MTA Hit With Criticism After Cutting Rent Deal For Grand Central Apple Store
NEW YORK (CBSNewYork) — The Big Apple is about to get the biggest Apple store in the world, but not everyone is thrilled.
Some are charging that the Metropolitan Transportation Authority cut the company a sweetheart deal for its new Grand Central Terminal location.
So what’s behind the controversy?
At its current New York flagship store on Fifth Avenue, Apple pays what’s called “percentage rent,” which involves sharing revenue with its private landlord. That figure is reportedly in the ballpark of $15 million per year.
However, at Grand Central the landlord is the MTA, which collects “percentage rent” from every retailer except Apple. That is because the retailer cut a deal with the MTA for a straight lease, totaling about $1 million a year.
According to real estate lawyer Steve Wagner it is a “wonderful deal for Apple” and “not such a great deal for the MTA.”
“New York City real estate is a blood sport and Apple played very well,” Wagner told CBS 2’s Tony Aiello.
The MTA said its leverage to negotiate with Apple was limited because no other company made an offer on the space.
Apple will be paying about four times more than the restaurant it’s replacing. The company has also agreed to pay all the renovation costs, but has refused to share revenue.
“We believe we have maximized the potential revenue from this unique opportunity in light of Apple’s policy not to enter into new percentage rent agreements,” an MTA spokesperson said.
However, critics of the agreement and the MTA’s decision don’t buy the explanation.
“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,” State Sen. Tony Avella told Aiello.
The Apple store is set to open in 10 days. Despite criticism of the deal, the MTA said Apple will bring many new shoppers to Grand Central and that will boost the bottom lines of other retailers at the station.
What are your thoughts on Apple’s deal with the MTA? Share your thoughts in the comments section below…