Wednesday, October 08, 2003

Dying By The Sword

Even the big guys blow one now and then.

The Rouse Company, a nationally known developer with thousands of square feet of shopping malls to its credit, failed to renew the lease on its headquarters office on time. The lease had three 10 year renewal options at far, far below market rent. In order to exercise the initial option, Rouse had to give notice to renew by December 31, 2002 for an option period beginning April 1, 2004. The spread between the rent under the option and market is somewhere over $2M. The Baltimore Sun has the story here and here.

On one hand, the Baltimore metro area would suffer economically if Rouse, as it intimates it might, leaves town. On the other hand, there's a certain schadenfreude at the sight of a large commercial landlord being hoist by the same petard that it probably hurled at numerous small fry tenants over the years. I wonder how many times Rouse allowed its tenants to re-up at below market rents simply because someone neglected to send a timely notice of renewal. I'm betting none.

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