Manhattan Landlord Threatening To Terminate Whole Foods Lease Over $1.4M In Back Rent

The Whole Foods in NoMad is at risk of defaulting on its lease amid a legal dispute involving a gas hookup. 

The grocer's landlord at 63 Madison Ave. says the tenant is behind on its rent, but Whole Foods says the landlord hasn’t fulfilled the obligations stated in the lease, making it impossible for the grocer to fully operate in the space, Crain's New York Business reported.

George Comfort & Sons, one of the owners of the property, threatened to hold Whole Foods in default over $1.4M in back rent unless it paid up within 10 days. In order to stop the default, Whole Foods is countersuing its landlord over an alleged promise of a gas hookup that was never delivered.

Whole Foods signed the lease for the NoMad location in 2019, agreeing to take on 60K SF over two floors of the property, which was a long-underused retail space, the New York Post reported at the time.

The building owners initially said that Whole Foods would be an ideal fit for the 15-story glass office building in Midtown, Crain's reported at the time. It appeared to be an advantageous move for Whole Foods, too, becoming the retailer’s 15th New York City store and filling the gap between its Chelsea and Union Square locations.

But Whole Foods says the spaces it leased weren’t connected to the building’s gas mains, and that its landlords agreed to provide a connection to the building’s gas. Without gas, Whole Foods argued in court documents, it couldn’t provide bakery goods or prepared food items, which would eat away a third of the space’s revenues.

The owners of 63 Madison Ave. started work with Con Edison to extend the building’s gas mains, but were forced to pause construction in March 2020, according to Crain's. In January last year, the landlords say they paid Con Ed to continue the work and told Whole Foods that the work was completed — despite Con Ed’s response that it would be unable to continue work until January this year.

Construction remains ongoing at the Whole Foods NoMad location, which the grocery retailer says excuses it from paying rent until the space is ready to use. Whole Foods also said it stands to lose a $20M investment in the property if George Comfort & Sons cancels the lease. A spokesperson for the landlord told Crain's that it hopes the unusual dispute will be resolved.