Apple's Latest Platform: Grand Central Station
Apple Inc. and the New York City Metropolitan Transportation Authority (MTA) finalized a deal on July 27 that will add an Apple store onto Grand Central Station’s east balcony. Apple expects to spend four months building the store, taking pains to comply with the Historic Districts Council in order to preserve the terminal’s historic ambiance. In other words, there will be no massive, glowing, white apple eclipsing the clock.
Apple is entering a 10-year lease with the MTA for 23,000 square feet of space. The store will replace Charlie Palmer’s Metrazur restaurant, which Apple agreed to pay $5 million to for agreeing to exit its lease eight years early. The company will also occupy a vacant building on the northeast side of the terminal and various out-of-the-way space currently used by Metro-North Railroad.
The Apple lease is part of a growing trend at prime locations such as Grand Central Station, where smaller, existing tenants are losing their space to the highest bidder. For example, Apple will pay MTA $800,000 in its first year alone, while Metrazur paid only $263,997 for essentially the same space. Apple’s rent will increase annually, capping at $1.043 million in the last year of the deal.
Aside from Metrazur, other long-term tenants are also losing out. By late fall, the transit hub plans to incorporate a dozen new shops and restaurants that have outbid existing tenants. This shift is due in part to Grand Central’s five-year-old requirement that an existing tenant whose lease is up must go through the same application process as prospective tenants seeking a lease. Longevity is not a factor in the lease renewal process.
Profitable retailers such as Shake Shack, Beer Table, Kidding Around Toys, and Eli’s will all begin new leases in the fall.