CBRE sues suburban shopping center landlord in another leasing dispute

The world’s largest commercial real estate brokerage has filed another lawsuit over a Chicago-area landlord’s alleged nonpayment of a big commission, while the landlord is claiming he has no choice but to renegotiate the fee.

The dispute over more than $550,000 that brokers say they’re owed adds to a slew of litigation stemming from Chicago-area property owners allegedly failing to pay leasing agents on time and as promised.

Late last month, CBRE sued Atlanta-based investor RD Sharma, who bought the 81,000-square-foot retail center at 960 South Barrington Road in Streamwood out of foreclosure for $1.2 million in 2021, according to Cook County court records.

The property had been vacant for several years, after it had been occupied and then exited by Value City Furniture, Sharma said. Its prior owner was an affiliate of the large, nationwide retail landlord Kamin Realty Company, which signed a deed in lieu of foreclosure to transfer the property to its lender, FNBC Bank & Trust, in 2020, public records show. 

Sharma’s purchase came at a significant discount from Kamin’s 2016 deal to buy the property for over $3 million.

Since Sharma’s purchase, the property — which is within the larger, 350,000-square-foot Westview Center shopping area — has turned around. 

It hit 100 percent occupancy earlier this year when Burlington Coat Factory agreed to lease more than 22,000 square feet in the Barrington Road building. Burlington was set to join a 24,000-square-foot Aldi grocery store and a 30,000 Ollie’s discount chain shop, with the new tenants having agreed to partition the former furniture store space into three separate stores.

The landlord was set to pay for and oversee a portion of the work to complete each tenant’s interior buildout, however Sharma ran into complications that delayed the project, leading to an issue with Ollie’s that has resulted in his inability to pay his broker’s commissions. CBRE’s Joe Parrott and Craig Lillibridge represented Sharma in negotiations with Aldi, while Parrott represented the landlord alone on the other two deals with Ollie’s and Burlington, exhibits in the lawsuit show.

Sharma said he couldn’t buy electrical equipment needed to complete the partitioning because parts were being held up from being shipped to Illinois during a hurricane in Florida that required priority shipping of those parts to that area of the country. As a result, Ollie’s hasn’t paid Sharma rent, citing a provision in its lease that said it would have rent abated in the event of a delay with an interior buildout.

Until Ollie’s resumes paying rent, Sharma can’t afford to pay the commissions, he said. He also said he believes he’s getting charged commissions that are above market prices, citing an Iowa City, Iowa, leasing agreement between a different landlord with Ollie’s that was viewed by The Real Deal. 

Sharma claims the agreement paid out a significantly smaller commission of $3 per square foot, a rate split between both the listing broker and the tenant’s broker. In suburban Chicago, though, Sharma claims both CBRE and a broker that represented Ollie’s are seeking 4 percent each of the total revenue provided by the lease, or around double the Ollie’s leasing commission in Iowa.

CBRE declined to comment.

“I’m still open to sit down and talk,” said Sharma, who owns several other retail properties in the U.S. He said the Streamwood deal was his largest property. He alleges CBRE signed off on paying out a co-broker’s commission to Ollie’s without his authorization.

The brokerage alleges Sharma owes about $97,000 for the Ollie’s lease, plus more than $30,000 in interest for failing to pay on time, while the landlord owes nearly $229,000 plus $47,000 in interest for the Aldi lease and more than $185,000 and over $11,000 in interest for the Burlington lease.

Sharma wants to negotiate a smaller commission payout with the brokers, but the lawsuit’s filing shows CBRE may be unwilling to settle for less.

It’s among several lawsuits that big commercial real estate brokerages, including JLL and Cushman & Wakefield, have filed in Cook County court to recover commissions they say they’re owed but haven’t been paid. 

Another is playing out between JLL and the owner of the McDonald’s corporate headquarters in Chicago’s Fulton Market neighborhood, while Cushman is suing Knickpoint Ventures over a Logan Square deal gone wrong with Crate & Barrel. 

CBRE is also pursuing a separate case against GW Properties over a suburban medical office deal that fell apart that was scheduled to pay $6 million to the brokerage, if it had moved forward. All those cases remain pending in court.

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