Sherman's building recently lost Wwwrrr, the online education company that closed in January, and a company called resaleworld.com, an online site that sells items for thrift shops around the country. Wwwrrr left a 40,000-sf hole, while resaleworld.com left about 10,000 sf.
In fact, when it closed early this year, Wwwrrr never even moved into space it had taken on and fixed up for expansion, Sherman says. Sherman was surprised at resaleworld.com's difficulties--he liked its business model, and the company even had a $250,000 grant from the state to set up their operation.
"I was hurt financially because I didn't get the rent, but we had financial guarantees," Sherman says. "I lost sleep that had to do with dot-coms bailing on me--absolutely."
While Sherman typically requires a letter of credit that covers the improvements, the departures were a tough nut to swallow. He has had some success in leasing up the empty space--Wwwrrr spent a lot of its own money on the improvements, so the space is very nice. But he still has a ways to go in filling up the 360,000-square-foot office building, which is 12% vacant.
Sherman has learned his lesson about startups. He now requires tenants to provide financial statements, and either demonstrate profitability or have investors in the company sign personally for the lease. He said he hasn't had many takers.
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