updated 12:00 pm EST, Wed November 30, 2011
Apple thought be paying substandard rent
Apple has managed to secure an unusually beneficially real estate deal for its upcoming Grand Central Terminal store, according to the New York Post. The paper says it has obtained copies of leases showing that Apple will be paying just $60 per square foot, "well below" what many other GCT tenants are paying. A future Shake Shack, for instance, is expected to pay over $200 per square foot.
The Apple Store is moreover said to be skipping revenue sharing with Grand Central's operator, the Metropolitan Transportation Authority. The Post suggests that Apple may have driven a tough bargain for its space, depriving the MTA of revenue at a time when budget problems have caused fares to go up. Of the businesses in the GTC, only Apple and a Chase ATM branch are not paying a percentage of sales over a given threshhold.
People described as "real estate insiders" reportedly estimate that Apple could pull in $100 million per year from the new outlet. The MTA, though, is defending its agreement. "We set out to maximize the rent we receive for this space, and we’re thrilled that we were able to more than quadruple what we had been receiving previously," says spokesman Aaron Donovan. He adds that no other companies responded to a request for proposals. A July summary, prepared after Apple signed its lease, reveals that the MTA is hoping "significant new traffic" from Apple customers will offset money lost by sacrificing usual financial arrangements.