Apple has reportedly asked the landlords of its retail stores across the UK for huge rent reductions. As per the report, Apple has told landlords of its 38-store estate in the UK that it wants a rent reduction by 50 percent and a rent-free period to go along with it. In turn, the company is willing to extend the rent lease by a few years.
The move has caused dismay among landlords of 38 Apple Stores across the U.K., with many of them having multiple years of lease still left in their contracts. The landlords are under no obligation to accept Apple’s proposal, though it is unclear what exactly happens if they reject the proposal.
Apple is pushing for a rent reduction so as to bring the rents of its stores in line with other retailers who have managed to get their rents reduced due to the ongoing pandemic. However, unlike other retailers, Apple has seen an increase in demand for its products that the move comes amidst the company posting a record Q2 revenue of $59.7 billion. The company had noted during its earnings call that despite its retail stores being shut down, demand for its products via online channels was “phenomenal.”
Apple Stores are highly profitable and they tend to push the footfall higher in malls and nearby regions. This is also the reason why many landlords try their best to keep Apple as their tenant for long periods of time as it helps in boosting the popularity of their place. While it makes sense for other retailers to ask for a rent reduction as their sales have dropped, Apple asking for a 50 percent rent reduction seems a bit unfair as the company has just posted a record-breaking quarter.
The Sunday Times]
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