Legal battle ramps up at waterfront Bal Harbour condo building

Former unit owner and her buyers allege board president Joseph Swedroe is engaging in “self-dealing”

Joseph Swedroe and 286 Bal Bay Drive (Getty Images, Google Maps, Eleventh Circuit Court)

Current and former unit owners at a boutique waterfront building in Bal Harbour allege that the condo board president has illegally obtained control, with the goal of ultimately terminating the association and redeveloping the property.

Litigation between Water’s Edge House condo board president Joseph Swedroe and former unit owner Marlene Feuerring dates back nearly two decades. Swedroe, who is a partner at his father’s architecture firm and a real estate agent with Beachfront Realty, owns seven of the 11 units at Water’s Edge House, built in 1954, at 286 Bal Bay Drive.

At the root of the dispute is that Feuerring and the now-owners of her former units allege Swedroe has illegally claimed the right of first refusal to purchase units when they become available without going through the correct process. Swedroe and the association allege that Feuerring violated the condo declaration by bypassing the association.

If Swedroe were to acquire enough units to eventually terminate the association, he could sell the property to a developer for a significant markup or redevelop it himself. Developers are increasingly targeting older properties through condo buyouts because little undeveloped waterfront land is left. And in the year since the deadly condo collapse in Surfside, more owners are willing to sell.

Swedroe, his attorney, Aaron Behar, and the condo association’s lawyer, Evan Berger, did not immediately respond to requests for comment.

According to Miami-Dade court filings, Feuerring had entered into a deal in November of last year to sell her units to a non-Swedroe buyer, but Swedroe wanted to purchase the units. The board was unable to vote to exercise the right of first refusal on Feuerring’s units because two of the three board members had a financial interest in the outcome of the sale, a.k.a. a conflict of interest.

But at an emergency special meeting in December of last year, seven of the 10 unit owners present voted in favor of the association purchasing the units with Swedroe as the true buyer, according to court filings. Swedroe is listed as a manager of the LLCs that own six units and he owns one unit in his name, giving him the seven votes.

After the vote, Swedroe notified Feuerring and her buyer that he was “ready, willing, and able to close” on the units, according to the lawsuit he filed against her last year in Miami-Dade Circuit Court. Feuerring “refused to cooperate” and said she will not sell the condos to him without a court order, according to his complaint.

A judge dismissed Swedroe’s lawsuit with prejudice, court records show, and Feuerring’s buyer backed out. She ended up selling the units to her real estate agents, Lisa Miller and Hayley Sloman of The Girlz LLC in March for $1.7 million, property records show.

Swedroe and Feuerring’s disputes date back to 2004, when Swedroe sued Water’s Edge House and unit owners, including Feuerring and her late husband, Ralph. That complaint is not available online. In 2020, Feuerring sued the condo association and Swedroe, alleging that Swedroe breached his fiduciary duties “by engaging in self-dealing” as association president, for allegedly failing to maintain and repair the common spaces, resulting in water intrusion to Feuerring’s property, which ultimately devalued her units.

Fast forward to this year, in May, when Water’s Edge House sued Feuerring, Miller, Sloman and The Girlz LLC for breach of contract and equitable, declaratory, and injunctive relief after Feuerring sold her unit to The Girlz LLC. A hearing on whether the case will be transferred to complex business court is set for Sept. 9.

The defendants – Feuerring, Miller, Sloman and The Girlz LLC – seek the court’s appointment of a receiver to take over the association. They allege that Swedroe has perpetrated the association’s alleged “flagrant breach of fiduciary duties and gross mismanagement” through “years of unchecked self-dealing and breaches” of the condo declaration. They claim Swedroe has led the charge on special assessments to all owners at the building to fund his lawsuit against Feuerring.

Attorney Jordan Isrow of Government Law Group, representing Feuerring, and her buyers in the lawsuit, said that once a majority owner has control of the association, it leaves the remaining owners with little leverage.

“It’s time for people to start realizing,” Isrow said. “It may not be relevant today, but these are the decisions that snowball unless you’re actively participating” in the decisions that boards make.

Isrow said the association doesn’t have the meeting minutes that statute requires, documenting previous votes on exercising its right of first refusal for previous purchases.

“A lot of these people are older or part-timers and they aren’t paying attention as much,” Isrow said, referring to aging condo communities in South Florida. “This is the tip of the iceberg. My hope is we can get a good result.”

Article Link: Legal battle ramps up at waterfront Bal Harbour condo building
Auther: Katherine Kallergis

As Fight Over South Florida Condo Termination Intensifies, Expect More Litigation as Developers Pursue New Buildings

“A lot of condo associations seem to go unchecked. It’s not to say that they do anything wrong, but the truth is, a lot of people aren’t paying attention to what their condo board does. Especially in something like this particular building, where a lot of its members are part-time residents,” said Jordan Isrow of Government Law Group. “You may not see something is happening to your building or not happening to your building until it’s too late.”

As condo associations and developers look to take advantage of older buildings to capitalize on South Florida’s increased property values, condo termination litigation is bound to increase. But that can also create problems for condo owners as some may try to illegally profit off of the trend.

That’s an allegation at the heart of a lawsuit against Miami architect heir and Water’s Edge Condominium Association president and board chair. Joseph Swedroe of Bal Harbour, who owns seven of the 11 units at Water’s Edge condominium, is accused of unlawfully self-dealing to gain control of the majority of the units.

The property is located at 286 Bal Bay Drive in Bal Harbour.

It’s a case that demonstrates why associations might need a receiver to keep things fair for everyone, as attorney Jordan Isrow of Government Law Group in Fort Lauderdale sees it.

Isrow represents the defendants who are condo unit owners where Swedroe is on the board.

Jordan Isrow of Government Law Group in Fort Lauderdale.

“A lot of condo associations seem to go unchecked. It’s not to say that they do anything wrong, but the truth is, a lot of people aren’t paying attention to what their condo board does. Especially in something like this particular building, where a lot of its members are part-time residents,” said Isrow. “You may not see something is happening to your building, or not happening to your building, until it’s too late.”

Attorney Evan Berger of Becker & Poliakoff in Fort Lauderdale represents the condo association, and attorney Daniel Gielchinsky of DGIM Law in Bay Harbour Islands represented Swedroe in his lawsuit. Neither responded to a request for comment by deadline.

Isrow’s clients allege that Swedroe wanted to buy two units from owner Marlene Feurring so that he could own nine of the 11 units in the condominium. The lawsuit claims Swedroe used his control of the board to charge special assessments to all unit owners to fund the lawsuit against them for the benefit of Swedroe personally with any legitimate benefit to the members of the association at large.

“Our belief is that he’s wanting to gain 80% plus ownership requirement statutorily allow him to terminate the condominium which would then give him the right to control the destiny of a very valuable piece of real estate in Bal Harbor on the water right by the inland,” said Isrow.

The case first came to Isrow when Water’s Edge Declaration of Condominium sued Feuerring, claiming that the association has the right of first refusal to buy any unit that was offered for sale. The association claimed the seller violated the “clear and enforceable requirement of the declaration” when Feuerring sold her units to Lisa Miller and Haley Sloman without first providing the association with the opportunity to purchase them.

“She gave notice to the association, but at the time there were only two board members, one of which was Joseph Swedroe,” said Isrow. “The association’s own general counsel advised him that he could not vote on the right of first refusal because he had a conflict of interest, so she was ready to move forward with the sale but before she could do so there was a lawsuit filed by Swedroe individually.”

Isrow said Swedroe filed a lis pendens to stop the sale, seeking to force Feuerring to sell the units under the right of first refusal.

“We went for an emergency hearing that he did not have legal standing because he is not the association and the association is the only one that had that vote initially, and without a proper vote, there is no exercising right of first refusal,” said Isrow. “It was very unusual because it rarely happens.”

That case was dismissed with prejudice, and Swedroe was ordered to pay the defendant’s attorney’s fees. Now, there are two additional board members, who Isrow claims are Swedroe’s sister and the CEO of his father’s architect firm.

“They do not live in the building. They do not own any of the units in the building. They were just designated by Joe Swedroe or just requested that they step in to be candidates and they were elected,” said Isrow.

Isrow said after the election, the association started to investigate the sale of Feuerring’s former units. Feuerring, Miller and Sloman have countersued, asking the court to appoint a receiver to oversee the association and the board.

“Even assuming that they were going to void the transaction, which we don’t think will happen, that only gets you back to the status quo. That means Marlene goes back to being the owner of the unit and the buyer is no longer the new owner,” said Isrow. “Marlene has made clear she will never sell to Joe Swedroe. She will hold onto it and gift it to her son or grandson.”

Isrow said the lawsuit epitomizes why the association needs a receiver.

“Without any of the other unit owners having a say in the voting, keep in mind he owns seven of the 11 units, anytime there’s even an at-large vote he trumps all the other unit owner’s votes. There’s no alternative remedy to seek help,” said Isrow. “The only viable alternative here is a receiver and that’s the direction we’re going in.”

With an increase in property values there’s a lot of money to be made, and older condos that are redeveloped could be worth something in the multimillion-dollar range. Isrow said he expects to see similar cases in the future.

For attorneys who represent condo owners who may find themselves in a similar situation, Isrow advises being extremely detail-oriented.

“Make as many records requests as possible because, statutorily, the association is required by law to maintain certain records,” Isrow said. “If those records aren’t being kept or they never existed in the first place, whichever may be the case, that’s a very important barometer of whether that is something of concern.”

Article Link: As Fight Over South Florida Condo Termination Intensifies, Expect More Litigation as Developers Pursue New Buildings
Auther: Melea VanOstrand

StrongBlock Lured, Bilked Crypto Investors Via Reward, Suit Says

Crypto-asset seller StrongBlock promised “lifetime” rewards with the purchase of certain blockchain products but then capped those rewards in a bait and switch, 15 investors say in a suit in federal court in New York.

The company also violated the law by failing to register as a seller of securities, Erik Crowl and the other investors say in their complaint, filed Aug. 26 in the US District Court for the Southern District of New York. The tokens and nodes qualify as securities, they say.

StrongBlock’s blockchain crypto-assets, unlike decentralized commodities based on blockchain, “are similar to traditional securities in that they represent one’s investment in a project that is to be undertaken with the funds raised,” the investors say.

Their compensation should amount to more than $4 million, they say.

The investors allege StrongBlock sold them nodes in exchange for StrongBlock STRNG and SRINGR tokens that they owned “and promised those nodes would in turn earn Plaintiffs token rewards.” The rewards were allegedly promised to come daily, “in perpetuity with no cap or limitation.”

But the company “pulled the rug out from under every node holder by arbitrarily and unilaterally capping in April 2022 the cumulative rewards that could be generated by an individual node,” the investors say. That action allegedly contradicted company statements “that node rewards would never go to zero.”

The investors also name four individuals in the complaint, including CEO and founder David Moss.

Causes of Action: Unregistered offer and sale of securities; control person liability; breach of contract; conversion; fraudulent and negligent misrepresentation; fraudulent inducement; negligence; and unjust enrichment.

Relief: Compensatory damages of “no less than $4,171,584.36″ plus interest; and punitive damages.

Response: StrongBlock didn’t immediately respond to a request for comment sent through a support form on its website.

Attorneys: Zeisler PLLC and Government Law Group PLLC represent the investors.

The case is Crowl v. StrongBlock, S.D.N.Y., No. 1:22-cv-07313, complaint 8/26/22.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Maya Earls at mearls@bloomberglaw.com

Article Link: StrongBlock Lured, Bilked Crypto Investors Via Reward, Suit Says

Hollywood trailer park goes under contract to developer

Phase 2 of the Pinnacle 441 apartments is planned at 6028 Johnson St., Hollywood.

The developer has proposed a 7-story project here.

Pinnacle aims to redevelop a trailer park in Hollywood to build the second phase of its affordable housing project.

The city’s Technical Advisory Committee on Sept. 6 will consider plans for Pinnacle 441 Phase 2. Miami-based Pinnacle has the 1.67-acre trailer park, containing 50 homes, at 6028 Johnson St. under contract from Ponte Vedra-based TP Hollywood LLC.

Directly to the east of the trailer park, Pinnacle broke ground on Pinnacle 441 in early August. The $45 million project will have 110 affordable apartments, three market-rate apartments and 6,760 square feet of retail.

“We’re really excited to expand our footprint in affordable housing development with the possibility of adding 100 additional residences with the second phase of Pinnacle 441,” Pinnacle regional VP Timothy Wheat stated.

Totaling 123,593 square feet in seven stories, the project would have 100 apartments and 110 parking spaces. The units would range from 783 to 1,330 square feet.

There would be 30 one-bedroom units, 47 two-bedroom units, 22 three-bedroom units, and one ground-floor live-work unit with two bedrooms and space for a small business.

There wouldn’t be many amenities in the building, as the tenants would have access to the amenities in the first phase of the project.

Hollywood-based Kaller Architecture designed the project. Fort Lauderdale-based attorney Keith Poliakoff represents the developer in the application.

With rents spiking by double digits in Broward County over the past year, there is huge demand for affordable housing. The U.S. 441 corridor in Hollywood didn’t have much development for decades, but the city has allowed more density there and developers have taken a stronger interest in the area.

Many trailer parks in South Florida have been redeveloped into more profitable uses in recent years. This is one of the few instances in which the trailer park would be replaced by affordable housing, instead of market-rate apartments or industrial.

Article Link: Hollywood trailer park goes under contract to developer
Auther: Brian Bandell

30 years after Hurricane Andrew: How resilient is South Florida? – orlandosentinel.com

The 30th anniversary of Hurricane Andrew’s assault on South Florida is days away, and for the uninitiated and those who may have forgotten, here is what the Category 5 storm did to southern Miami-Dade County and elsewhere.

After striking on Aug. 24, 1992, Andrew killed 65 people, destroyed 63,000 homes, left 175,000 homeless, and in the immediate aftermath, left a million people without power. Three cities and towns in particular — Homestead, Florida City and Naranja Lakes — were completely or nearly reduced to ruins.

When 100 Air Force reservists returned home from temporary duty in Italy, their C-141 Starlifter landed at the U.S. Coast Guard station at Opa Locka Airport in northern Miami-Dade, not at their headquarters at Homestead Air Force Base, which bore the earmarks of a military attack.

“Welcome back,” Col. Russell Clem told the returnees. “Unfortunately, I have to say, welcome back to the greatest natural disaster to hit the United States.”

By many accounts, the recovery effort that followed was chaotic and nearly devoid of leadership. But once the extent of the disaster became apparent, a region that was already battered by a recession, a savings-and-loan crisis, elevated joblessness, and the bankruptcies of leading employers gradually found its way back.

If Andrew did the region any favors, it exposed flaws in local building codes, shoddy construction on a large scale, the pitfalls of relying on an economy focused on tourism and real estate, and deficits in storm preparation and recovery.

How resilient is South Florida now?

Interviews this week with businessmen, economists, forecasters and other experts show substantial improvements over the last three decades. Many agree that another storm of Andrew’s magnitude is likely to be mitigated by preventive measures taken over the years, though South Florida’s growing status as a preferred place for out-of-staters to relocate has raised uncertainties about the extent of damages another massive storm could cause.

Hurricane Andrew, one of the most powerful storms of the 20th Century, as it hit the southeast coast of Florida on Aug. 24, 1992.

New building codes

The communities of South Miami-Dade never had a chance in the face of a storm packing wind speeds of 175 mph and higher in certain areas.

Mobile home parks were reduced to shards of wood and metal. Planes, hangars and housing at the air base suffered heavy damage. Some housing developments stood fast better than others, their fates tied to building code adherence, construction quality and their proximity to the severest winds.

Broward and Palm Beach counties got their share of high winds, downed trees and structural damage, but the impact was greatest the farther south one drove.

The storm destroyed or damaged more than half of Miami-Dade’s housing units, according to a 1996 University of Florida research report. More than 353,000 people evacuated their homes, according to the university’s Bureau of Economic and Business Research.

Two Miami-Dade grand juries investigated deficiencies in both the codes and their enforcement, and strongly urged improvements. Today those improvements are a factor that many in the construction and weather forecasting businesses view as the region’s main line of defense against future big storms.

Bryan Norcross, FOX weather contributor and hurricane specialist, was working for WTVJ-Ch. 6 in Miami when Andrew struck. He was on the air for 23 consecutive hours, sitting down in his anchor chair at 9 a.m. Sunday; he didn’t leave until 8 a.m. Monday.

Norcross is credited with comforting thousands of South Floridians during the worst of the storm because they heard his voice on the radio. They heard him on the radio only because he made preparations to have a radio feed in case the TV transmission didn’t work.

“A sequence of things that happened allowed my voice to be the voice they heard in the dark of night when all hell was breaking loose,” he said.

His main Andrew takeaway: better building codes.

“The building codes used in Dade and Broward county are the best hurricane building codes in the world. It’s a direct result of Hurricane Andrew,” he said.

Miami construction law attorney George Breur of the Mark Migdal and Hayden firm says the post-Andrew codes are responsible for reduced damages across Florida during subsequent storms in the 2000s.

“Andrew was basically what gave birth to the Florida building code,” he said. “There was obviously inconsistent enforcement of the codes. Every three years it’s been updated and improved.”

In Miami. he said, 25 new condo towers are under construction and all of them will contain high-impact glass materials.

“In Miami-Dade County a residential high-rise has to have a wind grade of over 185 mph,” Breur said. “That’s not to say we’re not going to have some damage. But the key takeaway is that losses will be reduced. You’re not going to have a building blown completely away and there should be less insurance claims.”

Aerial of a Florida City mobile home park in 1992 after Hurricane Andrew devastated south Miami-Dade (then just Dade) County. The old Florida City water tower took a beating and was replaced by a new tower. The city’s water plant was also refurbished. (Carl Seibert/South Florida Sun Sentinel file)

But construction these days is more costly.

Ron Magill, Zoo Miami’s goodwill ambassador and communications director, recalled the zoo’s aviary was destroyed, causing the loss of countless birds.

“What has changed is that the building codes became so much more stringent following the hurricane,” Magill said. “An aviary that originally cost us $3 million to build, to rebuild [it] to meet the codes properly took us 10 years at a cost of $13 million.”

Management hopes the strengthened codes will help prevent animal escapes and reduce the chances for injuries.

Peter Dyga, president and CEO at Associated Builders & Contractors, Florida East Coast chapter, warns the code improvements are no guarantee against widespread damages even though he lauds the upgrades.

“For sure I think the changes that were put in place contributed to progress through the years to the point where we have one of, if not the strongest building codes in the world.”

As a result, the level of destruction “should not should be as great” if the region was hit by another storm of Andrew’s strength.

But he warned the better code doesn’t make the region risk-free.

“We will probably be hit by the same things again,” he said. “We are taking a calculated risk by having people living in a zone that’s exposed like the southeastern portion of Florida.”

A diversified economy: a stronger defense?

South Florida’s economy is in better shape now than 30 years ago to withstand the financial impact of severe storms, economists say.

J. Antonio Villamil is the founder and principal adviser at Washington Economics Group, a consultancy in Coral Gables, and a former undersecretary of commerce In the 1990s during the administration of President George H.W. Bush.

“We’re a different economy altogether,” he said. “We have much more international business and high technology startups. We don’t rely as much as we did before on cyclical construction and tourism as in the past. Given the size of the population and entrepreneurial nature of the startups, it’s quite different than during Andrew.”

amra Giffen looks through what is left of her mobile home in Kendall on Aug. 25, 1992, after Hurricane Andrew hit South Florida. (Jim Virga/South Florida Sun Sentinel file)

Immediately after the storm, a recovery movement spearheaded by private businesses called “We Will Rebuild” helped jump-start the process and set a tone for more cooperation between the public and private sectors..

“It helps to create a better business environment when you have the public sector and business community working toward a common goal,” Villamil said. “That happened. There was a lot of leadership in the area.”

“We Will Rebuild was a major factor in driving investment in the area,” he added. “The business environment improved dramatically.”

Many businesses selling must-have items did well after the storm.

Keith Koenig, CEO of the City Furniture chain, which is based in Tamarac, said the storm wiped out his company’s location in Cutler Bay. At the time, the business was known as Waterbed City.

“We were pretty devastated by that,” he said. “The insurance company covered that. Our business really boomed because people needed to replace furniture where their homes and apartments were wiped out.”

“It was a disaster, and also an opportunity,” said Koenig, who also serves as a board member of the Atlanta Federal Reserve’s branch in Miami. “We dealt with the hurricane and our business actually boomed for about nine months. It was an artificial temporary boom and then got back to a more normal level of business.”

He, too, counts the strengthened building codes as being “at the top of the list in my mind” as being a major change for the good driven by Andrew.

The Aug. 25, 1992, front page of the Sun Sentinel, a day after Hurricane Andrew blasted across South Florida. (South Florida Sun Sentinel)

“Builders were really concerned this would drive up costs,” he said. “But it didn’t slow down demand. Now, any home not built to that level of that resilience is not as valuable.”

Northward ho — instant growth for Broward

The storm dramatically forced shifts in the population. driving nearly 40,000 people out of Miami-Dade permanently, according to the UF report, with many moving to the Broward County cities of Miramar and Pembroke Pines. Both are now among the region’s fastest-growing cities.

“People got their insurance money and the entire population shifted from Dade County to West Broward County almost overnight,” said attorney Keith Poliakoff, managing partner of the Government Law Group in Fort Lauderdale. “I always thought that was amazing.”

Previously, the West Broward area was “nothing but land and cattle,” he added.

Bob Swindell, president and CEO of the Greater Fort Lauderdale Alliance, recalled that a significant amount of residential development already had been underway when the storm hit, effectively providing housing opportunities for Hispanic and Caribbean-area residents who resided in south Miami-Dade and needed to find new places to live.

“Fortunately, there was enough product coming online in Broward,” he said. “We had the first Caribbean-American majority city commission in Broward County and in the country. It changed our politics and the culture and the makeup of our county.”

Villamil said the population movement created “a truly integrated economy,” especially between Miami-Dade and Broward.

“We truly have a megalopolis between Dade and Broward, including Palm Beach County,” he said. “This is likely to accelerate with Brightline and Tri-Rail and the ability to commute between counties.”

Better preparations emerge

For FPL, there were numerous lessons learned about how to respond to such a disaster. It had no idea in 1992 how to beef up the workforce before the storm, how to house those workers, how to feed them, where to stage the work trucks, where to stage the food.

The utility has more than 100 staging sites now, said Manny Miranda, executive vice president for power delivery.

He recalled that after Andrew struck, he received an initial damage report from a co-worker.

“He said, ‘Manny, every single pole is down,’” Miranda recalled. “I said, ‘Maybe it’s where you’re standing.’ He said, ‘No, everything is devastated.’”

Miranda would soon learn that description was accurate. The utility replaced 20,000 poles for 1.4 million customers.

The utility’s storm recovery process is very different now, he said.

Boats damaged by Hurricane Andrew at Black Point Marina in Homestead on Sept. 4, 1992. (Judy Sloan Reich/South Florida Sun Sentinel file)

“We already have pre-determined where material goes, where the tents go, where trucks park, how to fuel trucks. We can house people, we have mobile trailers for sleeping, mobile trailers for cooking,” he said.

The company also learned to have its workers toil alongside city cleanup crews. One thing that happened during Andrew was that municipal crews bulldozed entire areas to get them cleared, destroying electrical equipment in the process.

Miranda said about 45% of FPL’s electrical lines are underground.

“One of the things we know is our main transmission lines, our main circuit lines, what we call main feeder lines, they hold up pretty well during a hurricane,” Miranda said. “The issue for us during Hurricane Irma was overhead lines in people’s backyards.”

Miranda said access and restoration is complicated by trees, swimming pools and sheds. The utility is looking to put all neighborhood lines underground and harden them all to withstand 145 mph winds.

Zoo Miami in South Miami-Dade learned it needs a post-storm plan, including having generators for air conditioning animal housing.

“I think the zoo is much-better prepared in dealing with the aftermath than we were initially,” Magill said. “The sense of having a pre-determined evacuation for animals post-storm, having generators now built and located throughout the park, having our stations properly managed and maintained so we can deal with excess water. I think that experience is going to be invaluable should another storm of that magnitude come through.”

Swindell believes the state now has a better storm preparedness culture.

“People were moving to Florida and a lot of new folks had never been in a hurricane before,” he said. “You’d have a hurricane party at a local bar and go out and buy stuff you would never buy.”

“That mindset really got shaken up. I think people take it much more seriously. We’re building much better.”

Three generations of one family lost their mobile homes at the Dadeland Mobile Home Park in Kendall when Hurricane Andrew hit South Florida. Tamra Giffen comforts daughter Catlin, 3, while grandmother Dorothy Giffen rests on what was left of a neighbor’s home on Aug. 25, 1992. (Jim Virga/South Florida Sun Sentinel file)

The next ‘Big One’

Economists still warn that another storm of Andrew’s magnitude could well create much more damage than in 1992 mainly because of the sheer rise in the region’s population, which is now 6.1 million, up from the 4.1 million people who lived here three decades ago.

The increased density caused by a development boom has created higher real estate values that could easily be deflated by another natural disaster, they warn.

“Where we might be underestimating is the actual cost,” said Sofia Johan, an economist at Florida Atlantic University. “The population has doubled in the last 20 years and the population’s wealth has possibly doubled, if not quadrupled.”

“Whatever damage happens is going to be even more expensive,” Johan added, noting that insurance companies are dropping customers and raising rates.

Florida’s insurance market has spent most of the last two years on life support, battered by financial woes, the South Florida Sun Sentinel recently reported. Heavy losses caused widespread fears — just before the official start of hurricane season on June 1 — that a large number of companies would not be able to meet the state’s minimum financial-strength requirements to protect all of the state’s property owners.

“I get dropped by my insurance companies on a regular basis for whatever reason,” Johan said. “I am thinking about all of those people who cannot afford the 60% to 70% increases in insurance. What would happen to them?”

Hollywood Mayor Josh Levy reminds people that sea level rise is a major concern.

“If a storm hits at King Tide we could be worse off as a region,” he said. “We’re certainly taking steps to raise the seawalls and public shorelines to reduce the likelihood of flooding in a perfect-storm situation. Conditions led by sea level rise make the challenge all the more harder. The bar is set higher by nature itself.”

Staff writer David Lyons can be reached at dvlyons@SunSentinel.com. Staff writer Chris Perkins can be reached at chperkins@sunsentinel.com.

Article Posted on: 30 years after Hurricane Andrew: How resilient is South Florida?

Author: David Lyons and Chris Perkins

30 years after Hurricane Andrew: How resilient is South Florida? – sun-sentinel.com

The 30th anniversary of Hurricane Andrew’s assault on South Florida is days away, and for the uninitiated and those who may have forgotten, here is what the Category 5 storm did to southern Miami-Dade County and elsewhere.

After striking on Aug. 24, 1992, Andrew killed 65 people, destroyed 63,000 homes, left 175,000 homeless, and in the immediate aftermath, left a million people without power. Three cities and towns in particular — Homestead, Florida City and Naranja Lakes — were completely or nearly reduced to ruins.

When 100 Air Force reservists returned home from temporary duty in Italy, their C-141 Starlifter landed at the U.S. Coast Guard station at Opa Locka Airport in northern Miami-Dade, not at their headquarters at Homestead Air Force Base, which bore the earmarks of a military attack.

“Welcome back,” Col. Russell Clem told the returnees. “Unfortunately, I have to say, welcome back to the greatest natural disaster to hit the United States.”

By many accounts, the recovery effort that followed was chaotic and nearly devoid of leadership. But once the extent of the disaster became apparent, a region that was already battered by a recession, a savings-and-loan crisis, elevated joblessness, and the bankruptcies of leading employers gradually found its way back.

If Andrew did the region any favors, it exposed flaws in local building codes, shoddy construction on a large scale, the pitfalls of relying on an economy focused on tourism and real estate, and deficits in storm preparation and recovery.

How resilient is South Florida now?

Interviews this week with businessmen, economists, forecasters and other experts show substantial improvements over the last three decades. Many agree that another storm of Andrew’s magnitude is likely to be mitigated by preventive measures taken over the years, though South Florida’s growing status as a preferred place for out-of-staters to relocate has raised uncertainties about the extent of damages another massive storm could cause.

Hurricane Andrew, one of the most powerful storms of the 20th Century, as it hit the southeast coast of Florida on Aug. 24, 1992.

New building codes

The communities of South Miami-Dade never had a chance in the face of a storm packing wind speeds of 175 mph and higher in certain areas.

Mobile home parks were reduced to shards of wood and metal. Planes, hangars and housing at the air base suffered heavy damage. Some housing developments stood fast better than others, their fates tied to building code adherence, construction quality and their proximity to the severest winds.

Broward and Palm Beach counties got their share of high winds, downed trees and structural damage, but the impact was greatest the farther south one drove.

The storm destroyed or damaged more than half of Miami-Dade’s housing units, according to a 1996 University of Florida research report. More than 353,000 people evacuated their homes, according to the university’s Bureau of Economic and Business Research.

Two Miami-Dade grand juries investigated deficiencies in both the codes and their enforcement, and strongly urged improvements. Today those improvements are a factor that many in the construction and weather forecasting businesses view as the region’s main line of defense against future big storms.

Bryan Norcross, FOX weather contributor and hurricane specialist, was working for WTVJ-Ch. 6 in Miami when Andrew struck. He was on the air for 23 consecutive hours, sitting down in his anchor chair at 9 a.m. Sunday; he didn’t leave until 8 a.m. Monday.

Norcross is credited with comforting thousands of South Floridians during the worst of the storm because they heard his voice on the radio. They heard him on the radio only because he made preparations to have a radio feed in case the TV transmission didn’t work.

“A sequence of things that happened allowed my voice to be the voice they heard in the dark of night when all hell was breaking loose,” he said.

His main Andrew takeaway: better building codes.

“The building codes used in Dade and Broward county are the best hurricane building codes in the world. It’s a direct result of Hurricane Andrew,” he said.

Miami construction law attorney George Breur of the Mark Migdal and Hayden firm says the post-Andrew codes are responsible for reduced damages across Florida during subsequent storms in the 2000s.

“Andrew was basically what gave birth to the Florida building code,” he said. “There was obviously inconsistent enforcement of the codes. Every three years it’s been updated and improved.”

In Miami. he said, 25 new condo towers are under construction and all of them will contain high-impact glass materials.

“In Miami-Dade County a residential high-rise has to have a wind grade of over 185 mph,” Breur said. “That’s not to say we’re not going to have some damage. But the key takeaway is that losses will be reduced. You’re not going to have a building blown completely away and there should be less insurance claims.”

Aerial of a Florida City mobile home park in 1992 after Hurricane Andrew devastated south Miami-Dade (then just Dade) County. The old Florida City water tower took a beating and was replaced by a new tower. The city’s water plant was also refurbished. (Carl Seibert/South Florida Sun Sentinel file)

But construction these days is more costly.

Ron Magill, Zoo Miami’s goodwill ambassador and communications director, recalled the zoo’s aviary was destroyed, causing the loss of countless birds.

“What has changed is that the building codes became so much more stringent following the hurricane,” Magill said. “An aviary that originally cost us $3 million to build, to rebuild [it] to meet the codes properly took us 10 years at a cost of $13 million.”

Management hopes the strengthened codes will help prevent animal escapes and reduce the chances for injuries.

Peter Dyga, president and CEO at Associated Builders & Contractors, Florida East Coast chapter, warns the code improvements are no guarantee against widespread damages even though he lauds the upgrades.

“For sure I think the changes that were put in place contributed to progress through the years to the point where we have one of, if not the strongest building codes in the world.”

As a result, the level of destruction “should not should be as great” if the region was hit by another storm of Andrew’s strength.

But he warned the better code doesn’t make the region risk-free.

“We will probably be hit by the same things again,” he said. “We are taking a calculated risk by having people living in a zone that’s exposed like the southeastern portion of Florida.”

A diversified economy: a stronger defense?

South Florida’s economy is in better shape now than 30 years ago to withstand the financial impact of severe storms, economists say.

J. Antonio Villamil is the founder and principal adviser at Washington Economics Group, a consultancy in Coral Gables, and a former undersecretary of commerce In the 1990s during the administration of President George H.W. Bush.

“We’re a different economy altogether,” he said. “We have much more international business and high technology startups. We don’t rely as much as we did before on cyclical construction and tourism as in the past. Given the size of the population and entrepreneurial nature of the startups, it’s quite different than during Andrew.”

amra Giffen looks through what is left of her mobile home in Kendall on Aug. 25, 1992, after Hurricane Andrew hit South Florida. (Jim Virga/South Florida Sun Sentinel file)

Immediately after the storm, a recovery movement spearheaded by private businesses called “We Will Rebuild” helped jump-start the process and set a tone for more cooperation between the public and private sectors..

“It helps to create a better business environment when you have the public sector and business community working toward a common goal,” Villamil said. “That happened. There was a lot of leadership in the area.”

“We Will Rebuild was a major factor in driving investment in the area,” he added. “The business environment improved dramatically.”

Many businesses selling must-have items did well after the storm.

Keith Koenig, CEO of the City Furniture chain, which is based in Tamarac, said the storm wiped out his company’s location in Cutler Bay. At the time, the business was known as Waterbed City.

“We were pretty devastated by that,” he said. “The insurance company covered that. Our business really boomed because people needed to replace furniture where their homes and apartments were wiped out.”

“It was a disaster, and also an opportunity,” said Koenig, who also serves as a board member of the Atlanta Federal Reserve’s branch in Miami. “We dealt with the hurricane and our business actually boomed for about nine months. It was an artificial temporary boom and then got back to a more normal level of business.”

He, too, counts the strengthened building codes as being “at the top of the list in my mind” as being a major change for the good driven by Andrew.

The Aug. 25, 1992, front page of the Sun Sentinel, a day after Hurricane Andrew blasted across South Florida. (South Florida Sun Sentinel)

“Builders were really concerned this would drive up costs,” he said. “But it didn’t slow down demand. Now, any home not built to that level of that resilience is not as valuable.”

Northward ho — instant growth for Broward

The storm dramatically forced shifts in the population. driving nearly 40,000 people out of Miami-Dade permanently, according to the UF report, with many moving to the Broward County cities of Miramar and Pembroke Pines. Both are now among the region’s fastest-growing cities.

“People got their insurance money and the entire population shifted from Dade County to West Broward County almost overnight,” said attorney Keith Poliakoff, managing partner of the Government Law Group in Fort Lauderdale. “I always thought that was amazing.”

Previously, the West Broward area was “nothing but land and cattle,” he added.

Bob Swindell, president and CEO of the Greater Fort Lauderdale Alliance, recalled that a significant amount of residential development already had been underway when the storm hit, effectively providing housing opportunities for Hispanic and Caribbean-area residents who resided in south Miami-Dade and needed to find new places to live.

“Fortunately, there was enough product coming online in Broward,” he said. “We had the first Caribbean-American majority city commission in Broward County and in the country. It changed our politics and the culture and the makeup of our county.”

Villamil said the population movement created “a truly integrated economy,” especially between Miami-Dade and Broward.

“We truly have a megalopolis between Dade and Broward, including Palm Beach County,” he said. “This is likely to accelerate with Brightline and Tri-Rail and the ability to commute between counties.”

Better preparations emerge

For FPL, there were numerous lessons learned about how to respond to such a disaster. It had no idea in 1992 how to beef up the workforce before the storm, how to house those workers, how to feed them, where to stage the work trucks, where to stage the food.

The utility has more than 100 staging sites now, said Manny Miranda, executive vice president for power delivery.

He recalled that after Andrew struck, he received an initial damage report from a co-worker.

“He said, ‘Manny, every single pole is down,’” Miranda recalled. “I said, ‘Maybe it’s where you’re standing.’ He said, ‘No, everything is devastated.’”

Miranda would soon learn that description was accurate. The utility replaced 20,000 poles for 1.4 million customers.

The utility’s storm recovery process is very different now, he said.

Boats damaged by Hurricane Andrew at Black Point Marina in Homestead on Sept. 4, 1992. (Judy Sloan Reich/South Florida Sun Sentinel file)

“We already have pre-determined where material goes, where the tents go, where trucks park, how to fuel trucks. We can house people, we have mobile trailers for sleeping, mobile trailers for cooking,” he said.

The company also learned to have its workers toil alongside city cleanup crews. One thing that happened during Andrew was that municipal crews bulldozed entire areas to get them cleared, destroying electrical equipment in the process.

Miranda said about 45% of FPL’s electrical lines are underground.

“One of the things we know is our main transmission lines, our main circuit lines, what we call main feeder lines, they hold up pretty well during a hurricane,” Miranda said. “The issue for us during Hurricane Irma was overhead lines in people’s backyards.”

Miranda said access and restoration is complicated by trees, swimming pools and sheds. The utility is looking to put all neighborhood lines underground and harden them all to withstand 145 mph winds.

Zoo Miami in South Miami-Dade learned it needs a post-storm plan, including having generators for air conditioning animal housing.

“I think the zoo is much-better prepared in dealing with the aftermath than we were initially,” Magill said. “The sense of having a pre-determined evacuation for animals post-storm, having generators now built and located throughout the park, having our stations properly managed and maintained so we can deal with excess water. I think that experience is going to be invaluable should another storm of that magnitude come through.”

Swindell believes the state now has a better storm preparedness culture.

“People were moving to Florida and a lot of new folks had never been in a hurricane before,” he said. “You’d have a hurricane party at a local bar and go out and buy stuff you would never buy.”

“That mindset really got shaken up. I think people take it much more seriously. We’re building much better.”

Three generations of one family lost their mobile homes at the Dadeland Mobile Home Park in Kendall when Hurricane Andrew hit South Florida. Tamra Giffen comforts daughter Catlin, 3, while grandmother Dorothy Giffen rests on what was left of a neighbor’s home on Aug. 25, 1992. (Jim Virga/South Florida Sun Sentinel file)

The next ‘Big One’

Economists still warn that another storm of Andrew’s magnitude could well create much more damage than in 1992 mainly because of the sheer rise in the region’s population, which is now 6.1 million, up from the 4.1 million people who lived here three decades ago.

The increased density caused by a development boom has created higher real estate values that could easily be deflated by another natural disaster, they warn.

“Where we might be underestimating is the actual cost,” said Sofia Johan, an economist at Florida Atlantic University. “The population has doubled in the last 20 years and the population’s wealth has possibly doubled, if not quadrupled.”

“Whatever damage happens is going to be even more expensive,” Johan added, noting that insurance companies are dropping customers and raising rates.

Florida’s insurance market has spent most of the last two years on life support, battered by financial woes, the South Florida Sun Sentinel recently reported. Heavy losses caused widespread fears — just before the official start of hurricane season on June 1 — that a large number of companies would not be able to meet the state’s minimum financial-strength requirements to protect all of the state’s property owners.

“I get dropped by my insurance companies on a regular basis for whatever reason,” Johan said. “I am thinking about all of those people who cannot afford the 60% to 70% increases in insurance. What would happen to them?”

Hollywood Mayor Josh Levy reminds people that sea level rise is a major concern.

“If a storm hits at King Tide we could be worse off as a region,” he said. “We’re certainly taking steps to raise the seawalls and public shorelines to reduce the likelihood of flooding in a perfect-storm situation. Conditions led by sea level rise make the challenge all the more harder. The bar is set higher by nature itself.”

Staff writer David Lyons can be reached at dvlyons@SunSentinel.com. Staff writer Chris Perkins can be reached at chperkins@sunsentinel.com.

Article Posted on: 30 years after Hurricane Andrew: How resilient is South Florida?

Author: David Lyons and Chris Perkins

Twin towers, each rising 35 stories, will be the tallest in Hollywood’s downtown

HOLLYWOOD — When glitzy twin apartment towers take up residence on the east side of Young Circle, they’ll have bragging rights as the tallest downtown.

The luxury towers, currently dubbed B57 North and B57 South, will rise into the sky nearly 400 feet high, transforming the east side of Young Circle from dormant to dazzling, developers say.

The towers — an ambitious $555 million project calling for 856 apartments — will dress up a blighted corner currently home to a Walgreens and long-shuttered Publix. The project’s high-end restaurants, shops and office space are also expected to draw a crowd, bringing more people to a downtown that has struggled in years past.

A pedestrian skybridge will connect the two towers on the second level, making it possible for cars on Hollywood Boulevard to travel underneath the skywalk, providing direct access to Young Circle for the first time in decades.

Hollywood commissioners gave unanimous approval to the plan by developer BTI Partners in early July. Another vote granting final approval is expected on Aug. 31.

“I want to thank BTI for making this investment,” Vice Mayor Caryl Shuham said. “It’s exciting to see. When all of this happens, we are going to have a ton of people walking around downtown. And that’s the goal. Walking, shopping. Live, love, work, play.”

Two 35-story towers would rise on the east side of Young Circle in downtown Hollywood as part of a project planned by BTI Partners of Fort Lauderdale. The $555 million project calls for 856 luxury apartments in addition to shops, restaurants and office space. (BTI Partners/Courtesy)

Construction to start next year

The south tower will go up first, with a groundbreaking expected in June 2023 and construction expected to take two years, said Keith Poliakoff, attorney for the developer.

The north tower would break ground in mid-2024 and open by mid-2026.

Both towers will have 35 stories, standing 390 feet high.

The south tower will feature 455 apartments, with 72,600 square feet reserved for restaurants, bars and shops.

The north tower will have 401 apartments, with 70,000 square feet of retail space and 40,000 square feet of office space.

The apartments can be converted to condos in the future based on market demand, Poliakoff told commissioners.

Each building will have its own parking garage on levels one through nine, with a project total of 1,636 parking spaces.

For 20 years now, Hollywood officials have been exploring the possibility of recreating that 3.5 acre corner to allow for better traffic flow from the beach to Young Circle.

BTI Partners is making it happen, after getting the required buy-in from state transportation officials.

“This redevelopment, together with the vision of bringing Hollywood Boulevard through the property to Young Circle, took years of work to bring forward,” Mayor Josh Levy said. “Partners like the Florida Department of Transportation, Broward County Transit, the former property owner, and of course, the new owner/developer, BTI Partners, all share in an understanding of how exciting an opportunity this is to further the beautiful living space that downtown Hollywood is becoming, with the ArtsPark as its heart.”

The BTI Partners project would change the way traffic flows around Young Circle. Under the plan, the towers would straddle a new section of road that would open up the east side of the circle, giving drivers a more direct route to the beach. (BTI Partners/Courtesy)

New towers, new downtown

It all started when Poliakoff met Noah Breakstone, CEO of BTI Partners, and suggested he turn his sights on downtown Hollywood.

When the project came up for commission approval on July 6, there was something noticeable missing from the room: Critics.

Poliakoff told commissioners the reason they “don’t have 1,000 people here today” ready to blast the project was because the developer held several meetings over the past two years, vetting his plans with the community.

BTI Partners is also redeveloping another parcel on Young Circle once home to the Bread Building, an 11-story landmark built in 1969.

BTI has already demolished the building and expects to break ground soon on a 25-story tower with 362 luxury apartments and ground-floor shops and cafes. In a nod to history, the vintage Bread Building sign will be saved and used on the new building.

Hollywood’s founder, Joseph W. Young, would have approved of what’s happening downtown, Poliakoff said.

“He envisioned downtown as being a vibrant place for people to walk around, live and work and never leave Hollywood,” he said. “He wanted people to congregate downtown.”

Not everyone likes the tall towers coming to downtown Hollywood. “These tall buildings are going to dramatically change the character of the area, and not in a good way,” resident Jay Schorr told the South Florida Sun Sentinel. (BTI Partners / South Florida Sun Sentinel)

Longtime Hollywood resident Jay Schorr disagrees.

Schorr, who emailed the South Florida Sun Sentinel last year criticizing the project, says it will bring more traffic and potentially crime to downtown. He also says the towers are too tall.

“These tall buildings are going to dramatically change the character of the area, and not in a good way,” he said Thursday. “I think it’s out of character for what Joe Young wanted the city to be. He didn’t want these high-rise monoliths. I don’t think Joe Young would be happy with this at all.”

In his email to the newspaper, Schorr made a dire prediction: “Just like the great hurricane of 1926 that destroyed most of our city, the great development hurricane of 2021 will wreak havoc on our quality of life for decades to come.”

Ken Crawford, another longtime resident and president of the Parkside Civic Association, has a different take.

“Our downtown is growing,” he said. “The more density we have downtown the better off we are, because we’re more of an urban city now. We’re no longer living in 1926. We’re living in 2022. And we have to grow to move into the future.”

Susannah Bryan can be reached at sbryan@sunsentinel.com or on Twitter @Susannah_Bryan

Link: Twin towers, each rising 35 stories, will be the tallest in Hollywood’s downtown
Auther: Susannah Bryan

‘All part of the game’: Commercial landlords seek ways out of long-term leases as more lucrative tenants arrive

Property owners that don’t want to renew leases as rents increase will find unique ways to get out of contracts.

Landlords are finding ways to oust long-term tenants and replace them with new businesses willing to pay premium asking rents, two attorneys told the Business Journal.

Jordan Isrow, a partner in the Fort Lauderdale-based Government Law Group, said he has helped at least three landlords get out of renewing their leases with their long-term tenants so they could obtain new, more lucrative lease deals with companies relocating from New York and other parts of the country.

“With businesses moving to southeast Florida, commercial real estate has increased in value. That, in turn, makes it harder for tenants to stay in their lease or renew,” Isrow said. “[Landlords] are trying to capitalize on an opportunity that is presenting itself.”

The trend has come back mostly in South Florida’s retail sector, where average asking rents have risen 13.5% in Broward, 15% in Miami-Dade, and 16% in Palm Beach County from last year, according to recent figures from Colliers.

The rise in retail rents and fall in vacancies are largely driven by out-of-state restaurant operators who want their businesses in a region that has attracted high-income households, brokers and developers have told the Business Journal. At the same time, out-of-state companies are opening branch offices and, in some cases, even moving their headquarters to South Florida.

New arrivals include chains and franchises who have the infrastructure to pay higher rents and make capital improvements to retail properties, said Dominic “Nico” Romano, a real estate attorney affiliated with Coral Gables-based Spiritus Law Firm.

“Now you have real estate that is much more valuable and [landlords] taking advantage of the increases in prices,” said Romano, who also owns retail property in North Lauderdale.

Dave Preston, executive managing director of retail services at Colliers’ Miami office, said landlords are typically eager to oust tenants locked in at lower rates when market rents are rising.

“It’s just the natural dynamic of landlord-tenant relations,” he said.

Isrow said his clients have been able to get out of lease renewals by exploiting contract clauses, including their ability to make renovations or upgrades.

For example, when one landlord announced he was going to reconstruct the parking area, the tenant opted not to renew the lease. The landlord opted not to pursue that renovation project after signing a lease with the out-of-state tenant, he said.

Another method is to be a stickler with contract terms when a tenant gives notice that he or she wants to renew their lease. In one case, a landlord declared his tenant in default after the renter failed to include a return address.

Finally, landlords often use their right to inspect their properties to eject tenants. So if a tenant is doing an activity not explicitly allowed in the lease, the landlord can hold that business in default.

For instance, a flex industrial building landlord was able to oust a grocery store using that method because it had a butcher shop on the premises, something not explicitly allowed by the lease, Isrow said. A financial firm replaced the grocery tenant.

“This is all part of the game right now,” Isrow said.

Mom-and-pop businesses usually don’t have the time or money to go through litigation to contest the situation, so they’ll usually take a settlement, Isrow said. Landlords are also willing to pay current tenants to move so they can bring in newer clients, he added.

Romano said tenants can negotiate a lucrative payment from a landlord who wants them out.

“Maybe [the tenant] has a huge asset like a liquor license,” he said.

Romano said mom-and-pop businesses in high-demand locations will be forced to close or move elsewhere.

Romano also said he sees no reason why retail rents will drop anytime soon.

“We have been fortunate in South Florida to have been in an inviting climate, both from a meteorological standpoint and a business standpoint,” Romano said. “As long as those things keep going, rents are going to keep increasing.”

Link: ‘All part of the game’: Commercial landlords seek ways out of long-term leases as more lucrative tenants arrive
Auther: Erik Bojnansky

Landlords Are Slashing Ties With Tenants to Capitalize on a Hot CRE Market. Here’s How They’re Doing It

“I think there’s going to be sympathy for businesses but at the same time, the law is really designed in a way to capitalistic benefit,” said Jordan Isrow of Government Law Group in Fort Lauderdale.

As commercial rental rates rise in South Florida, some landlords who are locked into leases are hoping to capitalize on the market by getting out of their contracts as businesses relocate and look for space.

That’s according to attorney Jordan Isrow of Government Law Group in Fort Lauderdale, who said he’s seeing landlords find creative ways to get out of their contracts.

“It’s mostly financially driven, but there may be other reasons as well, which is they may be looking to reshape the overall look and feel of a commercial space,” said Isrow. “They may be wanting to be changing direction and having a tenant they think may not otherwise be a good fit and having another tenant come in that’s competitive to that tenant.”

Landlords might also look for ways to invalidate a tenant’s options to renew, in order to get higher rental rates.

It’s all about looking closely at contracts, Isrow says, as no two leases are created equal. He recommended doing “a deep dive” into the lease and also looking at the tenant’s history.

“For example, I had a client who was looking to get out of a five-year extension that the tenant was otherwise entitled to under the lease,” said Isrow. “We found one provision in there that said that at the time the tenant issues its notice for renewal, it must be in good standing. The tenant missed a payment by just a few days, but that was during the window in which they sent their option to renew. This becomes a game of cat and mouse. We didn’t alert them to this kind of failure and instead waited for the notice window to pass. We informed them they were not in good standing at the time and therefore we were able to remove the tenant.”

There are a lot of prohibitive use clauses in a commercial lease that can prevent a tenant from using the property in a way that the landlord deems a nuisance to other tenants or brings down the value of the property.

Isrow said another strategy is to use the right to entry by a landlord provision to look around the tenant’s space.

“It’s an innocuous way to go in and say ‘We’re just looking around at the common elements.’ If they’re able now, once they’re inside the property, they can start looking around. Is there anything this tenant has failed to maintain that they’re responsible for? Is there any use that may not be in accordance with the lease?”

Finding a ‘Win-Win’

Ultimately, some landlords are not able to get out of their lease and end up in court, but that’s not the goal. Isrow says some parties are willing to pay their tenants to leave and may even help them relocate.
“They do this because of a cost-benefit analysis. They know that if they break the lease, they’re going to get sued, and they’re going to have to pay time and money for litigation. And if they can shortcut that and save some of the money and put it toward the tenant in a way that helps them get out of the situation they’re in and find another one, then it’s a win-win.”

Isrow doesn’t think the courts want to hurt landlords or tenants, they just starting to recognize the reality of the market.

“Some landlords are going to be able to pull it off, and others may not. It’s a very fact-specific situation,” said Isrow.

For attorneys representing landlords, Isrow says to be very specific as to what the goals are from the landlord, particularly if it’s a financially motivated decision. And before any decisions are made, review the lease.

“In some instances, depending on the relationship between the landlord and the tenant, there may be a viable solution as easy as having a conversation,” said Isrow. “You’d be amazed that sometimes if a landlord goes to a tenant and says, ‘Here’s my issue,’ sometimes that does the trick. Not always, but I think some lawyers are too quick to jump to the litigation front instead of actually finding an amicable solution.”

If a tenant still sues, Isrow believes the courts are sympathetic to the tenants: “I think there’s going to be sympathy for businesses but at the same time, the law is really designed in a way to capitalistic benefit.”

Link: Landlords Are Slashing Ties With Tenants to Capitalize on a Hot CRE Market. Here’s How They’re Doing It
Auther: Melea VanOstrand