When a natural disaster rips through commercial space occupied by your business, it can make the claims process easier if you’re your own landlord rather than a tenant – as two very different companies learned after a tornado effectively destroyed buildings in Springfield’s South End.
The two companies, Italian food importer and retailer Milano Importing and King & Newton commercial real estate, owned the buildings where they were housed when the tornado knocked them both out of commission.
One is a retailer, and the other an office user. Each had a unique experience.
Milano Importing at 988 Main St. was closed from early June to Dec. 14 as renovations to the store and kitchen chugged along. There are a couple small apartments above the shop, but co-owner Nick Recchia said the company isn’t ready to touch those yet, but is working on a new design scheme. The renovations to the first floor cost upwards of $250,000.
Add to that the estimated $30,000 to $50,000 the company lost in inventory.
“The entire roof was gone from the building, so we had to replace that,” Recchia offered. “A lot of the rest of the building had to be gutted because of water damage that happened after the tornado. We had to remove all the drywall and perform mold abatement. We were probably one of the first ones to open back here in the South End of that businesses that were hit the worst.”
The loss was entirely covered by insurance, but Recchia said he was forced to hire a private adjuster to come in and help with the process. The insurance company, Recchia said, was moving too slowly and he and his brother Anthony – also his business partner – didn’t feel the company was compiling enough information on parts of the building that were affected.
“We didn’t feel like we were being handled the right way,” Recchia told Banker & Tradesman during a recent visit to the property. “I think it was a smart move on our end to hire a private adjuster to speed up the process and to make sure we got enough money to actually replace everything we had before. The adjuster told us we were lucky that we owned our own space. I definitely don’t think we could have been so involved in the process if we were just renting our space.”
Cut & Run
In the case of King & Newton, the 20,000-square-foot building it owned and called home at 935 Main St. was so badly damaged by the storm that it was condemned. The insurance policy for the property was worth $2.1 million, said Thomas King, a broker with the firm.
But to bring it up to code before re-opening, someone would need to put at least $1 million into the property. Instead, the company decided to cut its losses, take the money and run – a choice King said the firm was glad to have. The building is now under contract with a buyer for a price “in the ballpark” of the $300,000 asking price, King told Banker & Tradesman.
“We didn’t want to get involved in a huge renovation project,” King said.
Immediately after the tornado, the real estate firm quickly relocated to temporary office space at One Financial Plaza, but didn’t find the landlord sympathetic to tornado victims, at least not in the form of tenant concessions or reduced rents.
“We needed to be up and running within a week of the storm to keep the business operating,” King said. “You didn’t have time to really look around at different spaces or negotiate terms. There weren’t any concessions. I’m sure it was the same for a lot of companies.”
