German co-living firm Quarters has been sued for “opportunistically” canceling an $8 million lease in New York City as Covid-19 began impacting real estate companies across the globe, reports The Real Deal.
Companies controlled by Mark Tress of Cedar Holdings, a real estate developer, owner, and investor based out of New Jersey sued Quarters in federal court. Tress claims that Quarters used construction delays to end its 10-year lease “only after it became clear that Covid-19 was spreading rapidly through New York City.”
Cedar Holdings claims that it had performed over $1 million of renovations at the property to comply with Quarters’ needs. The lawsuit seeks more than $8 million, roughly the value of Quarters’ lease. The developer says this is because it now controls a highly-customized building that cannot be occupied due to social distancing rules.
“Quarters promises property owners ‘partnership from start to finish,’” Cedar claims in its legal complaint. However, “in the midst of the current public health emergency, Quarters is not living up to its own lofty language. Instead, it has sought to pull back on its commitments to expand and provide housing in New York City.”
Quarters: Claims Are “entirely meritless”
Quarters responded to the allegations by stating they were “entirely meritless” with “no basis in fact or law.” The company claims that the lease termination is related to the developer mission a construction deadline of November 30.
Cedar Holdings admits that this is true, but says that that Quarters maintained it still intended to occupy the building and insisted that the company continued renovating the space.
Quarters manages 5,000 beds across Europe and North America. The subject of the lawsuit is a property in Brooklyn, which is part of a $300 million push from Quarters to expand further into the U.S. market.
The co-living industry projects difficult times ahead as Covid-19 causes economic turmoil in its wake.
photo credit: Quarters