feet in the building, with GFI as the tenant’s broker.
A source with knowledge of the lease told The Real Deal the bowling alley was taking the entire third floor and about three-quarters of the fourth floor, for a total of 75,000 square feet. The new lanes are set to open in October.
Lon Rubackin, managing director at GFI who represented Strike Holdings, and Stuart Lilien, managing partner with Lansco, declined to comment. Representatives for Futterman and Africa Israel, also had no comment.
Such commission disputes are complex and revolve around what agreements, if any, were signed between the parties beforehand, as well as how similar the final lease is to the earlier proposed lease, said Alan Heller, a partner with the law firm Heller, Horowitz & Feit, who concentrates on commercial litigation.
“I think it is a function of the type of agreement the broker had and the status of the negotiations on the essential terms at the time the broker was replaced,” Heller said.
Heller also noted a broker can be fired for cause, for example if a deal was falling apart as a result of a broker doing an inadequate job.
Real estate insiders said that if both brokerages were part of the Real Estate Board of New York trade association, the case would go to arbitration if one requested that. However, while Lansco is a REBNY member, GFI is not.
GFI is a real estate owner and manager based in Midtown with brokerage, mortgage lending and development services in New York and several other states.