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Chetrit battles Discovery Channel at 850 3rd Avenue

Rent disputed as entertainment company says Covid prevented its move-out

Chetrit Group principal Michael Chetrit and 850 Third Avenue (850thirdavenue, iStock, Discovery Channel)
Chetrit Group principal Michael Chetrit and 850 Third Avenue (850thirdavenue, iStock, Discovery Channel)

As people spend more evenings at home, media and television companies are benefiting from a largely captive audience.

That’s one reason Discovery Communications should pay rent at 850 Third Avenue, according to Michael Chetrit, principal at Chetrit Group, who is suing its entertainment industry tenant for June and July rent. Discovery’s lease expired at the end of May, but Chetrit says it did not vacate.

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Discovery — owner of the Discovery Channel, HGTV, Food Network, OWN: Oprah Winfrey Network, and others — paid June rent but wants that money back, and did not pay July rent “either under the 150% holdover rate or the base rate,” the lawsuit claims.

Chetrit wants a court to decide whether the pandemic permits its tenant to escape payment while maintaining occupancy, claiming Discovery owes it more than $840,000, mostly in holdover charges.

Discovery rented about 160,000 square feet across seven floors of 850 Third Avenue. Prior to its lease expiring, Chetrit said, Discovery was negotiating to extend its lease while waiting for renovations at its new 230 Park Avenue South headquarters to be completed.

The lawsuit acknowledges that Covid slowed construction and delayed Discovery’s move. But even if a court decides Discovery did not overstay its lease, Chetrit says it is still entitled to about $8,000 in unpaid base rent.

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Lawyers for Discovery are said to claim its move-out preparations were stopped by Gov. Andrew Cuomo’s March 20 executive order requiring non-essential businesses to close.

However, Chetrit’s lawyers, citing building records, note that Discovery employees or agents entered the building 83 times between March 23 and May 17 and 173 times between May 18 and June 7.

Media articles attached to the complaint show that moving companies continued to operate during the height of the pandemic. Also included is a slide presentation from Discovery’s counsel, Proskauer Rose, noting that moving companies were considered an essential business.

The presentation also advised clients to consider the implications of a government freeze on evictions.

Discovery did not respond to a request for comment. The Chetrit Group declined to comment.

Discovery first entered into its office lease at 850 3rd Avenue in 2004. In 2018, its headquarters in Silver Spring, Maryland, sold for $70 million.

Representatives of JLL, the commercial broker that assisted Discovery’s search for a new headquarters in New York City, did not reply to request for comment.

Contact Orion Jones at orion.jones@therealdeal.com

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Chetrit GroupCoronavirusOffice Leasing