8-30-22 As seen in Crains - Boho brand Free People found liable for back and future rent at Meatpacking store
August 30, 2022
Boho brand Free People found liable for back and future rent at Meatpacking store
Bohemian-chic apparel brand Free People is being held liable for more than $13 million in back and future rent for its outpost at 58-60 Ninth Ave. in the Meatpacking District, according to a recent ruling by a federal judge for the Southern District of New York.
The brand, a subsidiary of Urban Outfitters, which is based in Philadelphia, hasn’t paid rent at the 6,800-square-foot location owned by Michael Shah’s Delshah Capital since March 2020, according to court documents, except for a partial payment in May of that year that was applied to the balance.
Free People, which has occupied the site since 2016, claimed it didn’t have to pay because of the pandemic.
The stock price of publicly-traded Urban Outfitters has dropped by nearly 50% since June 2021 amid struggling sales and higher supply costs.
The rent nonpayment was part of a larger strategy by Urban Outfitters, which announced in March 2020 that it would stop paying for its New York City locations, including its Herald Square store, where Empire State Realty Trust sued for $1.2 million in back rent in June 2020.
But the court didn’t buy the retailer’s pandemic argument over the Meatpacking lease and ruled in favor of the landlord’s claims to recover the unpaid rent and additional funds due for the remainder of the lease, which expires in January 2027.
The annual rent at that location was $1.4 million, according to court papers.
In June 2020 Delshah terminated Free People’s Meatpacking lease over the rent arrears and sued the brand in state Supreme Court for rent unpaid between March and June 2020. It also sought the rent owed for the remainder of the lease. The case was moved to federal court.
This isn’t Delshah’s first brawl with Free People. The retailer claimed in a lawsuit filed in 2017 that Delshah delivered the space a year late and caused damage to its sales. Free People asked a judge to grant it 825 days of rent credits from the landlord valued at over $3 million, but a judge ruled later that year that Delshah owed just $650,000 in damages for the delay.
Free People has since vacated the space. The final amount due to the landlord will be decided at a hearing next month.
A representative for Urban Outfitters did not respond to a request for comment.
Bradley S. Silverbush and Richard Corde of Rosenberg & Estis represented Delshah Capital along with Woods Oviatt Gilman LLP attorneys William Savino and Bernard Schenkler, and Robert Carbone at Duke Holzman Photiadis & Gresens. Free People was represented by Faegre Drinker Biddle & Reath LLP.
