Is Ikea Orienting New Development to the Inner City

We all have seen the big box Ikea in suburban locations rising from the landscape like a sculpture in Yves Klein Blue yet an actual color scheme of the flag of Sweden. Possibly following the trend set by Target and Wal-Mart, Ikea may be looking closer to the inner-city which would make sense offering furnishings and products oriented to smaller residences.

A year after the parent company of Ikea said it was rethinking its business model and focusing on city centers rather than out-of-town warehouses, the furniture giant’s property division, Ingka Centres (formerly Ikea Centres), is taking the same tact.

As part of its plan to invest €5.8 billion (or $6.6 billion) to create new Ikea store-anchored developments around the world, Ingka Centres—a subsidiary of Ingka Group, which is the parent company of Ikea—is looking in the next two years to open six mixed-use developments with retail and entertainment areas, health education services and of course, an Ikea. But in the case of these city centers, the Ikea stores will have a smaller footprint (70,000 to 150,000 square feet rather than the more typical 400,000 square feet), Word on the streets is there will be at least 15 such centers opening within the next three years.

Ingka Centres is targeting 30 major cities in North America, Europe, Asia and Russia, with New York City (Ikea has full-format locations within Brooklyn and across the Hudson River in Elizabeth NJ) and San Francisco (a location in Emeryville) at the forefront. The company wants to purchase sites and redevelop them, and has already started visiting some properties in both cities. Other cities on the shortlist include Los Angles and Chicago, no mention of Denver, not surprising as our density is low compared to the other cities yet our average age and educational attainment would be a good match.

  • Average density of Los Angeles City not County is: 12,500 persons per sq. mile
  • Average density of San Francisco is: 15,000 persons per sq. mile
  • Average density of Chicago is: 11,900 persons per sq. mile
  • Average density of Denver is: 4,300 persons per sq. mile

In Shanghai, China construction is underway on the €1 billion ($1.1 billion) mixed-use Livat shopping center, which will include a smaller 200,000-square-foot Ikea store, 300 other stores, public space, a roof garden, a Scandinavian-styled street and five office towers. The project is slated for completion in 2022.

Last November, Ingka Group (formerly Ikea Group) launched a new strategy to focus on city-center stores as it sought to rethink its business model amid urbanization and the shift to e-commerce, per the Financial Times. That shift included trying different store formats, including smaller stores. For example, there is a small-format 70,000-square-foot Ikea store opening this spring in Paris although Ingka Centres is not involved.

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