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. Last Updated: 07/27/2016

Mezh Tenant Chief Says He Is Quitting

Two months after new management at the Mezhdunarodnaya commercial complex declared it would sweep out the facility's lingering Soviet cobwebs, the chairman of the tenant association announced he is throwing in the towel and vacating by Oct. 1 -- an act likely to result in dissolution of the 59-member association.


Carl Axelsen, president of the oil equipment firm Axelsen Industries, said despite efforts to see the new director on both his own behalf and that of the association, he has been refused an audience.


Furthermore, tactics he dubbed coercion -- booting tenant's vehicles until contracts are signed and raising rates indiscriminately -- have gone unchecked.


Refusing to sign a new contract that increased parking fees or a lease agreement that raised his office rent, Axelsen said he has decided to move his office when the lease expires in October.


"It's been an entirely frustrating experience," Axelsen, a 14-year tenant at the complex, said of the past few years. "The place is managed by a bunch of stone-aged people from the good old days."


The Mezhdunarodnaya, or Mezh, is located on Krasnopresnenskaya and consists of two hotels and a business complex called Sovincenter. It was built with the help of the American industrialist Armand Hammer 15 years ago for the Moscow Olympics as a showcase of Soviet sophistication, but has gained infamy for its high prices, surly security guards and questionable clientele.


The Mezh Tenants Association, or MTA, was formed by Axelsen four years ago in the wake of furious opposition by tenants angered at back-to-back rent hikes of 22 percent and 30 percent.


Tenants agreed to pay their rents into an escrow account until the rate increases were justified, and the Sovincenter management backed off.


That seems to have been the high point of the MTA's success as none of its board members have step forward to replace Axelsen.


Axelsen is complaining about rent hikes of 10 percent to 75 percent and a parking fee increase of $60, from $270 to $330 per space monthly.


"They just dictate to us, 'You pay this amount,'" he said.


Sergei Dresviannikov, the managing director of Sovincenter's leasing office, said, however, that the current round of rate hikes was announced one year ago and took effect Jan. 1, but he said the hikes were not applied arbitrarily.


Currently, office space rents for an average of $876 per square meter annually, Dresviannikov said. Apartments, which are often used by companies for offices, rent for $540 per square meter. Axelsen says he pays $396 per square meter for his office/apartment.


As lease contracts come up for their annual renewal, rents are being boosted to an average $960 per square meter annually, regardless of the type of facility, Dresviannikov said.


The increase is primarily due to the value-added tax, which Dresviannikov said Sovincenter previously paid for its tenants.


"Once we have a valid contract with the companies, we have no right to change it," Dresviannikov said. "As soon as the contract is over, we may reconsider."


As for booting cars, he said it is occasionally used to goad delinquents into paying their bills.


The wheels of Axelsen's car were locked because he was paying only the old parking rates. After the vehicle was booted, Axelsen began paying the new rates, although he has yet to sign a parking contract, Dresviannikov said.


Axelsen differs, and insists he has paid his bill.


But Axelsen admits that the issue comes down to value for money. The Mezh is old and dilapidated and its employees are difficult to work with, he said.


Past promises to upgrade and renovate have gone unfulfilled, so he says he is leaving.


Dresviannikov countered that it takes time for change.


Few Westerners thought they would ever hear such an acknowledgement from Sovincenter management until it was uttered publicly in May by the complex's new general director, Boris Gryaznov.


Although he waxed euphoric about his plans for the center two months ago, Gryaznov was unavailable for comment on Axelsen's charges.


The joint-stock company says it will refurbish the interior and has embarked on a journey to purge the Soviet mentality from the 3,000-strong workforce, as well as restructure management under the guidance of Price Waterhouse.


Although Dresviannikov said current law makes it difficult to remove workers, employees are tense over the rumors of change.


"The sense of anticipation is high," said one. "There's a lot of talk, a lot of gossip, but nothing has taken place."