Booming retail sales enable Apple to negotiate low rent prices at malls
The popularity of Apple's retail outlets has enabled the company to negotiate extremely low rent rates at malls, which in turn benefit from the additional foot traffic.
According to real-estate researcher Green Street Advisors, Apple is able to leverage the success of its brick-and-mortar retail outlets to ink advantageous rent deals with mall operators, reports The Wall Street Journal.
Apple pays as much as two percent of its sales to malls, as measured by square footage, a fraction of the 15 percent typical tenants pay, the report said. The disparity in rent terms is explained by Apple's ability to draw customers into its stores.
Unlike customers visiting so-called "anchor" tenants, like department stores, those going to an Apple Store may be less likely to stay in the mall to browse, the report said. This has not stopped an upward swing in lease prices for storefronts located next to or near Apple's outlets, however.
An Apple representative told the publication that Apple's retail locations hosted about one million visitors each day and accounted for roughly 12 percent of the company's $183 billion in annual sales for fiscal 2014.
Average Apple Stores generate about $6,000 in sales per square foot, while top performing locations can bring in $10,000 per square foot, the report said. The $6,000 figure remains unchanged from 2012.
Apple's sales numbers are so high that they can distort normal lease fees, which are in part calculated based on a mall's overall performance. When looking for a new spot to set up shop, retailers reportedly ask malls to exclude Apple Store data from overall sales statistics.
In its most recent earnings report covering the quarter ending in December, Apple revealed that it spent $3.5 billion related to leasing retail space. At the end of the period, the company had nearly 450 Apple Stores in operation around the world.