A representative for the Metropolitan Transportation Authority (MTA) responded to an article we posted yesterday about rumors of preferential treatment towards Apple in the Grand Central Apple Store lease agreement. They are putting all of their cards on the table, challenging anyone who is skeptical to “Bring it on.”
The MTA is standing firm against New York State Comptroller Thomas DiNapoli, who kicked off an investigation into the lease. Apple’s Grand Central location is staged to open its doors Friday, December 9th, and there have been no indications that the city will step in to delay this opening.
Comptroller is an elected position, and when something hits the public’s ear, these officials like to put up a facade that they are going to put the hammer down, yet to date all we’ve heard about is DiNapoli’s intention to investigate.
That aside, the MTA provided Macgasm with a list of facts about the deal that pretty much sum up why “preferential treatment” was an extremely false accusation. The neighboring businesses stand to gain a lot of extra foot traffic, not to mention the infrastructure changes Apple has made to the space, which increased the value.
Here is a run down of the deal directly from the MTA:
- The space that will soon house a new Apple retail store is a great location but has major limitations for retail, including very strict historic preservation regulations.
- Until the MTA took action earlier this year, the restaurant Metrazur had a lease through 2019 in this space that paid only $263,000 annually to the MTA. This lease dates back to the restoration of Grand Central Terminal in 1999 and never generated enough revenue to contribute any percentage rent.
- Believing that more revenue could be generated, the MTA put the space out for bid knowing that it would take a unique respondent to pay significant upfront costs: $5 million to buy out the existing lease and more than $2.5 million for infrastructure improvements.
- The deal with Apple is a win-win for the MTA and our customers:
- Quadruples the rent coming to the MTA (from $263,000 to $1.1 million)
- Provides a terrific new amenity at Grand Central Terminal.
- Will drive traffic to all of the retailers at Grand Central, where every 1% in additional sales is worth $500,000 to the MTA.
- Includes permanent infrastructure improvements to Grand Central, including HVAC systems and new egress.
The MTA believes this deal is the best case scenario for everyone involved, and points out that when all is said and done, Apple will be paying more than $180 per square foot, and not many other businesses exist that would have been willing to put so much cash up front and still be so limited by historical preservation guidelines. I can’t really argue against them either. It seems like a sweetheart deal for the MTA and neighboring businesses, more so than for Apple.
It would appear that an overzealous reporter for the Post thought he could cause a stir with an article and stretched the truth a bit to do so according to the “facts” provided to us by the MTA.