Ellen Koteen: Comparative market analysis needed at One Cottage Street

Thank you for your coverage of the newly formed Cottage Street Studios Tenant Association and our effort to meet with the management of Riverside Industries in an attempt to work in partnership to find a solution that meets the needs of both sides. What has puzzled us since April when we got the first email from the CEO announcing that studio rents would increase to $18 square foot at One Cottage Street was the underlying justification for this above market rent increase. Two days after this first announcement, management said rents would increase to $15 square foot, not $18. Tenants were presented with a power point presentation saying that a market analysis established that the comparable rate for similar spaces was $19 square foot, thus implying that the $15 rate was more than reasonable. This made no sense.

We have now researched CoStar, the company which provided the Underwriting Report and market analysis used to justify raising all rents to $15 square foot. The report looked at 12 properties in our region; these included buildings housing People’s Bank, Merck Pharmaceutical, professional medical offices, and other upscale properties. Not included were local mill buildings housing large numbers of artists: Eastworks, Paragon and Arts and Industry.

It turns out that CoStar is an international corporation with offices all over the world with headquarters in Washington D.C. We now understand that the CoStar report is intended to be used as a guideline but not as an actual factual determination of value. It should not be relied upon for property specific conclusions nor should it be used as a substitute for the advice of a local real estate agent or appraiser. Such a professional can assess the specific property characteristics, find truly comparable rental properties, and then draw reasonable lease rate conclusions.

We are now suggesting that the tenants association and Riverside each engage a local commercial real estate broker to conduct a comparative market analysis in order to establish a fair market lease value. Once this is done, we will have more information to go forward.

Ellen Koteen, tenant of 18 years at One Cottage Street

On behalf of the Cottage Street Tenants Association, Easthampton