New York state investigating Apple's low-cost Grand Central lease

Posted:
in General Discussion edited January 2014
After a story revealed that Apple is paying a lower-than-average rate for its new Grand Central Terminal megastore, a New York state official is now investigating the lease.



New York State Comptroller Thomas DiNapoli told the New York Post that he has launched an investigation into the agreement struck between Apple and New York's Metropolitan Transportation Authority. The store, set to open next Friday, Dec. 9, will cost Apple about $800,000 for the first year, a rate that is said to be well below what other tenants of the station are paying.



"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 in a statement. "This is a prime property, and I intend to make sure that the MTA hasn't given away the store."



The investigation was spurred by a story published on Wednesday, which characterized the deal between Apple and the MTA as "unique." Apple is said to be paying $60 per square foot for the property, while other tenants such as a Shake Shack restaurant pay more than $200 per square foot.



Apple's apparent "hard bargain" driven with the MTA also means the company will not share any of its sales revenue with the MTA, unlike some other storefronts in the station. The authority said allowing Apple to keep all of its sales is fair, because the new store will "generate significant new traffic" for the 100 other retail tenants of Grand Central Terminal.



The MTA has said that the authority will receive more than quadruple what it was paid previously, when Charlie Palmer's Metrazur restaurant occupied that space. In addition, the MTA also revealed that no companies other than Apple responded to the authority's public request for proposal.



Apple is also bankrolling infrastructure upgrades, including new elevators. And the company also reportedly paid $5 million to the Metrazur so it could take over the space.



But because that $5 million from Apple went to the restaurant, and not to the MTA, the actual rent being paid to the authority is much lower than competing occupants of the terminal.



Thanks to AppleInsider reader "P" for the photo.



The MTA has been under scrutiny from DiNapoli's office before, as last year it found a number of irregularities in the authority's real-estate portfolio. DiNapoli will look into the latest deal the MTA struck with Apple in an attempt to find if the iPhone maker was given any special treatment.



When the retail store officially opens next Friday, it will be one of Apple's largest retail locations in the world. The 23,000-square-foot store will open in time for Christmas, and will sit in a prime location in the terminal, through which an estimated 700,000 people pass every day.
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Comments

  • Reply 1 of 84
    solipsismxsolipsismx Posts: 19,566member
    What does the comptroller think is suspicious about the deal?
  • Reply 2 of 84
    Apple Vs. the big apple!
  • Reply 3 of 84
    Quote:
    Originally Posted by SolipsismX View Post


    What does the comptroller think is suspicious about the deal?



    It's probably just in response to public outrage after the article was published, politicians trying to look like they're doing their job. I'll bet the investigation will come to a close after the hysteria ends.
  • Reply 4 of 84
    So you can try and change a lease agreement but you cant stop a bailed out company from paying bonuses ? Cause that would be wrong.





    Also the MTA is charging me 12 bucks to take a tunnel so they can build the Freedom tower.I guess this means ill be paying 14 bucks next year so apple can have this store ?
  • Reply 5 of 84
    Oh no reasonable rent in N.Y. its the crime of the century.
  • Reply 6 of 84
    Quote:
    Originally Posted by SolipsismX View Post


    What does the comptroller think is suspicious about the deal?



    It's suspicious because the state might not be making as much money as they can out of the deal.



    That said, the New York Post is a rag most New Yorkers wouldn't wipe their butts with. The fact that it is the source of the details about the lease AND this investigation makes me question the factualness of either.
  • Reply 7 of 84
    I think it's fair to investigate. Personally, I don't believe Apple would stoop to shenanigans. But anytime a government at any level gives a perceived sweetheart deal to any corporation, it should be investigated. The rationalization that this would drive increased traffic to other stores is somewhat questionable.
  • Reply 8 of 84
    Quote:
    Originally Posted by farshad View Post


    Also the MTA is charging me 12 bucks to take a tunnel so they can build the Freedom tower.I guess this means ill be paying 14 bucks next year so apple can have this store ?



    What the MTA is charging you has zero to do with the amount of rent a leasee is paying. Especially one that will likely bring tons of sales tax income to the state, tons of traffic to the various stores etc.
  • Reply 9 of 84
    Quote:
    Originally Posted by charlituna View Post


    It's suspicious because the state might not be making as much money as they can out of the deal.



    That said, the New York Post is a rag most New Yorkers wouldn't wipe their butts with. The fact that it is the source of the details about the lease AND this investigation makes me question the factualness of either.



    Curious minds want to know - what newsprint is of sufficient quality for butt-wiping?
  • Reply 10 of 84
    Quote:
    Originally Posted by Obama View Post


    Apple Vs. the big apple!



    Fight!
  • Reply 11 of 84
    steven n.steven n. Posts: 1,222member
    Quote:
    Originally Posted by stelligent View Post


    I think it's fair to investigate. Personally, I don't believe Apple would stoop to shenanigans. But anytime a government at any level gives a perceived sweetheart deal to any corporation, it should be investigated. The rationalization that this would drive increased traffic to other stores is somewhat questionable.



    But Apple will press for the best deal possible. I expect them to do nothing less.



    I am sure they sold various other updates (like the 'vators) as well as substantially higher foot traffic to the area as major selling points.



    If the Shake Shack could bring in as many people from a good distance just to eat there, I am sure they could have gotten a better deal as well.
  • Reply 12 of 84
    sdw2001sdw2001 Posts: 17,659member
    Quote:
    Originally Posted by charlituna View Post


    It's suspicious because the state might not be making as much money as they can out of the deal.



    That's such liberal, deluded thinking on the state's part. They apparently didn't see the part where the MTA said it was making 4x as much as it was. It's never enough for these people. We need more revenue! Let's raise taxes to get it! The short-sightedness is unreal.
  • Reply 13 of 84
    If no other companies came forward to rent the space, then Apple has every right to drive a hard bargain. Perhaps the rents charged for the other spaces in and around New York are too high and are stifling businesses, and hence job creation.
  • Reply 14 of 84
    So very, very NYC. Hey, we got a big name player to expand its presence in our city! Now let's see if we can torpedo the deal!
  • Reply 15 of 84
    Quote:
    Originally Posted by stelligent View Post


    Curious minds want to know - what newsprint is of sufficient quality for butt-wiping?



    Indeed, I'd be far more concerned about the quality of the ink.
  • Reply 16 of 84
    conradjoeconradjoe Posts: 1,887member
    Quote:
    Originally Posted by AppleInsider View Post


    After a story revealed that Apple is paying a lower-than-average rate for its new Grand Central Terminal megastore, a New York state official is now investigating the lease.




    It is good that he is looking into it. I hope that he doesn't use a lot of resources.



    I think that he is going to find that the lease was an excellent deal for Apple, but also a good deal for the transit authority. At least, I hope so.
  • Reply 17 of 84
    Quote:
    Originally Posted by charlituna View Post


    What the MTA is charging you has zero to do with the amount of rent a leasee is paying. Especially one that will likely bring tons of sales tax income to the state, tons of traffic to the various stores etc.



    Do you really think the presence of that store will increase the overall amount of Apple swag that will be sold and taxed in the state of New York? Or will it just increase the proportion sold at retail as opposed to wholesale by Apple?
  • Reply 18 of 84
    mknoppmknopp Posts: 257member
    So, let me see if I understand this.



    Apple replaced a restaurant.



    They will be footing the bill for some significant remodeling efforts to the store.



    The MTA was looking for others to rent the space and nobody replied other than Apple.



    And the MTA has said that they will be making more than 4 times what they were before with Apple coming in.



    Yeah, this sounds like a terrible deal that definitely needs to be investigated.
  • Reply 19 of 84
    jetzjetz Posts: 1,293member
    Glad to see the authorities actually providing oversight for once.



    I'm sure they won't find anything. Carrier IQ on the other hand.....
  • Reply 20 of 84
    jetzjetz Posts: 1,293member
    Quote:
    Originally Posted by SolipsismX View Post


    What does the comptroller think is suspicious about the deal?



    I suspect it has more to do with the different terms (no profit sharing for Apple) than the rent.
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