Hugo Boss Wants Out of Its $8.3 Million Lease in New York
Hugo Boss Retail LLC is looking to exit its lease at a shopping center in New York as it remained closed for months amid the coronavirus pandemic.
In a complaint filed Friday in New York state court, the high-end fashion label sought the rescission of its commercial property lease at The Shops at Columbus Circle on the west side of the Manhattan borough. It described the lease, which expires on Dec. 31, 2025, as “unenforceable” due to government-mandated shutdowns that kept the location shuttered from mid-March to Sept. 9.
According to the filing, Hugo Boss pays approximately $692,000 a month and roughly $8.3 million for the year to A/R Retail LLC for the 14,700-square-foot space.
“The total standstill of business, commerce and everyday life in New York City has completely and unforeseeably frustrated the purposes of the lease and has rendered performance impossible,” it wrote.
Alternatively, Hugo Boss suggested that it was entitled to a rent abatement for the period during which it was unable to use the leased property, as well as a proportional rent reduction to reflect the “scant operating capacity” in recent weeks. It claimed that it has engaged in “numerous attempts” as early as May to come to an agreement with its landlord.
“The purpose of spending a monthly rent of nearly $700,000 to operate a retail store is completely frustrated when, as here, that store cannot open,” the brand said. “That purpose is also frustrated when the subject store can open at only a marginal capacity or when customers are too fearful of profound illness and potential death to venture out to shop in an indoor mall for clothing or other personal items.”
The German fashion house is not the only luxury label to go head-to-head with a property owner as the COVID-19 outbreak retains its grip on the country: Two months ago, Saks Fifth Avenue landlord Bal Harbour Shops sued the luxury retailer over unpaid rent and sought to evict the department store from its mall. (Saks subsequently filed a lawsuit against Bal Harbour and Matthew Whitman Lazenby, president and CEO of Whitman Family Development, which owns the shopping center, over statements that allegedly breached the parties’ contract and the shopping center’s fiduciary duty.)
As many stores shuttered, Gap and Ross, as well as Nordstrom, H&M and Burlington, joined a growing list of retailers that opted against making their rent payments as the outbreak threw their balance sheets into disarray. A number of tenants sought concessions from landlords, but some landlords — including those for Gap and Ross — were ultimately filed lawsuits against their tenants. Many commercial leases contain a force majeure clause, which essentially frees both parties from certain obligations caused by circumstances beyond their control, including wars, strikes and, in some cases, pandemics and other similar unforeseen events.
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