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Thread: State of New York Investigating Apple's Sweetheart Deal at Grand Central Station

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    MMi Staff Writer Michael Essany's Avatar
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    Default State of New York Investigating Apple's Sweetheart Deal at Grand Central Station


    As we've reported several times in recent weeks, Apple's forthcoming retail presence in New York City's Grand Central Station is the buzz of both the retail and tech worlds. Part of the impetus for the incessant coverage on this retail outlet is the fact that Apple received such a good deal on the real estate.

    State Comptroller Thomas DiNapoli is behind the investigation that seeks to expose whether the Metropolitan Transportation Authority gave Apple overly generous terms on its lease for the shop, which will open next weekend. The Post reported that Apple’s $60-a-square-foot lease is "well below what many other tenants are paying" — including a future Shake Shack burger establishment, which will pay more than $200 a square foot.

    “The article in the New York Post about the MTA’s contract with Apple in Grand Central Terminal is a cause for concern,” DiNapoli said this week. “This is a prime property, and I intend to make sure that the MTA hasn’t given away the store.” It should be pointed out that DiNapoli has a lengthy history of auditing the MTA real-estate portfolio. He has previously uncovered what the Post called "lax recordkeeping, hundreds of vacancies and mediocre marketing of properties."

    It remains to be seen what - if anything - will come from the investigation. The only thing we know for certain is that the State of New York has some big, unanswered questions. And the answers should be interesting.

    Source: New York Post

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    iPhoneaholic PatrickGSR94's Avatar
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    Opening next weekend? I could have sworn that I read here a couple of weeks ago that it was opening the next day after the article was posted.

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    Green Apple
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    I swear that I read the same article.

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    This guy DiNapoli is such an idiot. Clearly he doesn't understand how business works, and it's for that reason why the economy blows. Grand Central Station wants Apple there because they attract a large number of consumers, therefore drawing more traffic to the rest of the stores. The more people showing up, the more they can charge for rent. So maybe they are taking a discount with Apple, but they are going to make a killing on all the business Apple brings in. He just wants to get his 15 seconds of fame by tying his name into a story about the most famous company in the world.

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    Green Apple killakill's Avatar
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    Quote Originally Posted by decronin1123 View Post
    This guy DiNapoli is such an idiot. Clearly he doesn't understand how business works, and it's for that reason why the economy blows. Grand Central Station wants Apple there because they attract a large number of consumers, therefore drawing more traffic to the rest of the stores. The more people showing up, the more they can charge for rent. So maybe they are taking a discount with Apple, but they are going to make a killing on all the business Apple brings in. He just wants to get his 15 seconds of fame by tying his name into a story about the most famous company in the world.
    I believe your argument works in most cases, but this is Grand Central Station. There should be no need to negotiate a price. Arguably the number spot in the world Apple would want one of their stores. Discount rate, maybe so, but approximately 1/4 of the going rate seems to be a bit too much of a discount.

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    Quote Originally Posted by decronin1123 View Post
    This guy DiNapoli is such an idiot. Clearly he doesn't understand how business works, and it's for that reason why the economy blows. Grand Central Station wants Apple there because they attract a large number of consumers, therefore drawing more traffic to the rest of the stores. The more people showing up, the more they can charge for rent. So maybe they are taking a discount with Apple, but they are going to make a killing on all the business Apple brings in. He just wants to get his 15 seconds of fame by tying his name into a story about the most famous company in the world.
    As a tax paying New Yorker who is sick of MTA fare hikes and service cutbacks, I tip my hat to Tom DiNapoli. The truth is that MTA has done a few things in recent time that make them subject to scrutiny. If it turns out to be kosher, then yeah, let them rent the spot, but if Apple isn't paying the fair market value for a store in GCT they can go elsewhere. GCT is not a shopping mall, it's a train station and people go there to travel, not to shop. I'm sure a few people will go there for the Apple store (especially for major releases), but so many people pass through GCT every day on their commute that I can't see the presence of an Apple store making a large enough difference to justify raising rents on other tenants, and certainly not enough to justify a lease at one third the price. So, I wouldn't say it's very fair to say Tom DiNapoli is an idiot for this nor that his mentality is the reason the economy sucks. So far as I see it, he's doing what the comptroller should do, watch out for our money. Cheers.

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    My iPhone is a Part of Me mustard05's Avatar
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    Quote Originally Posted by PatrickGSR94 View Post
    Opening next weekend? I could have sworn that I read here a couple of weeks ago that it was opening the next day after the article was posted.
    LOL, I remember reading that article as well. Unfortunately, you have to remember that the writers here on MMI are not truly reporters.

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    Green Apple bleucrayonz's Avatar
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    haters are gonna hate! #appleftw

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    While they are getting a good deal, its most likely for the reasons stated in that they will bring in business. On another note, the information in the article above is wrong. They say Apple is paying $60 a square foot. The MTA said they pay $180

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    Quote Originally Posted by qumahlin View Post
    While they are getting a good deal, its most likely for the reasons stated in that they will bring in business. On another note, the information in the article above is wrong. They say Apple is paying $60 a square foot. The MTA said they pay $180
    "“They are effectively paying $180 per square foot over the 10 years of the lease, almost 10 times the previous tenant,” Donovan argued, figuring Apple’s payoff of Metrazur into that calculation."

    The key word is "effectively". They are not paying $180/ft^2 to MTA, that figure is adding all of Apple's other expenses to the actual lease price. The figure reflects *all* the money Apple decided to spend on the space, including a hefty buyout of the previous tenant. Frankly, I don't see why he even brings this up. Who cares how much Apple opts to pay in addition to the lease? The real question is whether or not they are paying a fair rent price to MTA and if the taxpayers and commuters of New York are getting screwed.
    Last edited by NapoleonRobotique; 12-01-2011 at 04:38 PM.

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    iPhoneaholic bigliquid530's Avatar
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    So charge the burger shack max price, but give a discount price to one of the most lucrative companies in the world..... Hmm

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    For those of you saying great for apple I say boo on you. IF it's not good for the people of NYC then who cares. THey need to pay the going rate for that space and not some mystical number adding in all the BS that has nothing to do with paying rent. Also, for those of you saying people will go shop at other stores BECAUSE the apple store is there give me a break! IF they where going there to see the apple store that's where they'll go, not to other stores. IF they where there for x reason and they planned on shopping anyway that has NOTHING to do with the apple store. Apple looks to reap the biggest benefits out of this deal as is. IF they paid the going rate for rent they would STILL reap the biggest benefits, so IMHO they need to pay the going rate.

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    My iPhone is a Part of Me PoEtikly's Avatar
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    Quote Originally Posted by mustard05 View Post
    LOL, I remember reading that article as well. Unfortunately, you have to remember that the writers here on MMI are not truly reporters.
    They don't have to "report" anything on this site. They do so on their own time so chill out. Mistakes are made and there's no reason for rude remarks towards the people who write these articles to inform you of iDevice news to the best of their knowledge and capabilities. If you don't like the way they write their articles then go elsewhere to read them. That simple

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    iPhoneaholic duromega's Avatar
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    so Apple it's renting way cheaper than others establishment, who knows who's behind this deal

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    Quote Originally Posted by NapoleonRobotique View Post
    As a tax paying New Yorker who is sick of MTA fare hikes and service cutbacks, I tip my hat to Tom DiNapoli. The truth is that MTA has done a few things in recent time that make them subject to scrutiny. If it turns out to be kosher, then yeah, let them rent the spot, but if Apple isn't paying the fair market value for a store in GCT they can go elsewhere. GCT is not a shopping mall, it's a train station and people go there to travel, not to shop. I'm sure a few people will go there for the Apple store (especially for major releases), but so many people pass through GCT every day on their commute that I can't see the presence of an Apple store making a large enough difference to justify raising rents on other tenants, and certainly not enough to justify a lease at one third the price. So, I wouldn't say it's very fair to say Tom DiNapoli is an idiot for this nor that his mentality is the reason the economy sucks. So far as I see it, he's doing what the comptroller should do, watch out for our money. Cheers.
    This is the same kinda of thinking that gets WalMart their choice spots at super-discounted rates with deferred/reduced tax rates, etc.
    A big difference here, though, is that Apple will most likely bring in a lot of traffic, Apple most likely pays better wages than WalMart, Apple most likely provides better benefits than WalMart and Apple doesn't engage in the cutthroat business practices that drive their suppliers margins in to the toilet (and the supplier's employees wages alongside) and help to drive out small businesses and kill off jobs.

    Just sayin.

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