Why authorities waive rents and taxes to land Apple Retail Stores

“The lure of an Apple Store can be so great that local authorities are doing all they can to sweeten the deal for the world’s biggest technology company, waiving rents and taxes in order to have it set up an Apple Store in their area,” Matt Brian reports for TNW. “New York’s Grand Central Terminal wanted Apple so bad it dropped its leasing fees and in Salt Lake City, authorities are rumoured to have dropped rents completely, to incentivise the opening of a new Apple Store.”

“A staggering 71 million customers visited Apple’s retail stores between January and March, an increase of 28 million from a year earlier. Apple’s impressive footfall is proving to be a catalyst for retail spending in the areas in which they are located, pushing the money spent back into the local economy,” Brian reports. “A recent ABC News report states that Apple is going to open a new store in Salt Lake City, located in City Creek… According to ABC’s sources, City Creek has offered a ‘major concession package’ that is thought to include five years free rent.”

Brian reports, “The truth is, realtors and local authorities know that when an Apple Store is opened in an area, tech savvy consumers come from surrounding areas to view products, seek help and spend money on luxury electronics. Put simply, spending will flow into City Creek… In just seven weeks, Apple’s newest New York store [in Grand Central Terminal] helped one restaurant boost sales by 7 percent — impressive as it’s already co-owned by basketball legend Michael Jordan. That restaurant – The Steakhouse — directly attributes its increased footfall to the nearby Apple Store with its other co-owner stating: ‘The jump only happened after Apple opened.'”

Read more in the full article here.

MacDailyNews Take: A rising tide lifts all boats.

And, now for a true classic:

I give [Apple] two years before they’re turning out the lights on a very painful and expensive mistake.David Goldstein, Channel Marketing Corp. President, commenting on Apple’s opening of retail stores, May 21, 2001

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

31 Comments

  1. Grand Central dropped rates because Apple leased out a lot of space. It’s a volume discount. I’ve long thought Apple should get preferential leasing rates, way back when the 5th Ave store opened. Before Apple took that space, it was dead, dead, dead.

  2. The store opening in Salt Lake City would be a peculiar location, being only 4 blocks from a current Apple Store (which is admittedly ridiculously overcrowded). Assuming this rumor is true, I can’t determine if they’ll keep both stores or just close the current one.

    1. They tend to bunch stores for some reason. Why? I don’t know, there are so many areas that have no Apple store, that could easily support one.

      1. I can think of three or four prime locations for an Apple Store in Washington, DC, but Apple thought otherwise. The only place they elected to put one was in “trendy” Georgetown, which is not very accessible for those who don’t live in the neighborhood. All the others in the region are outside the city on the Maryland and Virginia sides.

        1. The one in Bethesda Row is pretty accessible from DC, in fact, I was just there yesterday over my lunch break to get my iPhone checked out. Agreed the one in Georgetown is hard to get to and M street makes getting there a nightmare. Usually I go to the Tyson’s one where I worked for about a year, and still have friends there.

          Where in DC would you put another one? Adams Morgan? Off of Wisconsin near Chevy Chase? Just curious to see where you think might be good.

    2. Do they have one in Park City? If not, that would be a killer location. Close to the Claim Jumper so I can ski, drink and spend my money on cool new Apple products.

      1. My personal taxes as a percentage of my income are greater than 23 percent. Add to that the increasing insaitabity of the Feds to spend inordinate amounts of money on futile social programs and ill-conceived projects directed by overpaid and overcompensated government workers in inefficient and illmanaged bureaucracies I think it’s is time for working citizens to demand government to cease its excesses of frilvilous and wasteful spending. Spare me your dubious global statistics when my personal economics are more pertinent and current federal spending egregiously out of tune with reality and good sense.

        1. Sorry to bother you with facts again, but US discretionary spending, ie “futile social programs and ill-conceived projects” have been frozen since the 90’s are expected to decline from 1/3 to 22% of the budget over the next decade.

          And who is talking about “dubious global statistics?” GDP is gross domestic product, not global. And percent of GDP is federal spending / GDP. Middle school level math at best, and what is dubious about simple division? Unless “dubious” is your word for facts you don’t like.

    1. If only the federal government would be intelligent enough to reduce spending and the deficit before reducing taxes and raising the deficit.

      Tax cut and spend does not work. Cut spending first. If that is not enough to balance the budget, then raise taxes until it does balance. Now you have a reasonable starting point from which to debate further adjustments. But extending tax cuts and maintaining high defense spending while running massive deficits is clearly *not* the answer.

    2. If they applied a simple transaction tax of less than 1% on the high frequency stock churners on Wall Street, we could offset hundreds of billions in taxes or debt yearly.

      Of course, the Republicans are opposed to it. They want to increase the massively bloated Defense budget AND cut the taxes of the wealthy- offset with tax increases on the bulk of individual taxpayers and a savaging of other government services.

      The disingenuous bullshine the Rethugs push is insane. They rant about spending and refuse to cut a thin dime from the largest component of the budget. The US spends more on defense than the next 15 largest spenders on defense in the world.

      The Affordable Care Act- aka Obamacare- will save the Fedral Budget in excess of $1 Trillion during the first decade it operates. Of course the Rethugs are opposed.

      The next Fighter jet will break the back of our country even as it enriches the coffers of defense contractors with a lemon plane that we do not need.

      “The United States is projected to spend an estimated US$323 billion for development and procurement on the F-35 program, making it the most expensive defense program ever. The total lifecycle cost for the entire American fleet is estimated to be US$1.51 trillion over its 50-year life, or $618 million per plane” Wikipedia

    1. More accurate two word phrase: anchor store.

      Malls and shopping centers have typically offered different deals to the stores that drive traffic to area. Those stores used to be the big department stores–they would pay reduced rent, would not be assessed anything for common area maintenance, etc., with the smaller stores paying those expenses.

      Back before the economy slowed down there was a US chain called Steve and Barry that had being an anchor store as its business plan. It targeting second tier malls and shopping centers that needed traffic and negotiated not only rent free leases but also upfront payments for store construction and improvements. It sold clothes at or below cost, and was making its money not off of selling goods but rather from the payments it received from mall owners for opening new stores. When the economy slowed down the offers for new stores stopped and the company went tits up.

      That Apple has reached anchor store status is incredibly impressive–low square footage stores selling a handful of main products.

  3. Nothing like corporate welfare.

    Eliminate local property taxes and we will build X in your community.

    Give us a kickback on our employees state income taxes and we will relocate to your community.

    Impound site X (which we chose) under eminent domain, build building/complex x to our design with public bond money and lease it to us for nominal $ and we will relocate to your community.

    Subsidize worker training with state funds and we will locate x expansion in your community.

    Pay for utility and road site prep to the new facility you built for us with public money out of public funds, and we will come.

    After all this, they call it private property.

    They contribute nothing in taxes, collect rebates for state taxes of local employees, pay little to nothing in rent, pollute and then pick up in a couple of years to extort the same from another community- or else.

    Nothing like free enterprise. Especially when it is paid for by the taxpayer. Public risk and private gain- the definition of crony capitalism.

  4. Apple stores generate more sales revenue per square inch than any other retailer in the U.S. They seem to be an exception to typical rules because of the sales tax these stores can generate and because places that have an Apple store seem to be blossoming.

    …or like MizuInOz said above.

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