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Apple’s Grand Central Terminal Store Officially Opens, But Not Without Controversy

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One of Apple's largest stores opened to the public at Grand Central Terminal in New York on Friday, just in time for the holiday season. On the east balcony of Grand Central, Apple products beckon harried commuters, curious bystanders and Apple devotees into the 23,030-square foot store, where more than 300 employees can assist with questions and purchases.

At 10 a.m. on Friday, hundreds of people were eagerly waiting in line to experience first-hand the spectacle of Apple's Grand Central store, sporting special wristlets and being feted by Apple employees as they skipped up the marble staircase to the store's entrance. Apple employees lined the entire staircase in matching red t-shirts, clapping, cheering and encouraging people to stop in and browse. Crowds were greeted with a smile and a simple, white rectangular box, which contained a chic T-shirt emblazoned with "Apple Store Grand Central" on the front -- an exclusive gift to the first 4,000 visitors.

Inside, visitors furiously snapped pictures of the different rooms while employees happily photographed people posing next to the iconic Apple logo at the top of the staircase. Individuals from near and far made the trek to Grand Central, some as close as Brooklyn, others from as far as Sweden and Italy. Hollywood director Spike Lee, a New York native, blended in with the masses, absorbing the electricity and excitement that echoed throughout Grand Central's baroque and grandiose lobby.

However, the new store isn't without detractors. The sheer size of Apple's newest New York City location, its fifth retail store in town, has brought some unwanted attention to the company and New York's Metropolitan Transit Authority (MTA), which leases retail space at Gotham's landmark train station. There were reports that Apple negotiated a generous 10-year rental deal with the MTA, paying just $60 per square foot -- a deep discount compared with the rental costs of Apple's Grand Central neighbors. New York Comptroller Thomas DiNapoli pounced on the news, announcing that his office would conduct a follow-up audit on the arrangement. In a report released last July, DiNapoli's office listed recommendations for the MTA to generate more revenue.

"It is routine for the Comptroller's Office to do follow up audits to see if the recommendations that were made have been implemented and to test transactions and practices for compliance," said DiNapoli spokesman Eric Sumberg in an emailed statement. "In this case, the MTA's contract with Apple will be closely examined."

The MTA dismissed the published reports about the Apple deal, saying the $6o number was incorrect and downplaying any perceived controversy. MTA spokesman Aaron Donovan said Apple's decision to open a store at Grand Central was "the best possible deal for the MTA" and Apple would be "quadrupling the rent we receive and bringing foot traffic to Grand Central Terminal that will increase revenue from all of our retailers."

According to Donovan, Apple pays $180 per square foot in rent for the second-largest space at Grand Central (the Oyster Bar & Restaurant occupies the biggest space at 25,000 square feet). In comparison, the high-end restaurant Cipriani pays $86.68 per square foot, while Michael Jordan's Steakhouse pays $70.10 per square foot. Apple may be charged a rental premium in square footage terms, but the tech giant did not agree to the MTA's revenue-sharing agreement -- the only retailer to do so out of the 100 tenants leasing space at Grand Central. Donovan explains that because Apple functions as an "anchor tenant," the company will be bringing in more revenue and shoppers into Grand Central, benefiting all the stores. More than 700,000 people visit Grand Central every day, making the historic transit hub the second-busiest destination in New York City after Times Square.

Furthermore, Apple spent $2.5 million renovating its new space, says Donovan, and agreed to pay $5 million to buy out the east balcony's previous tenant, the restaurant Metrazur, to leave its location eight years early. The MTA charged Metrazur $263,000 in annual rent and will now bring in $1.1 million from Apple in the first year. The fee will increase incrementally over the 10-year lease.

Ultimately, whether or not Apple received a sweetheart deal won't negate the fact that throngs of Apple lovers and tech enthusiasts will make their pilgrimage to the Grand Central store, oohing and aahing over the products they most likely have seen (and used) countless times before. Grand Central has just become a little bit busier and a little more hip.