Apple’s new retail store set in the heart of New York’s Grand Central station is set to open its doors next week, according to a report from the New York Post. And thanks to Apple’s infamous negotiation skills, the Cupertino company paid peanuts for the lease.
Other retail tenants in the station typically pay approximately $200 per square foot to the Metropolitan Transportation Authority, according to the report, in addition to a certain percentage of their sales if they surpass a specified threshold. However, Apple’s deal is a little different.
Despite estimates claiming the store will rake in around $100 million a year in sales for the company, it will reportedly pay just $60 per square foot for its retail space, and it won’t share a penny of its revenues with the MTA. Its deal is said to be “well below” what many other tenants are paying, according to leases obtained by the New York Post.
Apple’s deal is so good, in fact, that the MTA has received criticism for leasing the space out at such a reduced rate. Robin Adams, executive vice president at real estate firm Lansco, said Apple’s no-percentage deal is surprising:
I am surprised they didn’t get some kind of percentage. You’d think if they were going to do, say, $50 million in sales, the MTA would at least get some percentage of anything over that.
Despite the criticism, however, the MTA maintains it is happy with the deal it has reached with Apple. Aaron Donovan, a spokesman for the MTA, said:
We set out to maximize the rent we receive for this space, and we’re thrilled that we were able to more than quadruple what we had been receiving previously.
In contrast to the new deal, Apple’s flagship retail store on Fifth Avenue costs the company around $5 million a year, with the landlord of the GM building taking an additional $15 million per year out of the $400 million the store generates in sales.