A yearlong dispute with its landlord has led to a threat of eviction for Metropolitan Brewing at its picturesque location along the Chicago River.
Rockwell Properties, which owns the Rockwell on the River development at 3057 N. Rockwell St., filed an eviction complaint in Cook County Circuit Court last week, alleging that Metropolitan owes nearly $818,000 in unpaid rent and other expenses. Crain’s Chicago Business first reported the news.
Jason Metnick, an attorney for Rockwell Properties, said the brewery will be served an eviction notice by the Cook County Sheriff’s Office in the coming days, which will start the clock on a process that could take months to resolve.
According to the complaint, Metropolitan is past due more than $401,000 in rent and $293,000 in late fees, plus other expenses.
The case, Metnick said, is “a straightforward matter of nonpayment of rent and other financial obligations under the lease.”
Metropolitan co-founder Tracy Hurst said the brewery will fight eviction and plans to file a counterclaim in which it will allege it has been overcharged for rent by Rockwell Properties since signing its 15-year lease in 2015.
Hurst said initial drafts of its lease, as well as construction blueprints, pinned the brewery’s square footage at about 24,000 square feet. The brewery wrote its business plan for its 2017 expansion into Rockwell on the River — also home to Metropolis Coffee and Judson & Moore distillery — based on that calculation, she said.
Hurst showed the Tribune a draft of a lease and plans from its architects that showed the square footage to be about 24,000. Baum Revision, a real estate developer involved in the project, says on its website that the space is 25,000 square feet.
However, Hurst said, during a busy day of construction at the brewery in 2015, Rockwell Properties co-owner Paul Levy presented her and Metropolitan co-founder Doug Hurst with a lease that they failed to read closely — and without their lawyer present — that pegged the square footage at 33,094 square feet. Levy said it was urgent they sign it, which they did, Hurst said.
Levy did not respond to a phone message seeking comment.
Almost as soon as Metropolitan began operating in the space in 2017, the brewery could never seem to catch up on its finances, Hurst said.
Hurst said she and Doug Hurst cut their salaries by more than 50% in 2018 while trying to save money. They didn’t understand the reason for the brewery’s financial struggles until enlisting the help of bankers and an accountant in late 2019, Hurst said. At that time, she said, they realized they were paying on about 9,000 more square feet of space than they had thought.
“We tried for two years to make ends meet when they never would meet because the papers weren’t accurate,” Tracy Hurst said.
Hurst said Metropolitan stopped paying rent in December 2019, believing it had overpaid by about $130,000 during the previous two years.
“When we found out what happened and that there was a balance owed us, you’re damn right I stopped sending money,” Hurst said.
She said the square footage discrepancy is likely at least in part due to being charged for a second floor space that was removed to accommodate tall fermentation tanks. The eviction complaint filed last week includes a plan that shows the brewery as having possession of a second floor space that no longer exists, Hurst said.
Metropolitan did not knowingly agree to pay rent for a portion of the interior that was removed, she said.
“We never would have done that,” she said. “That would be insane.”
Though Metnick said he was not involved in negotiating the lease, he said paying rent for floor space that has been removed to meet a tenant’s needs isn’t unprecedented.
“It’s not that it doesn’t exist — it’s that they redesigned the space,” Metnick said. “It doesn’t mean they aren’t occupying the space.”
Metnick also cast doubt on Metropolitan’s argument that it didn’t know the square footage when it signed the lease. Square footage is a standard subject of negotiation in commercial leases, he said.
“Like with any lease, there are drafts and amounts that need to be filled in, but this wasn’t a situation where someone pulled a fast one on them,” he said. “It’s a large commercial lease. I don’t really understand where they’re coming from.”
Tracy Hurst said she made a mistake signing the lease without an attorney present, and is chagrined that it took two years to realize they were paying for more square footage than they knew.
“Is that embarrassing and humiliating? Yes,” she said. “But as a small business person, when your ends aren’t meeting, you work harder; you don’t look for loopholes or mistakes. You don’t dig into your lease to find if there’s a way to make your ends meet. You say, ‘Dang, I need to work harder, I need to bring more money in.’ So that’s what we did.”
Hurst said the brewery met with Levy in October and pointed out the square footage discrepancy.
“Paul Levy looked me in the face and said, ‘The square footage is whatever I say it is,'” Hurst said.
Because Metropolitan did fall behind on rent during the standoff, Hurst said, she depleted the brewery’s cash reserves after the meeting to pay more than two months of rent as “a showing of good faith” of wanting to work things out.
However, she said, there was no further communication before receiving a notice of intent to evict on Nov. 6.
Even without the disagreement about the brewery’s square footage, Metropolitan would have struggled to pay rent once the COVID-19 pandemic hit, Hurst said. Among the steps it took to become more profitable was to start canning its beer, something Metropolitan had long resisted.
Metropolitan Brewing, which has specialized in German-style lagers since launching in 2008, is one of Chicago’s oldest breweries. The brewery operated out of a Ravenswood warehouse until 2017, when it moved into its current home as one of the anchor tenants in the redevelopment between Belmont Avenue and Addison Street along the North Branch of the Chicago River.
Levy is a longtime and prominent developer whose past projects have included the Bridgeport Arts Center.
The eviction complaint also alleges that Metropolitan has failed to pay common area maintenance charges, is not properly insured and has allowed customers to line up in common areas in violation of the lease and secured a license to sell food, also in violation of the lease. Hurst said the brewery sought the food license to be able to accommodate more customers during the pandemic. She also said the brewery is adequately insured.
Hurst said Metropolitan will continue brewing beer while hoping to work out a solution.
