It's racketeering because they'll break your legs if you don't pay. It's not racketeering to ask for a percentage of the revenues; that's standard at pretty much all malls.
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Terms of Apple's Sweetheart Deal for Grand Central Terminal Retail Store Revealed
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It's racketeering because they'll break your legs if you don't pay. It's not racketeering to ask for a percentage of the revenues; that's standard at pretty much all malls.
It isn't a question of legality. All leases are negotiated on a case by case basis.
The MTA is looking at the presence of Apple as a *revenue stream*. They will certainly increase traffic by a large amount, and the other tenants will reap the reward (as will the MTA through larger returns on revenue sharing at these other locations, -it's not like their not getting some additional revenue with Apple there).
Also, that MTA is a public entity makes no difference. The same forces are at work in the pure private sector. Large companies with a lot of clout, that bring customers and revenue, get to dictate better terms. Kudos to Apple for using their leverage to negotiate better lease terms. It's called business.
"$100 million a year" location? Sounds pretty low to me. I thought Apple's flagships were doing a solid 25-35 million a quarter (anyone know?). This will inevitably outperform them all, probably even double what UWS makes-- but maybe not double 5th Ave's sales.
The Post
What this article exhibits is that the Post has decided to throw its phony Murdoch populism at a random subject. Now there is, for a space more than 20,000 square feet, 4 times what they got before when there was a tenant. A burger joint is paying a higher rate for a much, much smaller space.
But the goal of a Murdoch paper is to selectively, very selectively, ignite a fake populism. No profit-sharing? Well, who says there should be? The city will get four times the rent.
If Apple puts a store in a shopping center, does it share profits? No. If Murdoch runs a TV network in New York, does it share profits? Why, no. What is generally the attitude of a Murdoch publication towards the municipalities' power to tax? Why, the taxes should be lower!!
But this article is all angry huffing and puffing over nothing. Got to give the masses a target for rage. Just make sure it doesn't mention phone hacking scandals or anything inconvenient.
What this article exhibits is that the Post has decided to throw its phony Murdoch populism at a random subject. Now there is, for a space more than 20,000 square feet, 4 times what they got before when there was a tenant. A burger joint is paying a higher rate for a much, much smaller space.
But the goal of a Murdoch paper is to selectively, very selectively, ignite a fake populism. No profit-sharing? Well, who says there should be? The city will get four times the rent.
If Apple puts a store in a shopping center, does it share profits? No. If Murdoch runs a TV network in New York, does it share profits? Why, no. What is generally the attitude of a Murdoch publication towards the municipalities' power to tax? Why, the taxes should be lower!!
But this article is all angry huffing and puffing over nothing. Got to give the masses a target for rage. Just make sure it doesn't mention phone hacking scandals or anything inconvenient.
And as a New Yorker, I'm thrilled Apple got the MTA to buzz off. Good riddance! Grand Central is "THE WORLD'S" terminal: to have the MTA receiving kickbacks as though they were JUST a mall operator (and not a massive transit agency) has always seemed scammy to me. I mean, the MTA raises transit rates whenever they feel like it anyway. The amount of money they've got coming in is obscene. Kudos to Apple for negotiating a better deal than anyone else gets-- that's Steve's way and I'm happy to see it still in force.
Er, what? Would you be slimy for negotiating a low price for a new car?
Er, what?
Breaking legs or kicking you out of a mall retail space if you don't pay protection money is the same difference to me.
There should be a set lease rate and set rate for utilities, security services etc.. Expecting a percentage of sales is extortion to me.
Wow, I can't believe how seriously some people are taking a New York Post story. Come on, use your brains a little.
E.g.,
(from an earlier item on this deal https://www.macrumors.com/2011/07/2...000-square-foot-grand-central-terminal-store/)
So... the MTA will be making more on the space than before AND supposedly get the benefit of increased traffic to all of the other stores.
Maybe the MTA could have gotten more -- I doubt anyone on this forum is in a position to know though... are any of you experienced in Manhatten retail real estate?
But it's hard to call it a bad deal it's a lot better than what they had before.
E.g.,
(from an earlier item on this deal https://www.macrumors.com/2011/07/2...000-square-foot-grand-central-terminal-store/)
So... the MTA will be making more on the space than before AND supposedly get the benefit of increased traffic to all of the other stores.
Maybe the MTA could have gotten more -- I doubt anyone on this forum is in a position to know though... are any of you experienced in Manhatten retail real estate?
But it's hard to call it a bad deal it's a lot better than what they had before.
Dude, this is Manhattan. Where you have 3 Starbucks, and 5 McDonalds within a 1000 feet radius. The whole island is ~30 sq mi in size. A mile is an eternity away in the city.
Because they didn't want to. It's called "Negotiation".
MTA decided that leasing the space for 4X the previous tenant's rate, with no revenue share, combined with the cachet and increased buyer traffic of having an Apple store on site was better than letting the space sit vacant and bringing in $0 income.
Then, as others have said, the MTA will enjoy the increased rent received from Apple than it was previously. It's a win-win situation for everyone involved.
Wow.
Well spoken, logical and precise. Such a rarity in these forums.
Keep up the good work.
No, since taxpayer money is at work in the public sector, any contract has to be standardized and fair. Otherwise, the municipality or department can get sued. So contractors can't haggle and only the municpality can set the contract terms. And if someone in the municipality is conspiring with the contractor to award them contracts, that's one of the reasons politicians go to jail every year.
From what I read, they paid off the restaurant to vacate and are going to occupy both the restaurant space, another retail space that was already vacant, and a bunch of public property that was never designated as retail.
The minute that public property was going to be used for corporate revenue, it should've gone out to bid. The MTA could've written the contract terms to target Apple (IE lessee is required to generate X amount of foot traffic... or whatever metric separates Apple from other potential bidders - that would be legal). Still should've gone to bid. Otherwise some other company will sue the MTA in a year saying they were never given the opportunity to acquire the space.
I agree with you in principle, but it wouldn't have been vacant. Metrazur would still be there.
Multiple. Wholesale usually results in lower prices, so bigger space has something to do with lower per sq ft rate.
Apple also spent a ton of money to renovate the area, knock down walls etc. It puts in $10 million on average for each store (not including lease payments) since they started opening them 10 years ago. This is more of a flagship, so it may have spent even more.
I never thought of Grand Central as a place to hang around and shop, so an Apple store would definitely change my perception and make me more likely to spend money there.
And, of course, this is from NY Post, so who knows how accurate the reporting may be...
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Although I generally agree that there should be a bid, but if it is targeted to Apple, just without naming it, it would not really make it fair, it would just keep up the appearances.
100 million a year?
The Apple Store Lenox Square in Atlanta rakes in an average of 150 million a year in sales which is also a substantially smaller space. I would imagine the grand central store would do well over 100 million a year in sales. Im also curious as to how many employee's they will have onboard. As reference Lenox Square has over 160 employee's. I guess there's gonna be jobs for some of the wall street folks. Apple's retail stores have the highest sales per square foot of any retailer in history by far.
The Apple Store Lenox Square in Atlanta rakes in an average of 150 million a year in sales which is also a substantially smaller space. I would imagine the grand central store would do well over 100 million a year in sales. Im also curious as to how many employee's they will have onboard. As reference Lenox Square has over 160 employee's. I guess there's gonna be jobs for some of the wall street folks. Apple's retail stores have the highest sales per square foot of any retailer in history by far.
The genius who was helping me at the 14th Street Apple Store yesterday said he's on the new Grand Central team "if it ever opens." He seemed frustrated that it is taking so long. But then again he wasn't a very friendly or helpful genius.
$100 million a year of sales does seem small, but obviously it won't be anywhere close to $750 million year. That would require over $2 million in sales every day. That ain't going to happen even with all the foot traffic of grand central station. Keep in mind that probably half of that traffic is commuters. Apple may now get all of those commuters business, but even a fan boi doesn't spend more than $2,000 a year on Apple stuff (right?). A million fan boi commuters dropping $2,000 a year doesn't get you close to $750 million. Big numbers really are that big.
For those who don't know, the MTA has been very aware of the appearance of these retail spaces which are visible from the center of the iconic station. They would not want to split it up and they would not rent it to a giant Shake Shack. There is just a decorum aspect that must be preserved (yes, while transvestite hookers are plying their trade in the bathrooms). There was a Michael Jordan Steakhouse in that space at one point, then another upscale restaurant and bar that I recall. If it was going to be retail, it was only going to be a certain class of retail. I suspect Apple knew this in negotiation and that allowed them to get a better price.
For those who don't know, the MTA has been very aware of the appearance of these retail spaces which are visible from the center of the iconic station. They would not want to split it up and they would not rent it to a giant Shake Shack. There is just a decorum aspect that must be preserved (yes, while transvestite hookers are plying their trade in the bathrooms). There was a Michael Jordan Steakhouse in that space at one point, then another upscale restaurant and bar that I recall. If it was going to be retail, it was only going to be a certain class of retail. I suspect Apple knew this in negotiation and that allowed them to get a better price.