Reporter Confirms Future Store, Big Incentive

A reporter for the Salt Lake City (Utah) ABC-TV affiliate has confirmed with two sources that Apple will eventually open a store at the new City Creek Center mall, and has been offered a substantial incentive to locate there. In a report that aired tonight, ABC4/KTVX reporter Brian Carlson interviewed Coldwell Banker executive Brandon Fugal, who confirmed on-camera that Apple would locate at City Creek, and that a “major concession package” had been offered to the company. A second, unnamed source told Carlson the incentive offered to Apple was five years of occupancy, rent-free. A representative of Taubman, which manages City Creek, said the company does not reveal the terms of its leases. Tipsters pointed IFO to City Creek last November, and in February said The Gateway store would close when the new store opens. However, the timing of the new store opening is not known. In the retail real estate industry, it’s not uncommon for mall management to offer various rental incentives beyond lower rent, including construction allowances, a longer lease term, favorable lease termination conditions, a lower proportionate share of common area mall costs, and a lower percentage rental. That last incentive consists of both a set percentage of gross sales, and a breakpoint above which the percentage must be paid (e.g. 5.5 percent over $1,750,000 in year one). The breakpoint can change over the term of the lease, typically increasing each year, favorable to the tenant. It’s well-known in the real estate industry that Apple receives favorable treatment from landlords, who realize that an Apple store will increase mall traffic and sales at other retailers. In fact, some retailer lease agreements include “Apple proximity” as a condition of their signing a mall space lease. Update: In early June sources confirmed the ultimate closing of The Gateway store, and the location of the City Creek store—to the left of Sephora in the west section of the development.