Apple is poised to reap a bonanza in Grand Central Terminal but it won't be sharing any upside with the landlord.
As reported by The Post, the money-minting iPad maker is gearing up for a splashy opening next weekend at the Big Apple's historic commuter hub, with plans for a chic store that's expected to be one of its most profitable worldwide.
But while real estate insiders estimate the shop will rake in $100 million a year in sales, Apple won't be sharing a nickel with Grand Central's operator, the Metropolitan Transportation Authority.
The tech giant is the only retailer in the fast-growing retail transit hub to have such a sweet lease.
Critics likewise note that Apple's $60-a-square-foot lease is well below what many other tenants are paying -- including a future Shake Shack burger joint that will be shelling out more than $200 a square foot, according to the leases, copies of which have been obtained by The Post.
That's a sign that Apple drove a hard bargain with the MTA -- despite the fact that the public agency's budget squeezes are pushing up fares for subway straphangers and suburban commuters across the region.
"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," said MTA spokesman Aaron Donovan, noting that no other companies responded to its public request for proposal.
"I am surprised they didn't get some kind of percentage," said Robin Abrams, executive vice president at real estate firm Lansco. "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."
In a summary prepared in July in the wake of the Apple lease signing, the MTA justified its no-percentage rent deal by insisting that the gadget store will generate significant new traffic for Grand Central Terminal's other 100 or so retail tenants.
All of those shops and restaurants, with the exception of a Chase ATM branch, pay the MTA a percentage of their sales that exceed a given threshold. For every 1 percent increase in their sales, the MTA projects it will reap $500,000.
Still, the MTA didn't estimate what kind of increase it expects, and some real estate experts are skeptical.
"Maybe they should have hired Harry Macklowe to negotiate the lease for them," said real estate lawyer Steven Wagner, referring to the New York property tycoon who lured Apple to Fifth Avenue when he owned the GM Building at 59th Street.
While Apple is said to have grabbed the basement space for its "Cube" in front of the GM Building for less than $5 million a year, sources estimate the 10,000-square-foot location is generating annual volume of more than $400 million -- and at least $15 million in percentage proceeds for the landlord.
Apple may have squeezed better terms from the MTA than from Macklowe, but in both cases the Cupertino, Calif., company is reaping a fortune on oddball retail spaces, mainly because of its hot-selling gadgets, according to Jeffrey Roseman, principal at Newmark Knight Frank.
Copyright 2008 LexisNexis, a division of Reed Elsevier Inc. All rights reserved.
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