Mike and I recently completed a transaction on behalf of his (and now ours 🙂 ), long-time client, Evolution Markets. In 2014, we helped Evolution move into a creative prebuilt office at 180 Madison Avenue and with their lease set to expire, last month we advised them on a renewal via a new lease amendment. It’s the second client of mine I’ve had the pleasure to do repeat business with…a (positive) sign of getting older in the business.
Evolution’s lease amendment referenced many provisions previously negotiated in 2014, however the building’s landlord, Prudential, insisted upon a change to the holdover clause. Specifically, the holdover clause addresses what happens if a tenant stays past their lease expiration. There is always a penalty for holding over since the landlord needs timing certainty to take possession of the space and re-lease it. As a tenant’s broker, our job is to minimize holdover penalties as much as possible by limiting the extent of the damages the tenant is exposed to. Despite everyone’s good intentions, hold overs do happen and thus this provision is one that cannot be overlooked.
In this specific instance, Prudential wanted a stronger holdover provision because NYU signed a lease to open a new research facility at 180 Madison and Prudential must deliver Evolution’s floor to NYU by a certain date. To minimize their risk of not being able to meet the obligations in the NYU lease, Prudential wanted to give Evolution a much harsher holdover provision than what was previously negotiated. We ultimately resolved their concern of not being able to deliver NYU the floor and our concern of being liable for uncapped consequential damages, and got the deal done.