Apple’s sweetheart GCT lease draws controversyBy
The Apple Store in Grand Central is still a week or so away from its grand opening, but already, its mere presence and the lease Apple has signed is generating controversy. One State Senator may even take the extraordinarily bold step of holding a hearing to protest the lease.
Here’s the story, as first reported by The Post: Apparently, Apple negotiated a deal in which it pays $60 per square foot for the space and doesn’t have to pay the MTA, its landlord, a percentage of profits. It will be the only retailer in Grand Central with such a sweetheart deal, and the rent itself, while four times higher than what Metrazur was paying, pales in comparison with the $200 per square foot Shake Shack will soon be paying. Uh oh.
The MTA itself was a bit defensive of the deal. “We set out to maximize the rent we receive for this space, and we’re thrilled that we were able to more than quadruple what we had been receiving previously,” Authority spokesman Aaron Donovan said to The Post. No one else, the MTA has noted multiple times, even bit a bid in for the space when the authority issued a request for proposals earlier this year.
Still, those watching the proceedings and those dismayed at the state of the MTA’s finances were none too pleased. “I am surprised they didn’t get some kind of percentage,” Robin Abrams, an executive with Lansco, said. “You’d think if they were going to do, say, $50 million in sales, the MTA would at least get some percentage of anything over that.”
The MTA has repeatedly said that the Apple Store and the traffic it generates will make up for the lease terms favorable to the Cupertino computer giant. The authority anticipates that the Apple Store will “generate significant new traffic” for the other retail establishments, and as The Post reports, every one percent increase in non-Apple Grand Central sales results in an additional $500,000 for the MTA.
Throughout the city, reaction to this development has not been kind. Gizmodo slams both the MTA and Apple. The computer retailer is “screwing over one of its partners” and “might be hard-lining you right out of your ride to work.” That’s a bit of hyperbole as even a percentage-based lease wouldn’t generate the kind of dollars the MTA needs to close long-term spending gaps.
One State Senator though isn’t too impressed. “There needs to be an investigation of who negotiated this deal. The taxpayers of this state are being ripped off that Apple is getting this sweetheart deal,” Tony Avella said to WCBS.
So what to do? The MTA had no leverage in the negotiations, and Apple knew it. It’s getting more money than it used to get and could reap ancillary benefits in the form of increased traffic through Grand Central. On the other hand, Apple is paying a percentage at 59th and 5th that has amounted to around $15 million per year. That’s real money the MTA won’t see because they weren’t in a position to ask for and get it. It is another day in the life of this crazy city.