MTA Wins With Apple Store

The addition of the Apple Store to Grand Central is the latest step in the ongoing rejuvenation of Grand Central that was fostered by MTA Metro-North Railroad’s rehabilitation of the Terminal in the 1990s.

MTA Wins With Apple Store

The re-emergence of the Terminal as an increasingly popular retail destination and transportation hub has been mirrored by an increase in leasing revenue to the MTA. In 1994, as the renovations were just getting underway, the MTA earned $7 million in rent for retail space at Grand Central. Ten years ago, the MTA earned $15 million in gross revenue from what had grown into an array of 100 retail tenants. This year, the MTA expects to double that amount, to $30 million.

Grand Central’s east balcony, now occupied by Apple, was originally accessible only by elevator. From 1950 to 1990, the balcony and the monumental windows behind it were obscured by a huge advertisement, the Kodak Colorama. When the MTA undertook the renovation of the terminal in 1996-1998, it built a massive marble staircase to mirror the one on the west side of the Main Concourse, opening this space up to the public for the first time.

It was an untested retail environment without the benefit of access to the street that the otherwise similar west balcony enjoys. The MTA entered into a long-term lease with a restaurant, Metrazur. As the phenomenal success of Grand Central’s renovations came into focus, the MTA realized it could receive more rent for the space Metrazur was occupying through 2019, and that it would be able to lease nearby space that was accessible only through the restaurant.

Through negotiations involving the restaurant as well as Apple, Metrazur demanded $5 million in order to terminate its lease early. The MTA put out an RFP that was well advertised and open to all bidders. The MTA received only one response, from Apple. As expected, the new lease more than quadruples the rent that the MTA is receiving for the space. And each additional 1% increase to foot traffic that the store brings into Grand Central means a big boost to the bottom lines of all 100 of the Terminal’s retailers -; as well as $500,000 to the MTA itself. So far, neighbors are seeing a 7% increase in sales.

Unfortunately, a report put out in late July by the office of State Comptroller Tom DiNapoli distorts this rosy picture, framing the MTA’s proactive negotiations to boost its bottom line as a negative.

“The Comptroller's audit staff clearly has no understanding of how high-profile commercial real estate works, given the shockingly inaccurate and clearly biased audit they issued,” said MTA Chairman Joseph J. Lhota. “The MTA's lease process with Apple was open, transparent and followed both the spirit and letter of the law.

Chairman Lhota continued: “Remember Senator Daniel Patrick Moynihan's old adage, 'You have the right to your opinion, you don’t have the right to your own facts'? This audit is not fact-based, and accordingly, the auditors’ opinion is worthless. The overt bias against the MTA and Apple in this audit is breathtaking. Trust, honesty, humility, transparency and accountability are the building blocks of a positive reputation. It’s a shame the Comptroller’s staff who prepared this audit showed none of these qualities.”

With 700,000 visitors per day, Grand Central Terminal is the second most-visited place in New York City after Times Square. It is the heart and hub of MTA Metro-North Railroad, the nation’s busiest commuter railroad, which maintains the Terminal and operates 750 trains to and from it each day serving 200,000 passengers. MTA New York City Transit’s adjoining subway complex is the second busiest in the New York City subway system, with five lines serving a combined average of 288,700 riders per day.

The MTA strives to maintain a diverse mix of retailers in the Terminal, with New York-based local businesses representing the majority of the tenants.