Walton Street Capital purchased the 20,000-square-foot Apple Store, a 35-story office building, and a retail building next door for $370 million in 2017, and is now planning to sell the store and 10,000 square feet of retail space for $175 million while holding on to the office building.
The biggest surprise to me in this story was that Apple didn’t already own the property.
I bet Apple doesn’t own a lot of the actual buildings their stores are in.
Like shopping malls.
Exactly.
So what if the new landlord doesn’t want Apple store or want to increase rental pricing? Can Apple keep the store there or relocate? I’m curious how this works.
Typical lease terms are long, maybe twenty-five years. When it comes time to renegotiate, the value to the building owner of the building *without* its current tenant is a strong point of leverage for the current tenant.
Well, there’s a contract both companies sign so that would deal with your questions. But few, if any, landlords would ever want to give up a highly attractive retailer like Apple. As the story says, Apple likely gets *discounted* rent because they bring so much traffic.
When you read a 10k, you will see “leasehold improvements” discussed and reported. Apples latest number is ~7.3 billion. “Land and buildings,” presumably including the spaceship (which Apple definitely does own) is ~$13.6 billion.
Rent expense for 2017 was reported as $1.1 billion.
My neighbor owned the building Apple’s data center occupies in Reno.
Me thinks they might own this one soon.
You have no knowledge of retail space management. Large retailers lease space for tax advantages.
Walmart doente own any of the spaces it occupies, preferring instead to create bogus holding companies to manage their brick and mortar, as it is 100% tax deductible each year. If you own the building, you are faced with amortization schedules and rite offs on the interest portion of the transaction. Also, like the aforementioned Walmart, when the utility is done and you move, you are not left with the burden of unwanted retail space.
This creates huge problems for municipalities who are stuck with empty stores that they cannot force ownership to do anything about. This is called “the dark store” principal. It causes undue burdens on cities across North America faced with abandoned storeses with no one claiming responsibility for them.
On top of this, republican legislators (you know, the criminals who control many state legislatures) have continuously Blocked local municipalities from doing anything about these problems. In my own city, we have over 2,000,000 feet of empty retail locations which we can neither force the demolition off. This contributes to urban life in a major and significant ways.