Judge to decide whether Twitter missed rent in spat with Boulder landlord

BOULDER, Colo. (CN) — Following five days of trial over a lease dispute between Twitter and a Colorado landlord, a Boulder judge requested the parties provide additional briefing before she determines who breached the agreement with the other.

“If the rent was due on Dec. 1st, then Lot 2 prevails. If the rent was not due, X Corp. prevails,” summarized attorney Damien Zumbrennen on behalf of X, formerly known as Twitter.

On Valentine’s Day in 2020, Twitter signed a 10-year lease with Colorado real estate company Lot 2 SBO, for a 64,557-square-foot railyard building in Boulder, Colorado, set to expire in 2032. Over two years, the tech company spent $40 million turning the shell building into a flagship headquarters, complete with kitchens on each floor, showers for bike commuters, and a grand staircase down the center to connect all four floors.

On the witness stand, Lot 2 SBO’s real estate broker spoke in awe of the building while explaining the challenges of finding a tenant in the post-2020 office market collapse.

“It’s super cool, I’d love to work there. They built a playground,” testified real estate broker Don Misner, who leased out the building while working for Jones Lang Lasalle. Now employed by Newmark Commercial Real Estate, Misner continues to work with the landlord.

Misner advocated against divvying up the building into smaller units because it would degrade the value of the space. Confident the market would eventually turn, Misner said he wanted to keep the building intact for someone who could rent the full space.

In its current condition, however, Misner said that “it’s hard to imagine anyone else would want it. It was a very custom build. There is a ridiculous allocation of kitchen and recreational space.”

While many commercial office spaces maintain a 50-50 split of work and communal space, the Twitter headquarters only reserved 10% of its space for cubicles.

According to the Colorado Secretary of State's Office, Lot 2 SBO is owned by the Centennial-based legal services company CT Corporation. Because Lot 2 SBO has no employees of its own, commercial real estate manager The John Buck Company oversaw the buildout.

In 2020, the landlord didn’t mind the eccentric changes because Twitter, now X, had committed to occupy the building for 10 years — with hints it would stay in the Colorado college town nestled in the foothills of the Rocky Mountains even longer.

What happened next became the subject of a five-day bench trial, with landlord Lot 2 SBO arguing it simply evicted the social media company for failing to pay rent, starting shortly after Elon Musk purchased Twitter in October 2022 and renamed the social media platform X.

The lease promised a monthly base rent of $199,866.88 through April 30, 2032, but the landlord also included a $90-per-square-foot tenant improvement allowance to induce the company to sign on while the building was under construction. According to X, the money could be used to cover moving expenses, architectural design, project management, relocation consultants, and other soft costs.

In June 2023, X countersued, claiming the landlord knew the tech company intended to apply the improvement allowance to the rent and had received an email giving notice.

Today, the building stands largely empty, as the landlord has struggled to find another "unicorn" tenant in need of the full building as is.

Minor is confident the market will turn quickly as companies pull their workers back into the office.

“Both sides think there is no ambiguity, and their interpretation is the only interpretation,” said 20th Judicial District Judge Nancy Salomone. “Do you want the opportunity to flesh out the secondary alternative argument?”

Both parties agreed to take two weeks to submit a briefing on the steps Salomone should take if she finds the contract ambiguous. The appointee of Democratic Governor John Hickenlooper did not indicate when or how she would decide the case but said closing arguments were not necessary to help her reach a conclusion.

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