Free rent not entirely free, Knotel’s landlord alleges in lawsuit

Northwind Group sued the flex-office firm for $900K

New York /
Nov.November 03, 2020 05:20 PM
Knotel’s Amol Sarva and Northwind’s Ran Eliasaf with 40 Wooster Street (Google Maps)

Knotel’s Amol Sarva and Northwind’s Ran Eliasaf with 40 Wooster Street (Google Maps)

A Soho office landlord is suing Knotel over nearly $900,000 in unpaid rent, including six months of free rent that was part of its initial lease agreement.

Northwind Group, a Manhattan real estate private equity firm, wrote in a lawsuit filed in New York State Supreme Court that the flex-office company stopped paying rent on its office space at 40 Wooster Street in March.

The landlord withdrew Knotel’s $206,250 security deposit in May, but Northwind claims it’s owed $485,810 as of October. Northwind also alleges that by failing to make the required rent payments, the tenant “has forfeited its right to the free rent period amount” of $412,500, per the lawsuit.

Northwind is asking for a judgment of $898,310 against Knotel.

Offering several months of free rent is a common strategy by landlords to attract tenants, but Northwind asserts that tenants can lose that benefit if they don’t hold up their end of the bargain.

Ran Eliasaf, Northwind’s managing partner, did not return a request for comment.

“Knotel is always evaluating and adjusting our portfolio to best meet the needs of our customers, through Covid-19 and beyond, and we have reached positive resolutions with many owners,” Knotel spokesperson Mousa Ackallm said in a statement. “We take our landlord relationships very seriously, and will continue to actively engage with them to achieve good outcomes during these challenging times.”

Established in 2015, Knotel has grown rapidly since, but the pandemic lockdown has posed an existential threat to the flex-office sector. Northwind is not the first landlord to sue Knotel for nonpayment.

Northwind acquired the six-story, 14,125-square-foot Soho building in April 2014 for $16.35 million, according to public records. Knotel has occupied the second through sixth floors since March 2018.





    Related Articles

    arrow_forward_ios
    L-R: Savanna's Chris Schlank, Eastdil Secured's Will Silverman, JLL's Bob Knakal (Photos by Paul Dilakian)
    Office royalty talk conversions, distress and the “downsize upgrade” trend
    Office royalty talk conversions, distress and the “downsize upgrade” trend
    Columbia Property Trust's Nelson Mills and 799 Broadway (Columbia Property Trust, 799 Broadway, iStock)
    Columbia Property Trust signs investment firm to 71K sf at 799 Broadway
    Columbia Property Trust signs investment firm to 71K sf at 799 Broadway
    East End Capital's Jonathon Yormak and 141 East Houston Street (141 East Houston Street, East End Capital)
    Boutique LES office scores blockchain firm as anchor tenant
    Boutique LES office scores blockchain firm as anchor tenant
    Vice Media CEO Nancy Dubuc and 225 Broadway (Getty Images, Google Maps, iStock)
    Refinery29 subleasing at 225 Broadway for move in with Vice
    Refinery29 subleasing at 225 Broadway for move in with Vice
    Naftali Group's Miki Naftali, BRP Companies' Meredith Marshall (Photos by Paul Dilakian)
    Miki Naftali, Meredith Marshall talk development, death of 421a
    Miki Naftali, Meredith Marshall talk development, death of 421a
    R-L: Willow's Kevin Danehy, Era Ventures' Clelia Warburg Peters, Fifth Wall's Brad Greiwe and The Real Deal's Hiten Samtani (Photo by Paul Dilakian)
    Real estate tech is coming for your business
    Real estate tech is coming for your business
    Industrious CEO Jamie Hodari and CBRE chief financial and investment officer Emma Giamartino (LinkedIn, CBRE)
    CBRE doubles down on flex-office provider Industrious
    CBRE doubles down on flex-office provider Industrious
    New York skyline
    Rising interest rates will dampen city’s investment sales market this year
    Rising interest rates will dampen city’s investment sales market this year
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...