Developer of W’burg office conversion sues over 30-day notice

All is not well at 456 Johnson Avenue, the former East Williamsburg industrial warehouse that Sequoia Development Group has triple-net-leased and converted into a 58,000-square-foot office-and-retail building.

Sequoia, led by Brooklyn investors Israel Neiman and Moses Grunfeld, filed a lawsuit against Queens-based landlord Maki Realty Corp. last week, alleging that it was served with a 30-day notice to address building violations at 456 Johnson Avenue or else see its 15-year lease at the property terminated.

The complaint, filed May 17 in Kings County Supreme Court, claims Maki’s 30-day notice served late last month was “vague” and “not properly served,” and disputes Maki’s claim that Sequoia is in violation of its lease on the converted warehouse.

The lawsuit added that Sequoia is “willing and able to cure” any violations in order to avoid having its lease terminated by the end of this month. The alleged violations, according to Maki’s notice served April 28, include Sequoia’s having “failed to install and maintain a fire and sprinkler service system” and “failed to properly maintain the elevators” at 456 Johnson Avenue.

Sequoia is seeking a judgment declaring Maki’s notice is “null and void” and that it “has not breached the terms of the lease,” as well as an injunction against “any action to cancel or terminate the lease.”

In addition, the developer seeks a judgment that it “should be affordable a reasonable opportunity to cure” any violations at 456 Johnson Avenue should the court determine that “there has been a breach” on the terms of its lease.

Representatives for both Sequoia and Maki, which is led by Joseph Cartolano, did not return requests for comment.

After signing a triple-net lease on the property in April 2015, Sequoia agreed to invest more than $2 million into gut-renovating and converting the four-story former paper mill, located only a few blocks from the Morgan Avenue subway stop on the L train, into a 35-unit office building with ground-floor retail.

With offices spanning between 900 to 2,200 square feet each, the project targeted TAMI and creative tenants who have increasingly looked to Brooklyn for their workspace.

But demand for space at 456 Johnson Avenue underwhelmed after the building’s launch earlier this year, with the prospect of an L train shutdown potentially contributing to the tepid response from the market. Neiman has since slashed asking rents from the upper-$40s per square foot to the mid-to-upper-$30s.

Despite signs of a softening market, the redevelopment is only one of several recent projects that have looked to transform the East Williamsburg and Bushwick neighborhoods into viable office destinations.

Lincoln Property Group is eyeing rents around $50 per square foot at a 100,000-square-foot former factory at 455 Jefferson Street, while Brooklyn developer Toby Moskovits’ “Bushwick Generator” at 215 Moore Street will span 75,000 square feet across five interconnected warehouses.

Real estate investment firm Savanna, meanwhile, has teamed with Daren Hornig’s Hornig Capital Partners on a 160,000-square-foot office and retail conversion of the former Schlitz Brewery at 95 Evergreen Avenue.