MTA tells New York to 'bring it on' & investigate Apple's Grand Central lease
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A spokesman for the MTA reached out to AppleInsider on Friday to state that neighboring tenants at Grand Central are "very pleased" that Apple will be opening one of its largest retail stores in the world at the heavily trafficked terminal.
"Bring it on," the MTA's press release says in response to a New York state investigation. "This is the best possible deal for the MTA, quadrupling the rent we receive and bringing foot traffic to Grand Central Terminal that will increase revenue from all of our retailers. We look forward to explaining the details of this competitively bid transaction to anyone who is interested."
The MTA's statements came in response to New York State Comptroller Thomas DiNapoli, who revealed on Thursday that he is investigating the lease the agency awarded to Apple. The retail store is set to open next Friday, Dec., 9, and will cost Apple about $800,000 for the first year.
DiNapoli's investigation was prompted by an article from the New York Post, which characterized the deal between Apple and the MTA as "unique," and particularly favorable toward Apple. The Post said that Apple is paying about $60 per square foot for the property, while other tenants pay more than $200 per square foot.
In addition, Apple was portrayed has having driven a "hard bargain" with the MTA to ensure it will not share any of its sales revenue with the agency, unlike other storefronts in the terminal. The authority has said it is fair that Apple will keep all of its sales, because the new store will generate traffic for the 100 other retail tenants at Grand Central.
The original story quoted Robin Abrams, executive vice president at real estate firm Lansco, as saying that she was "surprised" by the terms of the deal. But in reaching out to AppleInsider on Friday, the MTA said that Lansco feels her comments were misrepresented by the Post.
The MTA also said that while Apple's new retail space is a "great location," it has "major limitations" for retail stores, including "strict historic preservation regulations." The previous tenant, Metrazur restaurant, had a lease through 2019 that paid $263,000 annually to the MTA.
Apple Store Grand Central photo courtesy AppleInsider reader Ryan.
The agency believed that it could generate more revenue for the space, and put it out for bid. Apple, in winning the bid, agreed to cover "significant upfront costs," including $5 million to buy out the Metrazur's existing lease, and more than $2.5 million for infrastructure improvements.
The MTA said the deal with Apple will quadruple rent coming to the MTA, from $263,000 to $1.1 million. They also believe it will drive traffic to all of the retailers at Grand Central, where every 1 percent in additional sales is worth $500,000 to the MTA.
"This is the best possible deal for the MTA," the agency said. "When all of the costs are included, Apple is paying more than $180 per square foot over the ten-year lease. As the competitive bidding process revealed, there are no other uses for this space that would generate the same revenue for the MTA given the up-front costs and limitations."