Landlord Sues Tenants for $81M Renovation Barred by Lease

If New York City developers Peter L. and Anthony E. Malkin win the prestigious commercial real estate Pinnacle Award for which they are nominated for their renovation of an office building across from Macy’s on West 34th Street, it will be a bittersweet victory. The Malkins are being sued by another developer, Charles Cohen, whose company owns the 26-story building that they’ve leased since 1963.

The lawsuit alleges that the Malkins had no right to affix a new glass facade and make other interior improvements without Cohen’s permission for those structural changes, as required by the lease. The lawsuit seeks to terminate the lease and evict the father and son development team.

For their part, the Malkins, who control the Empire State Building, assert that Cohen’s lawsuit is a pretext for breaking their lease, which lasts until 2077 and sets the current rent at $840,000 a year, about one tenth of the face rate Cohen could charge if the lease were renegotiated.
The Malkins argued that the lease requires them to maintain the building properly, which included replacing the supposedly leaky facade wall.

But Cohen contended that the lease specifically states that no structural change or alteration exceeding $100,000 can take place without prior written approval. “They are a sophisticated tenant, and they have a lease by which they must abide,” said an attorney for Cohen.