updated 01:30 pm EST, Fri December 2, 2011
'Bring it on,' claims official press release
New York's Metropolitan Transportation Authority has issued a press release claiming it doesn't feel threatened by the state comptroller investigation into the lease terms for the Grand Central Apple Store. "Bring it on," the release reads. "This is the best possible deal for the MTA, quadrupling the rent we receive and bringing foot traffic to Grand Central Terminal that will increase revenue from all of our retailers. We look forward to explaining the details of this competitively bid transaction to anyone who is interested."
A New York Post look at Apple's lease recently revealed that the company is paying about $60 per square foot, versus as much as $200 or more for other businesses in Grand Central. Apple is also immune from revenue sharing, even though all other tenants in the terminal are subject to it with the exception of a Chase ATM branch.
The Post originally quoted Robin Abrams -- an executive VP with the real estate firm Lansco -- as stating she was "surprised" by Apple's terms, but the MTA alleges that Lansco now feels Abrams' comments were misrepresented. The MTA further comments that while Apple has a "great location," the space has significant restrictions such as historic preservation regulations. Apple reportedly agreed to spend $2.5 million in infrastructure upgrades, and another $5 million to buy out the lease of the space's previous tenant, Metrazur.
The MTA says accumulated rent will jump from $263,000 a year under Metrazur to $1.1 million. Increased traffic at other businesses could bring in another $500,000 annually with just a 1 percent boost in sales. "This is the best possible deal for the MTA," the entity insists. "When all of the costs are included, Apple is paying more than $180 per square foot over the ten-year lease. As the competitive bidding process revealed, there are no other uses for this space that would generate the same revenue for the MTA given the up-front costs and limitations."