A California-based company that has rapidly expanded in the last few years by renting large amounts of office space, then subletting it fully equipped to attorneys, has defaulted on its lease at an upper Northwest office building.
The owners of the Spring Valley Center, 4801 Massachusetts Ave. NW, Friday notified tenants who subleased space from Attorney Office Management Inc., that "for your information (AOMI) is in default of its lease. . . . Accordingly you are hereby notified to pay all rent due by you . . . directly to Spring Valley Center," whose owners include Melvin Lenkin and David Burka.
The tenants sublease space on two floors of the building in a so-called "Fegen Suite" named for Los Angeles businessman Paul Fegen. Fegen has gone across the country leasing several entire floors in office buildings then installing law libraries, a central office staff and subletting the space to small laws firms.
Since the AOMI's founding in 1966, it has leased more than 4 million square feet of space in 13 states to more than 4,000 tenants, according to a recent newsletter published by the company.
"It's a little to early to predict what the default means for our future," said Lee Rogers, an attorney who is president of the suite's recently organized tenants association. "We're trying to work it out."
The association was created in September after AOMI notified many of the tenants of rent increases ranging from 48 to 100 percent. The default notices came a little more than a week after the association met with AOMI vice president Wayne Owens to discuss the increases.
The rents in the suite had generally ranged from $14 to $18 a square foot, according to one tenant, and the increase would have pushed some rents to as much as $30 a square foot, which is comparable to rents of office space in the most desirable sections of downtown Washington.
AOMI told the tenants in an Aug. 2 letter that there would be significant rent increases because a recent market study had found that a considerable amount of the company's space was operating "considerably below market value or below our operating expenses."
Neither Owens, a former Utah congressman, nor other AOMI officials in Los Angeles could be reached for comment.
AOMI has also leased and occupied space at 1101 14th St. NW., a building owned by Richard Rubin. Rubin said Friday that AOMI was not in default of its lease. However, Rubin declined to say whether AOMI had been given a period of free rent and was still operating in that period. Several local leasing agents said developers are usually willing to give AOMI a year's free rent because the company rents such large blocks of space on a long-term basis.