Apple and the New York City Metropolitan Transportation Authority (MTA) both received criticism last year for a sweetheart deal in which Apple paid less rent per square foot for the Grand Central Terminal retail store space than other tenants in the facility. Well, the deal is starting to pay off for the MTA as expected, since the popularity of the Apple Store at Grand Central Terminal appears to be improving sales for other retailers.
While the trend is based on data from only one nearby restaurant, it's expected that the Apple Store is attracting business to other stores and restaurants in Grand Central Terminal as well. Crain's New York Business says that sales at Michael Jordan's The Steakhouse N.Y.C. have increased by 7 percent in the last seven weeks. A co-owner of the restaurant, Peter Glazier, says the improvement in sales isn't just because Apple displaced another high-end restaurant, Metrazur. "The jump only happened after Apple opened," according to Mr. Glazier.
Apple not only pays less rent than other tenants, but does not contribute to a revenue sharing agreement that most of the other tenants of Grand Central do. The MTA believed that the flagship Apple Store would attract significant numbers of new customers that would benefit the other tenants and the entire facility as well. For every 1 percent increase in sales for the terminal's retailers, the MTA stands to gain $500,000 in rent due to the revenue sharing agreement.
If the experience of Michael Jordan's The Steakhouse is an indication of increased sales across the board, then the Apple agreement will certainly pay off dividends to the MTA.