Industrial vacancy closed 2025 at 7.5% and is tracking toward 7.8% by the end of 2026, twice the sub-4% rate landlords saw in 2023 and the highest reading in more than a decade, with over 1.5 billion square feet of space sitting empty nationwide.[1] A market like that rewards whoever signs the tenant first, not whoever checks the tenant’s paperwork most carefully. Two landlords who each signed the same industrial tenant to a big lease this spring are now in court saying they found out which of those two things mattered.
A tenant improvement allowance clause that releases funds on the lease’s execution date, or through loan proceeds a landlord draws down at closing, rather than against milestones a landlord’s own architect or contractor certifies as actually built, gives a tenant nothing to lose by taking the money and defaulting before the buildout exists.
A Brooklyn landlord says it wired $11 million toward a warehouse that was never built. KSG, an entity led by Leah Weiss, owns a 600,000-square-foot warehouse in Mount Pocono, Pennsylvania. It signed BroadRange Logistics, a Georgia-based third-party logistics operator, to a 20-year lease and agreed to fund $11 million in tenant improvements. KSG’s complaint, filed in New York state court in May 2026, alleges BroadRange never intended to build out the space, took what allowance it could reach, and then stopped paying rent. The claims are fraudulent inducement and unjust enrichment, a step up from an ordinary breach action.[2]
A second landlord, in a different state, says the same tenant now owes it $32 million. 76 Commerce Center LLC and 76 Commerce Center 3 LLC sued BroadRange in Colorado’s Adams County District Court on May 29, 2026 (Case No. 2026CV31042), over two buildings totaling 1.07 million square feet at 76 Commerce Center in Brighton. The complaint puts monthly rent at $590,714 and alleges BroadRange stopped paying, leaving $32 million outstanding in unpaid rent and what the filing calls “discretionary allowances,” the same category of tenant-improvement money at issue in the New York suit.[3]
Reporting on the New York case describes this as a repeated playbook, not a one-off dispute. BroadRange operates 21 warehouses across eight states under CEO Ari Milstein. Coverage of the KSG suit ties it to a broader pattern across BroadRange’s recent leases: sign a long-term lease large enough that the landlord takes out financing to cover it, get loan proceeds earmarked for the tenant’s buildout released or drawn against, then default on rent within months of signing. BroadRange has denied the allegations in its court filings, and neither case has been decided.[2]
A landlord chasing a tenant this size in this market has every incentive to skip the condition that would have caught it. Filling 600,000 or 1.07 million square feet in a market with 1.5 billion square feet of competing vacancy is the kind of deal a landlord closes fast, and a fast close is exactly when a disbursement schedule tied to a calendar date, rather than to inspected progress, looks like a convenience instead of a gap.[1]
The clause language that would have mattered here is not exotic. Practitioner guidance on structuring tenant improvement allowances converges on the same short list: release money in draws tied to completion milestones rather than a lump sum at signing, require lien waivers from the tenant’s contractors with every draw, and hold back roughly 10% until final completion and sign-off.[4] A separate line of drafting practice covers what happens if the tenant walks away anyway: a clawback clause that lets the landlord recover the allowance, prorated for time occupied, on triggers that include non-completion or abandonment of the improvements and tenant insolvency. Courts generally enforce that language when the triggers are unambiguous.[5] Neither protection requires a novel clause. Both require the landlord’s lease to actually contain one.
A work letter already spends a full section on who eats a cost overrun once construction starts. These lawsuits are about the step before that: whether the tenant ever had to prove construction started at all before the landlord’s money moved.
Reading the disbursement schedule before it’s a lawsuit exhibit#
Acrebase’s clause extraction reads a work letter or tenant improvement exhibit and surfaces exactly how the allowance releases: on signing, on occupancy, in draws against certified milestones, or against loan proceeds funded at closing. That is the distinction these two lawsuits turn on. Across a portfolio of industrial leases signed during a leasing push like this one, the same extraction flags which allowances have no completion condition, no lien-waiver requirement, and no clawback right at all, so a landlord’s counsel can compare forty leases against each other instead of finding the gap in the one lease a tenant just defaulted on.
If you are a landlord, especially one filling large industrial space in a soft leasing market, do not let deal speed talk you out of tying every draw to inspected, certified progress and a lien waiver. Write a clawback right for non-completion and insolvency into the lease itself, not into the collections strategy you improvise after the tenant stops paying. If you are a tenant, expect a disbursement schedule this specific to slow down your first few draws. That friction is the landlord protecting against exactly the fact pattern two other landlords are now litigating.
Footnotes
[1] Bisnow, “A Record 1.5B SF Of Industrial Space Is In Search Of Tenants” (citing CoStar Group data: industrial vacancy at 7.5% at the end of 2025, projected to reach 7.8% by the end of 2026, twice the sub-4% rate in 2023 and the highest in more than a decade; over 1.5 billion square feet of available space nationwide). https://www.bisnow.com/national/news/industrial/industrial-vacancy-projected-to-keep-rising-in-2026-133085
[2] The Real Deal, “KSG Sued BroadRange For $11M Tenant Improvement Allowance” (July 10, 2026) — KSG, led by Leah Weiss, alleges BroadRange Logistics (Georgia-based, led by CEO Ari Milstein, operator of 21 warehouses across eight states) never intended to build out a 600,000-square-foot Mount Pocono, PA warehouse under a 20-year lease, took the $11 million tenant improvement allowance, and defaulted on rent; suit filed in New York state court in May 2026 alleging fraudulent inducement and unjust enrichment; BroadRange denies the allegations. https://therealdeal.com/new-york/2026/07/10/ksg-sued-broadrange-for-11m-tenant-improvement-allowance/
[3] BusinessDen, “The Docket: Real estate lawsuit roundup for 6.4.26” — 76 Commerce Center LLC and 76 Commerce Center 3 LLC v. BroadRange Logistics LLC, Adams County District Court, Colorado, Case No. 2026CV31042, filed May 29, 2026; two Brighton, CO buildings totaling 1.07 million square feet, $590,714 monthly rent, $32 million alleged owed in unpaid rent and discretionary allowances. https://businessden.com/2026/06/04/the-docket-real-estate-lawsuit-roundup-for-6-4-26/
[4] Fast Eviction Service, “Tenant Improvements in California: A Landlord’s Guide to Allowances, Work Letters, and Lien Risk” — recommending progress payments tied to milestones, lien waivers with every draw, and a 10% retainage held until final completion. https://www.fastevictionservice.com/blog/tenant-improvements-in-california-a-landlords-guide-to-allowances-work-letters-and-lien-risk/
[5] Aaron Hall, “Tenant Improvement Allowance Clawback Clauses” — clawback triggers including early termination, non-completion or abandonment of improvements, and tenant insolvency or bankruptcy; amounts typically prorated via straight-line amortization over the lease term; courts generally enforce clawbacks when the triggering language is unambiguous. https://aaronhall.com/tenant-improvement-allowance-clawback-clauses/
Acrebase is AI-powered contract intelligence for commercial real estate — clause extraction, risk flagging, and portfolio-wide search, plus tools for maintaining a consistent clause library and negotiation playbook across every deal a team runs. Learn more at acrebase.com, or get in touch about pricing.