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JLL Sues D.C. Landlord For Stiffing It Out Of $781K Commission On Coworking Lease

A rendering of the two new floors and rooftop amenity space at 1441 L St. NW

The Spaces coworking space on L Street is closed, but a legal dispute over its lease has opened up in court. 

JLL filed a lawsuit this week against the owner of 1441 L St. NW, an affiliate of S.C. Herman & Associates, claiming the landlord didn't pay commission on a 2018 lease it brokered with the coworking provider.

The brokerage firm is claiming breach of contract and seeking $832K in damages, including $781K in unpaid commission and the remainder in interest, as it says the payment was due in April and the contract included 1.5% monthly interest for late payments. 

The landlord and brokerage firm both declined to comment on the lawsuit. 

S.C. Herman retained JLL to lease the Downtown D.C. office building it renovated after losing its anchor tenant, the Bureau of Economic Analysis, in 2016. The $36M renovation added two floors and a penthouse and revamped the building's lobby and amenities. 

In July 2018, JLL brokered a 51K SF lease with Spaces brand to occupy the building's top three floors, totaling 51K SF. The building still had another 140K SF available to lease at the time, and the renovation was scheduled to deliver in November 2018. 

Spaces opened the location last year, its second in the District after its debut at the Uline Arena in NoMa. The coworking brand, operated by IWG, has additional D.C. area locations in Alexandria, Arlington, Chevy Chase, McLean and Reston

The Spaces location at 1441 L St. NW has gone dark. The coworking operator no longer lists the space on its website, and Google Maps describes it as "Permanently Closed." An IWG spokesperson confirmed the location has closed. 

The lawsuit doesn't mention the current status of the coworking space or whether the tenant continues to pay rent, but it claims that the leasing agreement between the landlord and broker requires the commission to be paid on the signed lease. 

IWG reported a loss of more than $300M during the first half of 2020, after making a $40M profit in the first half of 2019. About 100 work centers connected with the company's Regus subsidiary have filed for bankruptcy in the U.S. The entity that leased the 1441 L St. NW location doesn't appear to have filed for bankruptcy.