macnn
06/13/2008, 8:30pm, EDT
Friday, June 13th
Fifth Ave. store buffs value of NYC property
An instantly recognizable icon of Apple's retail presence, the Fifth Avenue "Glass Cube" store is said to have contributed to raising the value of the property it sits on by over $1 billion. ifoAppleStore reveals that Apple's $100-per-square-foot retail space, combined with other retail locations in the plaza, have helped the selling price when former owner Harry Macklowe sold the location to Boston Properties Incorporated for $2.8 billion this year.
It is rumored that Boston Properties is exploring revenue generation options, since space occupied by FAO Schwartz, for example, goes for $1000 per square-foot, vastly increased from the $71 it currently pays.
Filed under: industry, Apple
Other story tags: retail, Fifth Avenue
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Ouch
Hopefully Steve was smart enough to sign a 99-year lease with a rate cap, because it sounds like the new landlord really wants to raise the rent... though it's a little unclear from the article exactly who's paying what.
Thankfully, the original article makes it a little clearer that implication is that rates for similar space in that area runs $1000/sq ft... but who knows how realistic this actually is, and it should only affect NEW tenants to the building as I can't imagine there isn't a rate cap on FAO's and Apple's leases. I'm sure Steve has his lawyers checking this right now :)
re: ouch
I believe Apple signed a 20 year lease (based on the articles of how steve wants to take his glass cube with him when the lease expires - which is really stupid, since he has to replace it anyway, might as well make a new one).
Wich lease time
$100-per-square-foot is lease by year, by month or by day?
Value
In the real estate and leasing market, the dollar-per-sq-ft.
is a monthly fee. And Apples $100 dollar-per-sq-ft. rate
may seem high, but is reasonable given the amazing location
with its significant amount of traffic and 24 hours a day openness.
Being open twice as long as most retail locations, the NY Apple
Store more than makes up for the difference in revenues needed
for the 4,000 sq. ft. locale. That's almost half a million a month !
In marketing and advertising terms, the monthly fee is extremely
reasonable given the benefit of traffic generation via its glass cube
for locals and tourists is something that can't be measured in dollars.
In this stores case, it's about "presence" perceived brand value.
Besides, all this is mute - as it's cheap. Apple's other large Manhattan
Store in an old meat packing district costs $400-per-sq.-ft.
How's them apples ?
My god
I don't know if $100-per-square-foot in NY is a high value but here in Barcelona in the street analogous to where it's this Apple Store the price is 2300 €-per-square-meter a year or 191 €-per-square-meter a mont and this is $2000-per-square-foot.
Per year, not per month
Usually when you get a price quote per foot, that is the price per year, not per month, at least in all of the leases I have dealt with. $100/sq ft is amazingly cheap for that area. Even in small town Wisconsin, $20/sq ft is normal.
If you read the article linked, it confirms this rate as being per year:
Real estate sources say FAO is paying about $71 per square-foot per year on nearly one-half of its space, in an area where the market rate is over $1,000 per square-foot. Real estate analysts believe Macklowe lured Apple to the site with a lease charging about $100 per square-foot.
surprised
As a New Yorker, I'm surprised at the rate of $100/sq ft for that space. That's actually incredibly cheap given the prime location right in the shopping district heart on 5th Ave. I'm not sure how Steve negotiated such a low rate on that. Perhaps because it's almost all underground?
Anyway, I also hope Apple has a long lease with a fixed rate, because it sounds like if the new owners had their way, they'd up that rate quite a bit.
Damned greedy landlords- they're everywhere!