No, it is not. Apple stores have consistently been the highest revenue per square foot and bring in a great deal of foot traffic. There is no other retailer that is close.
While Apple Stores are undoubtedly popular, other stores are too.
What other retailer draws any where near as much traffic as an Apple Store? How stable are that retailer‘s finances?
Plus statements such as „most owners“ are generalized.
Yes, that is true, these are generalizations. There may be some location where the Mall has so many other stable retailers that they owner would like to see the Apple store leave. I do not know of any such location, but if you do, please tell us about it.
I‘d say a lot of malls and other retail locations are already suffering from Corona, with companies going broke left and right, so the last thing they need right now is stinkingly rich tenants asking for 50% off.
You continually focus on only the part of the offer that you do not like and refuse to acknowledge the part of the offer that adds value to the property owner. Retail locations are valued based on their ability to generate revenue. Loan underwriters look at several factors in evaluating their leases:
- How much revenue the lease will generate, not just monthly, but over the length of the lease.
- How much time is left on the leases at a location. In a location where demand is increasing, having a good mix of shorter and longer terms means that rents can be raised, in a location where demand is stagnant or decreasing, the more long term leases the better.
- The financial stability of the tenants. Having a long term lease with Sears in the U.S. used to be a great thing for a mall. Now it is at best neutral and most likely a negative. What other retailers in the UK are close to as stable financially as Apple? A long term lease with them adds a great deal of value to a retail locations value.
- How much foot traffic does a tenant generate? This matters for the halo effects of people visiting the mall for one store and stopping at others. A large draw increases the value of the mall for every other tenant. Again, Apple stores generate more visitors per square foot than any other retailer. That means there are more people to visit the little carts on the way, to stop at the food court and to wander into other stores when they are waiting for their appointments.
By offering long term leases, Apple is increasing the valuation of these locations. Every property owner will need to evaluate the individual deal being offered and either accept it, reject it or counter it based on its own financial analysis. Apple clearly feels the deals it is offering are a good trade off for both parties. If they are right, they will get many of the property owners to accept them. If they are wrong, they will not.
Right now it‘s about surviving the next 6 months - long term goals can be focused on once the crisis is over.
Sorry, signing long term leases helps with their short term situation. It will make it easier for these property owners to re-finance or restructure their loans, ensuring they have the needed capital. A major tenant lease that is only one to three years is scary for lenders, as it means uncertainty - something they hate. A long term lease gives them confidence that their cash flow numbers are correct (not greatly inflated).