Terms of Apple's Sweetheart Deal for Grand Central Terminal Retail Store Revealed

[kdarling]

The MTA thought it was in the best interest of the taxpayers– that it would drive increased traffic/revenues to the other stores in the terminal. Not only legal, but great.

This is New York. It actually would not be surprising if some money passed under the table to get a deal like this, whether Apple directly knew about it or not.

The MTA does what it wants to, regardless of best interests.

Didn't they use to spend millions buying rare artwork as an investment instead of using the money to fix bridges?

 

[daxomni]

The MTA thought it was in the best interest of the taxpayers– that it would drive increased traffic/revenues to the other stores in the terminal. Not only legal, but great.

Except that the sweetheart terms don't appear to be based on actually meeting those goals and simply give Apple everything they wanted regardless of how it actually pans out.

 

[ivladster]

What's the problem?

They know that Apple is gonna bring in thousands of people and make them stay longer at the Grand Central, this is why they just wanted to have Apple Store and didn't care about profit from Apple. They will profit in other areas when people talk about Grand Central, eat there, shop or just visit.

 

[Mad-B-One]

Goog for all!

I don't see a problem in that. Apple attracts the paying customer kind of people and revenue for all goes up. Won't be true for a lot of other shops and that is why they agreed to pay some of that profit back. None of those shops is forced to be there, so it seems that it is a mutual agreement. Coming up with arguments that this is unfair if somewhat far-fetched. Apple could open a store across the corner and get the same amount of customers not leaving as many dimes as anticipated at this location.

 

[BKF]

The store on 5th Ave is about a mile away. All this is going to do is give the people who already use grand central a place to buy Apple products. I doubt the other businesses in the station will be benefited much, people aren't going to go out of their way just to see the Grand Central store.

Well, maybe, but a lot of people use Grand Central Station. Also, this isn't the suburbs where you get in a car and drive a mile when you want something. It's a pedestrian/mass transit city, different dynamic, and this is in the heart of eye of a lot of pedestrian and mass transit traffic. It's going to be swarmed.

 

[Lindenhurst]

The biggest determiner in the price/sq ft difference between the Apple Store and the Shake Shack is the amount of space occupied. Apple's is 23,000; SS is 2,270.

You wouldn't know that by reading the article, but we are talking about the Post here. I guess it's remarkable that the words "mangled" "toilet" or "hooker" weren't somehow worked in.

Exactly..Cost per square foot is usually based on the amount of square feet rented. You would think the writer of the article would have included that in the article instead of written a piece of journalism that portrays Apple as getting something for nothing at the cost of others.

 

[Spoony]

First off this is the NY Post. They just like to cause drama. It's a gossip rag.

Comparing the space necessary for a shake shack and the space that Apple is renting is dumb. Apple's space is probably 30X larger. No one is going to pay 200 a square foot for a space that massive. They'd need to break it up into smaller spaces.

Prob makes more sense to just have apple there, drive increased traffic to other stuff and get the whole space leased out and keep it looking elegant. Win / Win.

The revenue sharing component just shows how powerful the appeal of apple is. Nothing illegal about that. This is still most likely still market rate rent for such a massive and large space.

 

[Fazzy]

So why doesn't apple have to pay a percentage of their profits, just like everyone else?

 

[LeoFio]

The store on 5th Ave is about a mile away. All this is going to do is give the people who already use grand central a place to buy Apple products. I doubt the other businesses in the station will be benefited much, people aren't going to go out of their way just to see the Grand Central store.

A mile in Manhattan is like 20 miles or more anywhere else. This store will add much convenience to those in the area as well as those travelling. Plus, apple stores in this city are tourist attractions themselves.

 

[daxomni]

It creates traffic for everyone else. Apple can draw crowds like no other. Apple Store halo-effect.

If this is true then Apple should have zero problem signing a contract based on actual improvement. If there turns out to be less improvement than predicted then why shouldn't there be less of a discount given?

 

[TWSS37]

Isn't it great when public utilities bend over for big business. I feel like emptying my wallet into the hands of the next rich person I see....

I love how every person who is looking at this from a taxpayer and logical way (and I'm assuming are NY residents) are getting down voted!!!

Business like Apple doesn't need incentives. Job growth (and thus APPROPRIATE lease and tax breaks) is spurred by moderate to high level paying jobs. Minimum wage (or close to it) salaries does nothing to help the economy.

 

[macus3r]

Wait... They seriously estimated only $100million in sales per year for this location? /facepalm

This store will do at least $750mm-1 billion/year, easily. Stupid move on the MTAs party.

 

[Liquorpuki]

I question the legality of a public institution giving sweet heart deals like this. Doesn't seem in the best interest of the tax payers

Politics as usual. And what will happen later is some watchdog group will challenge the MTA. Then the MTA will spend more taxpayer money to hire an independent auditor. In response the watchdog group will hire their own independent auditor. And both independent auditors will arrive at different conclusions. By then a couple years will have passed and nobody will care anymore.

A Shake Shack is coming to Grand Central?! Awesome! (though prob impossible to deal with!)

As a westcoaster who thinks the Shack Stack is one of the best burgers I've ever ate, I'd go for the Shake Shack more than the Apple Store.

The City of LA should give Shake Shack a sweetheart deal so they can stick one a block away from my apartment.

 

[Tiger8]

The biggest determiner in the price/sq ft difference between the Apple Store and the Shake Shack is the amount of space occupied. Apple's is 23,000; SS is 2,270.

You wouldn't know that by reading the article, but we are talking about the Post here. I guess it's remarkable that the words "mangled" "toilet" or "hooker" weren't somehow worked in.

Agree. The per sq ft drops SIGNIFICANTLY in the city for larger space, retail or residential.

So a 1200 sq ft 2 Bedroom is NOT twice the price of a 600 sq ft 1 bedroom

 

[pjfanelli]

Knowing Apple the display panels for the words are really iPads running the special version of iOS for the show models. Wouldn't shock me.

I think they are Apple Thunderbolt Displays. I took a good look yesterday, and I snapped a shot a few weeks ago of a Display box outside the front door. I commute through GCT every day.


Edit: Or they could be ACDs

 

[vitzr]

Now that is power.

Now that is Blantant Greed.

Apple: The Company That Takes & Takes & Takes.

As Nefarious as Big Oil.. ha.. ha..

All Hail Apple.

 

[AppleMad98004]

Mixed Feelings

I love Apple but I got to say not paying their fair share here and getting a deal that takes away from the MTA is not good.

This goes along with Apple's lobbying for no tax on their overseas profits (which are bigger now than US profits).....

They are totally in bed with the 1%. Good for them but pay the taxes!

 

[SeanMcg]

So why doesn't apple have to pay a percentage of their profits, just like everyone else?

or we could ask

Why does everyone else have to pay a percentage?

This is an honest question.

 

[Thunderhawks]

From the article


It seems not everyone agrees with that, especially since the MTA has no estimates or done any studies on what potentially that increase could be

Yes, let's waste more money in cash strapped NYC to study this!

Really? It's a no brainer.

Especially when you open up the leasing app:

Large space leased all at once!
Tenant good for the money!
Long term no hassle lease!
Drawing power will generate more traffic and more traffic
means more business for surrounding stores.

And yes, more taxes for NY state, due to sales!

Not directly for the MTA, but they get their share via Albany.

BTW: All of NY State is technically bankrupt, due to politicians. They invent new taxes (Metropolitan Commuter Tax) make them retroactive and grab, grab, grab. Did I mention: GRAB?
But that is another subject.

 

[JangoFett124]

The MTA fares are already too high, and now instead of making money off of their rich tenants profiting off the commuters, the MTA will have to raise ticket prices even more. This makes me quite angry.

 

[luckysob]

That is a big space. What was in that space before? A single merchant or multiple?

I don't see how they dodged the revenue sharing aspect that the rest of the merchants are required to follow. Could have bought a few train cars per year with the Apple Store revenues....

 

[RobNYC]

The MTA thought it was in the best interest of the taxpayers– that it would drive increased traffic/revenues to the other stores in the terminal. Not only legal, but great.

Not really since the MTA is hurting for cash. They'll just raise the rates on all the commuters again to compensate for their bad financial dealings. This isn't an isolated incident either, they're notorious for pissing away money and giving sweetheart deals.

http://www.sheepsheadbites.com/2011/05/how-political-deals-have-shortchanged-the-mta/

 

[GQB]

This is New York. It actually would not be surprising if some money passed under the table to get a deal like this, whether Apple directly knew about it or not.

Proof please?
Seriously, the tin foil hat crowd is out in full force today.
This store will drive more affluent buyers into nearby stores and produce more revenue per sq foot than any rental scalping could accomplish.
Apple stores, particularly this one, are destinations.
Go find a bank to occupy.

 

[Thunderhawks]

So why doesn't apple have to pay a percentage of their profits, just like everyone else?

When somebody leases space/a store to sell something they do not owe anything to the landlord, but the rent (and whatever is included in that number).

By your logic a landlord would have to participate in a stores' losses.

 

[El Cabong]

Grand Central is crowded enough without an Apple store. However, this may have the positive effect of diffusing the crowds at the 5th Ave store, which I currently avoid in favor of the Soho location, which is far less crowded.

However, I wouldn't be at all surprised if some palms at the MTA were greased to make this store's seemingly sweet deal go through (in fact, I'd be surprised if that didn't happen, given the MTA's track record - no pun intended). I'm sure that we'll be subsidizing this through yet another fare increase in the near future.