Australian court orders Apple must complete retail space construction

Posted:
in General Discussion edited January 2014
An Australian court has ordered Apple to complete the stalled construction of its retail space in Brisbane's historic MacArthur Chambers building, whether or not Apple intends to occupy the space.

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A Queensland state court ruled this week that Apple must continue paying for the work necessary for its portion of retail space within the MacArthur Chambers building. Apple must fund construction within its portion of the building until such a time that the building owner can lease the space to another tenant, according to ifoAppleStore (via TUAW).

Reportedly, roughly half the interior work on the MacArthur Chambers space is incomplete, and that work would have to be done before another retailer could begin installing their own store interior. Apple began taking bids from local contractors on the work necessary to improve the space to the standard for an "end-of-lease handover" shortly following the court's ruling.

The MacArthur Chambers building is a 1930s era construction used by General Douglas MacArthur as the allied forces' South West Pacific Area headquarters during World War II. Apple's plans to construct a retail space in the building emerged in April of 2011, when a development application was filed with the Brisbane City Council.

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The renovation was expected to cost as much as $11.4 million, with $3.84 million of that going to demolition costs necessary to remove the decades-old existing renovations. The project ran into problems when Kell & Rigby, the contractor on the construction, went bankrupt. Apple eventually decided to cancel the project in November of 2012, and no work has been done on the interior since.

Apple's reasons for scuttling the project instead of seeking out a new contractor are as yet unknown. The MacArthur location would have encompassed the ground floor, mezzanine, and basement of the building. When the plans emerged, it would have been Apple's eleventh store in Australia. Apple now has 18 locations in the country.
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Comments

  • Reply 1 of 27
    In surprised Microsoft hasn't applied to sublease it from Apple so they can have live breakdancers click in their surfaces in their own retail store.
  • Reply 2 of 27
    asciiascii Posts: 5,941member
    Why did it even have to go to court? You can't rent a building from someone, half demolish the inside, and then just walk away. It's their property and they have to be able to lease it to a new tenant.
  • Reply 3 of 27
    chris_cachris_ca Posts: 2,543member

    Quote:

    Originally Posted by ascii View Post



    Why did it even have to go to court? You can't rent a building from someone, half demolish the inside, and then just walk away. It's their property and they have to be able to lease it to a new tenant.


    who will immediately tear down the existing (and new) construction and put in what they want.

  • Reply 4 of 27
    paxmanpaxman Posts: 4,666member

    Quote:

    Originally Posted by Chris_CA View Post


    who will immediately tear down the existing (and new) construction and put in what they want.



    Unless Samsung is interested. They'll take the completed store and innovate some Samsung poster here and there.

  • Reply 5 of 27

    Quote:

    Originally Posted by paxman View Post


    Unless Samsung is interested. They'll take the completed store and innovate some Samsung poster here and there.



     


    Yes but the poster will be filled with iOS icons. But I'm sure Samsung's attorneys will tell the jury that Sammy's icons are different.

  • Reply 6 of 27
    solipsismxsolipsismx Posts: 19,566member
    ascii wrote: »
    Why did it even have to go to court? You can't rent a building from someone, half demolish the inside, and then just walk away. It's their property and they have to be able to lease it to a new tenant.

    I can see a few scenarios against Apple here.

    1) Apple signed a contract saying that they would upgrade the inside as part of their lease agreement and/or do so within a certain timeframe and/or spend at least x amount on the construction.

    2) Apple signed a contract that required them to do business in that space (as opposed to simply having control over it). Why is this important?

    Short term, it can affect other businesses around it. For instance, say there was an up and coming retail competitor, a much larger retailer chain could lease property around it then no utilize it thus reducing the natural flow of potential customers. If not illegal it would be unscrupulous.

    Longterm, it can damage the area or structure as a popular area for business, thus hurting the property owner's means for generating revenue from the area which can in turn bring down the property value, which can affect other properties in the area. Anchor stores in malls will almost always have requirements as to when they can be closed, for how long, and why.
  • Reply 7 of 27
    hmmhmm Posts: 3,405member

    Quote:

    Originally Posted by Chris_CA View Post


    who will immediately tear down the existing (and new) construction and put in what they want.



    That is ridiculous. You have no way of knowing the cost of the construction. With the old construction still in place, they might be able to lease it as is. Requiring real construction work on the tenant end would limit their options unless the space is in a ridiculously desirable location.


    Quote:

    Originally Posted by SolipsismX View Post





    I can see a few scenarios against Apple here.



    1) Apple signed a contract saying that they would upgrade the inside as part of their lease agreement and/or do so within a certain timeframe and/or spend at least x amount on the construction.



    2) Apple signed a contract hat would have them doing business in that space (as opposed to simply having control over it). Why is this important? Because it affects other businesses around it. For instance, say there was an up and coming retail competitor, a much larger retailer chain could lease property around it then no utilize it thus reducing the natural flow of potential customers. If not illegal it would be unscrupulous, but the real issue in regards to a lease is that it could cause longterm damage to the area or structure as a popular means for business, thus hurting the owner. Anchor stores in malls will almost always have requirements as to when they can be closed, for how long, and why.


    Neither would surprise me. It's a city with limited space. their downtown area is surrounded by water. It's one of my favorite cities though.

  • Reply 8 of 27
    isaidsoisaidso Posts: 750member


    This has been one of my biggest fears; the cancelation of of new retail buildout projects. Followed, someday, by the closure of existing stores.

  • Reply 9 of 27
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by isaidso View Post

    This has been one of my biggest fears; the cancelation of of new retail buildout projects. Followed, someday, by the closure of existing stores.


     


    The construction company went bankrupt, not Apple. Stay calm.

  • Reply 10 of 27
    chris_cachris_ca Posts: 2,543member

    Quote:

    Originally Posted by hmm View Post


    That is ridiculous. You have no way of knowing the cost of the construction.



    Why do I need to know the cost of anything?


    Can't say I (though I'm far from an expert) have ever seen a retailer take over an existing space and not gut it & redo with their own plan. (except for small/non-chain stores that simply need a space)


     


     


    Quote:


    With the old construction still in place, they might be able to lease it as is. Requiring real construction work on the tenant end would limit their options unless the space is in a ridiculously desirable location.



    To quote the AT&T commercial with guy and little kids sitting in a classroom...


    "Uhm, what?"

  • Reply 11 of 27
    malaxmalax Posts: 1,598member

    Quote:

    Originally Posted by isaidso View Post


    This has been one of my biggest fears; the cancelation of of new retail buildout projects. Followed, someday, by the closure of existing stores.



     


    Me, I'm kinda scared of heights and I'm not a big fan of bugs.  But whatever keeps you up at night, I guess.  If it gets really bad you could seek professional help.

  • Reply 12 of 27
    hill60hill60 Posts: 6,992member

    Quote:

    Originally Posted by SolipsismX View Post





    I can see a few scenarios against Apple here.



    1) Apple signed a contract...



    2) Apple signed a contract...


     


    The end.

  • Reply 13 of 27
    citycity Posts: 522member


    Apple apparently signed a Lease. We don't know the terms of the lease and it could have conditions favorable to Apple, as Apple could possibly leverage such. I'm not familiar with Australian landlord-tenant law either. It seems like Apple then decided not to open a store here. Normally, the landlord would mitigate his damages and try to find a new Lessee. Assuming that the landlord made the best deal they could, Apple would need to pay the cost to procure the replacement Lessee, including the cost necessary for improvements if paid by the landlord. If that new lease is for less rent, Apple would pay the difference. There would be much to argue about if the cost of improvements is excessive, such as converting it to a restaurant. I believe the Landlord can expect improvements of the quality of a typical Apple store.

  • Reply 14 of 27
    bdkennedy1bdkennedy1 Posts: 1,459member
    Apple probably chose a space that was historically significant and has a contractual obligation to restore it.
  • Reply 15 of 27
    lightknightlightknight Posts: 2,312member
    Those scumbag French courts in Australia!

    /s
  • Reply 16 of 27
    lightknightlightknight Posts: 2,312member

    Quote:

    Originally Posted by SolipsismX View Post

    Anchor stores in malls will almost always have requirements as to when they can be closed, for how long, and why.




    Actually, not only anchor stores... I got a friend who owns/operates a small art gallery in a well-known building, and she ends up working ridiculous hours, with her family chipping hours in for free, because her business cannot make enough to pay for an employee, but she has to operate as long as the building's open...

  • Reply 17 of 27

    Quote:

    Originally Posted by paxman View Post


    Unless Samsung is interested. They'll take the completed store and innovate some Samsung poster here and there.



    Yeah, but Samsung doesn't need the extra space for those waiting in line to buy their products. And, of course neither does Microsoft. However, maybe Microsoft could use that extra space for their breakdancers or a command performance of Steve Balmer doing his famous crouching fat man, sweating monkey dance.

  • Reply 18 of 27

    Quote:

    Originally Posted by malax View Post


     


    Me, I'm kinda scared of heights and I'm not a big fan of bugs.  But whatever keeps you up at night, I guess.  If it gets really bad you could seek professional help.



    It was the night panthers that kept me up all night. God, I hated how they'd stay still until I looked away!

  • Reply 19 of 27
    isaidsoisaidso Posts: 750member

    Quote:

    Originally Posted by Tallest Skil View Post





    Originally Posted by isaidso View Post

    This has been one of my biggest fears; the cancelation of of new retail buildout projects. Followed, someday, by the closure of existing stores.


     


    The construction company went bankrupt, not Apple. Stay calm.



    I don't mean offense; but did you just read what you wanted to read, or is the article wrong, or what?


    And mind you; this was not just one more little "cubbyhole" in some mall. This was to be a very important store for them.


     


    "Apple eventually decided to cancel the project in November of 2012, and no work has been done on the interior since.


    Apple's reasons for scuttling the project instead of seeking out a new contractor are as yet unknown."


     


    PS


    Not worried about Apple going bankrupt. (yet)

  • Reply 20 of 27
    isaidsoisaidso Posts: 750member

    Quote:

    Originally Posted by malax View Post




    Quote:

    Originally Posted by isaidso View Post


    This has been one of my biggest fears; the cancelation of of new retail buildout projects. Followed, someday, by the closure of existing stores.



     


    Me, I'm kinda scared of heights and I'm not a big fan of bugs.  


     


    But whatever keeps you up at night, I guess.



    It's called "the future".


    Quote:


     If it gets really bad you could seek professional help.




    Too expensive.

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