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…


One Comment

  1. Julius says:

    I am Brazilian and I will certainly will buy the Apple products that are on my gift list in this new store. If some of you don’t want that store at CG, then ask Apple to move this store to Sao Paulo or Rio. It will be more than welcome.

  2. kefrost says:

    Who care what they pay for rent? I certainly do not. More power to any company who can negotiate a better rent for their business. In this economy, we all have to look out for ourselves!

  3. Techmanner says:

    Apple is such a success now that everything this USA company
    does is scrutinized ten fold ,even the nice deal Apple made using and gaining from
    the antique MTA rental laws. What price success? and yes the
    company is richer and more solvent financially then our US Treasury.

  4. Duckmanbill says:

    Wait. So MTA is going to be getting about 4 times the amount of what it used to get for the space, and this is a bad deal for them?

  5. Meme Meyagi's Nightmare says:

    hahaha. Reallyyyy? You want to bring that up in this post? How’s that related to anything on this page? Also, all the Meme Meyagi’s out there should just shoot themselves and stop wasting oxygen.

  6. hh says:

    The DEA have been stealing drugs from evidence lockup and reselling them. It has become a popular way in the Department of Justice’s DEA to make extra money.
    They also steal from suspects for which they have created fabricated or coerced heresay evidence.
    With some of the DEA suffering under mountains of credit card debt they have started to think outside the box.

    1. rmsbl4 says:

      What has your post have to do with the story?

  7. bizhlp says:

    There was no mention of the length of the lease and option renewal price. The first assumption is that the store will be a hit (which it may very well be) but you can’t charge a higher rent based on what the store pays elsewhere..each location has to be based on its own merits. If the former tenant was paying $250,000 a year, then 4x may be a good deal especially when there were no other takers for the space. Having Apple at Grand Central may have ancillary benefits from increased train ridership to the store, increased traffic for other merchants later at night, lead to higher rental income, as well as draw higher caliber tenants.

  8. Ronnie from Morris Park says:

    Like the Atlantic Yards project a 100 million dollar sweet heart deal went to Mr. Ratner and his friends. How much Apple stock do the members of the MTA board own,just asking…

  9. brian says:

    honestly who cares apple still has to pay a city tax correct and state tax. so stop whinning its creating jobs

    1. retphxfire says:

      Oh, yeah, the ‘job’ argument. How many jobs will it creat? 100??? Not much of payoff for $i million. The jobs arugment is always a joke, most the so-called jobs created are being outsourced to other countries, companies using this argument are laying off US workers. : Companies are sending well-paying manufacturing and service jobs to countries with few, if any, protections for workers and the environment. And these jobs are probably not coming back. The Bush administration authored multimillion-dollar tax cuts to the wealthy while supporting trade laws that encourage offshore outsourcing Stop living in a fantasy written by the right.

      1. Memester says:

        Apple is building a humongous employee office building IN the Cupertino USA which is and I quote “… a staggering 2.8-million-square-foot ring-shaped main building that will house 12,000 employees and a central courtyard. Besides the main building, the 175-acre plot will also contain a 1000-seat auditorium, a corporate fitness center, research facilities and a 4,300-car parking structure.”

        So, they are outsourcing jobs to where now?

        Where are the news of layoffs at Apple?

        As I see it, you should be supportive of this American company regardless if they outsourced manufacturing to China for example.

        Add up the jobs created in the USA from app development, peripherals development, the jobs created because of the TOOLS that Apple provides to get the jobs done… the software that creates more jobs and skill sets.

        You’re a propagandist Occupier traitor, rethink your asshattery.

        1. situationalawareness says:

          Wow, you sound like a British apologist in 1774.

          1. Memester says:

            And you sound like you live in the past. But I got you didn’t I so you come up with dumb stuff like that.

      2. M G says:

        Fantasy written by the right???? It’s Obama that’s always shucking out money to bogus companies for bogus jobs get your facts staight buddy. At least Apple is a legitimatie company unlike Solindra.

    2. retphxfire says:

      I suggest all of you check out the facts, starting with GE. Calling for more tax cuts, yet they move their headquarters to China, pay NOTHING, ABSOLUTELY NONE taxes and layed off thousands of employees (after a mulit-billion dollar net profit) and moving those jobs overseas. Don’t believe me, check it out for yourselves. You can than the conservative, and wealthy, right for all these lost jobs.

  10. CG says:

    Are we to expect that shoppers will want to go to Grand Central to buy a apple product? Once again, the government are their worse employer; what calculation did the MTA utilize? Anyway, who cares, Apple is paying $1 million dollars in rent….that’s like a drop in the bucket for them….GO APPLE…. There is only one winner here: APPLE….

    1. situationalawareness says:

      In NYC, if you know the Apple store is there then yes, yes a customer will go there.

      Are we to expect that shoppers will go to north Scottsdale (Phoenix, AZ) to buy an Apple product? (further distance than most places in NY from Grand Central Station) Of course.

Comments are closed.

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