An anchor store, exactly. It is not an uncommon practice in Malls to do similar sweet deals for a store that will enhance the entire Mall. The other stores should be grateful to have such an anchor.
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Terms of Apple's Sweetheart Deal for Grand Central Terminal Retail Store Revealed
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An anchor store, exactly. It is not an uncommon practice in Malls to do similar sweet deals for a store that will enhance the entire Mall. The other stores should be grateful to have such an anchor.
Actually it probably will. I work 2 blocks from Grand Central and almost never go there (been in there maybe twice in last 18 months). With the Apple store there I will probably stop in at least 1 per month on my lunch break and then buy lunch at GC.
The commercial value, in terms of sq ft leasing costs, is heavily dependant on size. Here on earth, anyway!
So many people, so little knowledge!
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Avoiding percentage rent is a good deal. But the comparison between apples $60/sf rent and snack shack's $200 per is, well, AAPLs and oranges: Smaller occupancies routinely pay higher rents.
Avoiding percentage rent is a good deal. But the comparison between apples $60/sf rent and snack shack's $200 per is, well, AAPLs and oranges: Smaller occupancies routinely pay higher rents.
It's called business. Apple didn't force the MTA to make that deal. It was a deal signed by both sides in good faith.
Also, Apple is not the only company lobbying for no tax on overseas profits. There's quite a few other companies besides Apple lobbying for it.
It's nothing more than business.
It will no doubt increase traffic/customers to other tenants. Think of a crazy Apple device/product release where people are lined up in anticipation...they need to eat right...or get a drink afterward, or buy a magazine to wait, or a new outfit to look uber cool with their new toy.
And I also think there will be some people who go there just to go there (I did with the 5th Ave store) and then being at a "mall" will wander around going into stores, who knows what you might pick up.
And I also think there will be some people who go there just to go there (I did with the 5th Ave store) and then being at a "mall" will wander around going into stores, who knows what you might pick up.
Grand Central Station should really be on any tourists list of sights to see in New York, but I suspect coupled with "largest Apple store" it will go up on that list. Tourists will shop for other stuff.
But if I were MTA I would have hung in there for some of the upside. Even 0.1% of the sales would have given some upside and also given MTA some visibility into the sales level for when the lease comes up for renewal.
But if I were MTA I would have hung in there for some of the upside. Even 0.1% of the sales would have given some upside and also given MTA some visibility into the sales level for when the lease comes up for renewal.
Well, I don't think so. Ever heard what happens behind the scenes before a WalMart comes to a new community? They get the land for free or almost for free, get big tax brakes, and destroy local businesses. Apple - not so much. Also, see what an employee at both companies makes and you will see who exploits. There is a website, a movie, and more dedicated to this issue - so your comparison is kinda off.
I don't understand why this is such a big deal. Apple is hip right now and is an attraction no one has to pay for as a mall/business center owner when they move in. Look at Las Vegas - they pay tons of money for shows that people come and visit. Grand Central gets even $60 / square foot for getting a consumer magnet. And don't forget - people who buy at an apple store are usually not the ones who cannot afford a Starbucks drink or a newspaper from the next corner store. And the best thing about it is that it is in no way a competition for the rest of the businesses.
You obviously don't understand *why* profit-sharing is part of many (most?) small business leases. The base rental rate is usually only slightly over what the maintenance and upkeep costs for the space with a tenant in place. There's enough for the mall/whatever to keep the shop and surrounding 'public space' in good upkeep and handle the seasonal decorations and such. They do this to attract businesses to the space, because a mall full of shops is much more attractive to shoppers than a mall with a bunch of empty store fronts.
Apple, as a renter falls into three categories which help them get better lease rates.
1) They're a known entity, and they're interested in long-term leases. You know they're going to be around long-term. This means less costs to renovate the space for new customers.
2) They're interested in *large* spaces. This means you don't have the added overhead of dealing with 20 businesses in the same space. They also have predictable sales, which means they can budget for the space they need without having to resort to profit-sharing arrangements.
3) They're viewed as a high-end retailer by the public at large. Simply having them in a location makes the location more attractive for shoppers. This also helps the space attract *more* high-end shops, many of which have lower volume, less predictable sales rates, leading to better (for the mall) profit-sharing arrangements with *their* leases.
These three factors, along with others, mean that Apple is capable of getting good deals on it's leases simply because solid, predictable income is better than astounding, but unpredictable income associated with large, unpredictable expenses.
The small food shop mentioned in the article has none of those advantages. And to top it off, they have expenses for their space that Apple doesn't. Extra power (or gas?) requirements for a restaurant, possibly requiring extra plumbing for lavatories depending on the details of the space, the overhead of health inspections that the mall has to deal with, etc.
I guess not. Is that a NYC thing for larger chains?
Say a low base rent, plus percentage of sales?
I rent 3 stores to people (not in NYC) and would actually never think to ask them for a percentage of their sales.
How is one to get correct numbers and who audits this?
Always willing to learn
100 Million a year?
Not sure where 750 million came from. The average computer transaction at an apple store is over $2,000, so yes it is very possible that the "fan boi" spends that much a year. They will also see a lot of foreign traffic that most stores in the U.S. don't see. In regards to the space, its possible that the jobs the Apple store will create had an impact. I can't think of another store or restaurant that would employee as many people in that space. For example the 5th Ave store has over 500 employee's.
Not sure where 750 million came from. The average computer transaction at an apple store is over $2,000, so yes it is very possible that the "fan boi" spends that much a year. They will also see a lot of foreign traffic that most stores in the U.S. don't see. In regards to the space, its possible that the jobs the Apple store will create had an impact. I can't think of another store or restaurant that would employee as many people in that space. For example the 5th Ave store has over 500 employee's.
Stop trying to make sense. This is a rumor website and people don't care about the realities of business.
They don't think deeper than a retina display ipad and missing specs in an iphone.
They have been brainwashed by Fox news and other stations that big corporations are bad and just want our money (Duh!)
Who provides the jobs and drives economy and pays taxes (As much as is legally required) ?
With the current generation's attention span, deeper thinking is the exception.
Like somebody already posted:
The tin foil hat crowd is out in force!
According to Google, the average revenue is about $35 million per store per year. So $100 million would be three times the average.
No, I do get why "small" business leases are this way. The retail business is very seasonal and smaller operations have a much lower operating margin than Apple for example especially when you average it out over a year.
Some of the commentators here did not seem to get the difference between a large retail chain like Apple and a smaller franchise owner or independent retailer. They expect Apple to both pay the fair market value for the space and infrastructure and a percentage of sales which would be wrong.
Apple is able to afford paying the actual fair market rental rate upfront for a whole year whereas smaller companies are willing to pay a smaller base rate in exchange for a percentage of sales which will fluctuate throughout the year.
With these numbers we can also figure out how much the shake shack expects to sell annually. Probably $6-8 million.
they are going to make a killing from people like me who forget their headphones on average once a week, and dont want to take a 60 minute train ride without their music...
I'd be willing to wager you've _never_ been there either considering you're calling it Grand Central _Station_.
How much per year?
Holy crap google said that? Well if google says it then we know its true....right? lol The revenue information per store is not public, nor would there be much up to date statistics. I am telling you from being a former employee of Lenox Square Mall that 35 million a year per store is not what you want to base any revenue numbers on currently. There are several Apple stores at about 3,000 sq feet and along with the average shopper at the grand central store being higher than a store in suburbia. A 23,000 foot store in NYC has the makings of over 250 million a year.
Holy crap google said that? Well if google says it then we know its true....right? lol The revenue information per store is not public, nor would there be much up to date statistics. I am telling you from being a former employee of Lenox Square Mall that 35 million a year per store is not what you want to base any revenue numbers on currently. There are several Apple stores at about 3,000 sq feet and along with the average shopper at the grand central store being higher than a store in suburbia. A 23,000 foot store in NYC has the makings of over 250 million a year.
MTA are morons for letting Apple get away with that!
They are constantly crying about income generation, raising commuters costs, charge Movies and commercials outrageous location fees to film on their properties and then they give Apple a free ride on this!
These contracts should be approved by someone other than the boneheads running it!
They are constantly crying about income generation, raising commuters costs, charge Movies and commercials outrageous location fees to film on their properties and then they give Apple a free ride on this!
These contracts should be approved by someone other than the boneheads running it!
those of you discounting the location's ability to crack $750mm+ are not taking into consideration the volume of iPhones Apple sells per quarter now, and the speed at which they sell these devices per hour in the store.
The average sales price of a product at the store is definitely going to hover around the $1,000 range when you take into consideration the quantity of phones and ipads sold vs. cpus.
couple that with the new "easytheft" stuff, the real number you have to look at is transactions per hour x avg transaction price. and with all these retail sales-driven enhancements apple is making, the quicker the customer turnaround will be.
$750 million+ by end of year FY12. mark my words.
edit: if we are to believe 9to5 mac's screenshot of apple retail beating it's forecast (which was set at 4x last year for black friday), then yea, please assume that run rate will only multiply as 2012 goes on.
The average sales price of a product at the store is definitely going to hover around the $1,000 range when you take into consideration the quantity of phones and ipads sold vs. cpus.
couple that with the new "easytheft" stuff, the real number you have to look at is transactions per hour x avg transaction price. and with all these retail sales-driven enhancements apple is making, the quicker the customer turnaround will be.
$750 million+ by end of year FY12. mark my words.
edit: if we are to believe 9to5 mac's screenshot of apple retail beating it's forecast (which was set at 4x last year for black friday), then yea, please assume that run rate will only multiply as 2012 goes on.
You know how journalism is though. The more people that read/hear the story the better. Nothing else matters to those journalists.