It looks like the Koreins will have to regroup in their rent dispute with Vornado over the 1 Penn Plaza office tower.
A Manhattan judge tossed out the lawsuit the Korein family filed in February, which asked the court to determine a fair value for the 2.5 million-square-foot skyscraper. The Koreins said they couldn’t find a neutral appraiser to value the property because no one dared to cross Vornado for fear of losing favor with the powerful landlord.
New York Supreme Court Justice Lyle Frank said that if the Koreins disagree with the valuation the appraisers arrived at, they need to dispute it under the terms set in the ground lease. The court, he said, couldn’t do the appraiser’s job.
“The Court is simply not empowered to determine the fair market value in lieu of enforcing the contractual provision between the parties,” Frank wrote in a June 8 decision.
This isn’t the end of the fight, though. The Koreins still have another case ongoing centered around the ground lease itself.
The Koreins’ attorney did not respond to a request for comment.
The decision is a setback for the family, which framed their standoff with Vornado Realty Trust as a David vs. Goliath battle.
The Koreins own the land under the 57-story tower, which Vornado has controlled via a ground lease since 1998.
When the lease came up for renewal in June 2023, the $2.5 million annual ground rent was supposed to increase based on the land’s fair market value. A few years earlier, Vornado began undertaking a massive renovation of the property, redubbing the once-named One Penn Plaza to Penn 1.
Estimates of the new rent swung wildly leading up to the renewal — from Roth’s suggestion in 2022 that it could jump to $26 million, to later projections of a far lower figure due to market conditions.
Under the terms of the ground lease, if the two sides could not agree on the land’s value, a panel of three appraisers was supposed to set it, one chosen by each party and a third chosen by the Real Estate Board of New York or the court.
But the Koreins claim many brokers refused to represent them in the negotiations, fearing retaliation from Vornado, whose deals can generate millions in commissions for their firms.
Their lawsuit called out some of the biggest brokers in the industry — including Darcy Stacom, Bob Knakal and Doug Harmon — who they say refused to represent the family opposite Vornado.
“For Manhattan real estate brokers, Vornado is a highly relevant and sought-after client,” wrote lawyers for the Koreins, who said they — by contrast — are a smaller company with less influence.
“For Manhattan real estate brokers, Vornado is a giant in the market,” the lawsuit reads. “Because landlords like Vornado pay the commissions for both the landlord’s and the tenant’s brokers, remaining in Vornado’s good graces can be vital to a broker’s livelihood.”
Read more
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Koreins call out more brokers in Vornado feud
