Apple Store effect wins company lower mall rents

Apple Store effect wins company lower mall rents 1

Apple Store effect wins company lower mall rents

Apple is using the high traffic its retail stores generate to pay lower rent than other mall stores, The Wall Street Journal reports. An Apple Store’s ability to lift overall mall sales single-handedly — by as much as 10 percent, according to real-estate research firm Green Street Advisors — lets the company negotiate drastically lower rent and leaves other stores to foot the bill, even if they don’t benefit from Apple’s added traffic. In the past, department stores paid little to no rent since they served as main draws for the traffic upon which smaller stores depend. Apple has elevated itself close to that level, bargaining to have its rent based on no more than 2 percent of its sales per square foot, compared to a typical store that pays as much as 15 percent. “As department stores close, Apple is replacing them as the main driver of traffic to the mall,” said Raymond Cirz, chairman of Integra Realty Resources, a real-estate valuation and consulting firm.

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