Newmark sues broker, ex-client over commission
(Crain’s) — Newmark Knight Frank is suing a former client and rival brokerage GVA Chicago over a $610,000 commission for a downtown office lease, a dispute that highlights the sometimes precarious broker-client relationship.
New York-based Newmark says it should have been paid — rather than GVA Chicago — for handling recent negotiations in Accretive Health Inc.’s 11-year, 44,385-square-foot lease at Bank of America tower, 231 S. LaSalle St.
Joseph Zona, a principal with Newmark’s Chicago office, initiated talks with Accretive in April, presenting several properties, including the historic B of A tower, according to a complaint filed Wednesday in Cook County Circuit Court.
Mr. Zona then, at the behest of Accretive, began negotiations with the leasing agent for B of A tower, Jack McKinney Jr., a senior associate at J. F. McKinney & Associates Ltd.
Mr. McKinney, whose firm is named as a defendant, and GVA Chicago Executive Managing Director Aileen Sandstedt both decline to comment.
Executives with Accretive, which provides revenue management services to hospitals, and the owner of B of A tower, a venture of Gramercy Capital Corp., didn’t return calls. Both firms are named as defendants in Newmark’s complaint.
The suit says Newmark was “instrumental in negotiating the fundamental business terms” of the Accretive deal and is entitled to the $610,294 commission, which amounts to $1.25 per square foot for each year of the lease term.
Yet Gramercy paid the fee to GVA Chicago after Accretive, which recently doubled its headquarters space at 401 N. Michigan Ave., insisted that GVA be identified as the broker, according to the complaint.
Newmark says Mr. Zona first contacted Accretive’s senior manager of corporate finance, Eric Kachin, on April 20 to discuss potential leasing opportunities.
Mr. Kachin informed Mr. Zona that the company had been working with GVA to find a downtown office. But two days later, Accretive authorized Mr. Zona to contact B of A tower’s leasing agent, according to the suit.
Mr. Kachin didn’t return a call.
Newmark’s suit says Mr. Zona continued to work with Mr. Kachin and other Accretive executives on the deal. But once the lease terms were almost entirely negotiated, Accretive began demanding that any reference to Newmark as the firm’s broker be removed from the lease. Newmark sent a “demand letter” on July 21 requesting the firm be reinserted as “tenant broker,” but nonetheless Newmark’s name was removed prior to lease execution.
The suit says Newmark submitted an invoice earlier this month to McKinney, the landlord’s representative, but wasn’t compensated.
Angela Evans contributed to this story.
