Apple's Grand Central Terminal Store Opens December 9th, State Probing Lease Deal

Thursday December 1, 2011 7:53 am PST by Eric Slivka

In line with previous rumors, Apple has officially revealed that its massive new retail store inside Manhattan's Grand Central Terminal will be opening on Friday, December 9th. The opening date was made official today with an updated message on the digital signage installed on the construction barrier surrounding the store.
Apple Store, Grand Central.
Arriving Friday, December 9.
One MacRumors reader has also provided us with an overhead shot of a portion of the store, revealing that Apple has installed the wood tables where it will display its products for customers to test out. A small portion of the store's Genius Bar can also be seen in the photo.


Meanwhile, in the wake of yesterday's disclosure of Apple's lease terms for the store, which total $60 per square foot and no revenue sharing with the Metropolitan Transportation Authority, The New York Post now reports that the State of New York is investigating the deal.
State Comptroller Thomas DiNapoli has launched an investigation into whether the Metropolitan Transportation Authority (MTA) gave Apple overly generous terms on its lease for the shop, which is slated for a splashy opening next week.

...

“The article in the New York Post about the MTA’s contract with Apple in Grand Central Terminal is a cause for concern,” DiNapoli said in a statement yesterday. “This is a prime property, and I intend to make sure that the MTA hasn’t given away the store.”
The MTA has pointed out that Apple is paying four times the rent paid by the previous tenant, the restaurant Metrazur, and that Apple is investing in new infrastructure, including an elevator, to support the store.

In addition, Apple paid $5 million to Metrazur in order to buy out the restaurant's lease, with the MTA arguing that the payment makes Apple's 10-year lease on the store equivalent to $180 per square foot in annual rent. But even considering that payment, which does not go to the MTA, Apple's lease rates remain below that of many other tenants in the terminal and well below market rates charged in other prime shopping areas of Manhattan.

Related Roundup: Apple Stores
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Mak47
106 months ago
So because the MTA "Ripped off" the taxpayers by signing a legally binding contract that is most likely irrevocable--the state government will spend more taxpayer money investigating it.

Nevermind the fact that at Apple's average of $5600 per square foot of revenue, this 23,000 sq foot space will generate over $11 million dollars in sales tax revenue alone for New York each year. That's around $478 per square foot if you're doing the math.

The simple fact is that Apple's stores generate exponentially more revenue than any other retail operation that would open there. The MTA could have paid Apple $50 per square foot to take the space and still come out ahead for New York. That doesn't even account for the boost that other retailers will see on top of what comes directly from Apple.

There is a reason why politicians run for office instead of running businesses or doing real work. They are incapable of it, and this is a shining example.
Rating: 24 Votes
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Some_Big_Spoon
106 months ago
Money the store will bring in for the Terminal, and surrounding businesses, is why the MTA did this, which is smart. Kill the deal at this point, and Apple walks, you'll get a Forever 21 in there with a Starbucks attached.

Fast pennies or slow millions...
Rating: 10 Votes
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BladesOfSteel
106 months ago
Okay, who actually owns the building? Does the City/State or is it privately owned?

I thought it was privately owned, but the article mentions that transit authority handled the deal.

If it is privately owned, then who cares what deal was made to get Apple in the door? I'm sure malls across the country give deals to certain retailers to come to their malls.
Rating: 9 Votes
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gnasher729
106 months ago
Let's say someone in the state of NY figures out that the contract is too generous to Apple. And they want more money. Doesn't matter. The contract is signed. If they want out, Apple will probably allow them to cancel the contract as long as they pay Apple back all the money that Apple invested. And then someone will figure out that this is a very, very expensive plan.
Rating: 8 Votes
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Rocketman
106 months ago
As I posted in the other thread,

"So I took the time to actually read the underlying and related articles. Apple is paying 4x the rent the prior tenant was. In addition to that they built out an area that was not being rented at all to add square footage to the overall effort. It turns out this space is considered "oddball" because it is not formatted in a way very many tenants could find a way to make it work. While it is true they are not paying a percentage of gross in addition to rent, they are paying four times the prior rental rate to offset it."

https://forums.macrumors.com/showpost.php?p=13944554&postcount=133
Rating: 6 Votes
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Shrink
106 months ago

One can always count on NY State Democratic lawmakers to be investigating something that can generate high profile news stories. It's their eventual road to the governors office (Spitzer, Cuomo, etc.)


Lucky thing no Republicans ever hype some relatively trivial story to garner cheap, high profile news stories. I know they're too morally upstanding to stoop to such low tactics. :D

It's only those dopey Democratic politicians who work the media for their advantage. Darn them for such crummy tactics.:rolleyes: ;)
Rating: 5 Votes
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johnnyrb
106 months ago
Apple should pack up and leave and take their tax revenue with them.
Rating: 5 Votes
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Shrink
106 months ago

Republicans are equally guilty in other locales. In NY, the Democrats have it locked up. Try not to get your panties in a wad.


Ooh, but it feels so good!:D
Rating: 4 Votes
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Chupa Chupa
106 months ago

If it is found out to be an bad contract it would be voided by saying it was illegal and as such a new one must be formed. As such the orginal contract was never binding.



Yet I do not think even anchor stores would get this big of a sweat heart deal compared to everyone else. They may get a good deal but not that much better.
Also to be blunt an Apple store is not an anchor store. Sorry they serve way to limited of a market to be an anchor.


Your response shows your lack of knowledge of both the law and retailing. It would be tough to prove the lease was an illegal contract. Maybe you could do that with ease in a 1L contracts exam but not in real life.

And as for Apple not being a anchor because of the "limited" market, you don't seem to understand the definition of an anchor store. An anchor is any store that draws in a large amount of people. Beside Apple being one of the most loved brands in the U.S. it's stores are often the only one with a large amount of people in it, even during the holiday season. If that isn't an anchor then all my retail real estate knowledge is for naught. Geez, everyone and their mom has an iPad, iPhone, or iPad. Some limited market! Anchors frequently get below market leases and avoid a gross sale and percentage clause.
Rating: 3 Votes
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CalWizrd
106 months ago

If it is found out to be an bad contract it would be voided by saying it was illegal and as such a new one must be formed. As such the orginal contract was never binding.


I guess you're not in the legal profession. There is no precedent to void a "bad" contract (I don't agree that it was bad, BTW) by magically declaring it illegal and then voiding its enforcement.

Deals are made every day that might favor one side or the other, and subsequently codified into a binding contract. Just because one side happens to be a state agency doesn't change this principle a damn.
Rating: 3 Votes

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