No pandemic pause in IKEA shopping mall plans in the United States

STOCKHOLM (Reuters) – IKEA’s shopping center business hopes to open its first U.S. mall in central San Francisco within a year, continuing its expansion plans as many retailers are reeling from the coronavirus crisis.

The logo of Swedish furniture giant IKEA can be seen in Mexico City, Mexico on May 22, 2019. REUTERS / Edgard Garrido / Files

Ingka Centers, one of the world’s largest shopping center owners, told Reuters in May it was seeking entry into the United States, initially focusing on locations in New York City, Los Angeles, San Francisco and Chicago.

Managing Director Gerard Groener said on Monday that the COVID-19 pandemic had not altered plans for the expansion of Ingka centers: “Modern physical retail must be built around the needs of the local community, a complementary blend of uses, digitization and sustainability. “

“Regardless of the ‘new normal’ what the demand for meetings, shopping and entertainment outside the home looks like will remain, and this is evidenced by the high level of footfall we have seen at our meeting venues which have reopened following COVID-19 restrictions, ”Groener added.

Ingka Centers, a division of the Ingka Group that owns most of the IKEA stores in the world, made its first real estate purchase in the United States last week, the struggling 6X6 mall in downtown San Francisco, empty since its opening. completion in 2016.

Its total investment in the mall, which like its others will be based on an IKEA store, will amount to $ 260 million, including the acquisition and redevelopment, said Ingka Centers, which has 45 shopping centers in Europe, Russia and China.

Ingka Centers plans to roughly double that figure in all markets as, alongside the furniture industry, it moves to the city center from locations outside of the city.

Groener said Ingka Centers is in active talks with potential property sellers in several European cities, with Barcelona, ​​Madrid, Milan, Rome and Berlin on its wishlist.

IKEA’s push can provide much-needed support to city centers, where stores struggle with difficult market conditions.

San Francisco Mayor London Breed said in a statement from Ingka Centers: “The presence of this great retailer in the heart of our city will be transformative for our Mid-Market neighborhood. “

IKEA, which is made up of several companies and controlled by foundations, has historically funded its operations with its own cash.

“The goal is to continue doing it,” Groener said.

Reporting by Anna Ringstrom; Editing by Helena Soderpalm and Alexander Smith

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Peggy P. Gilmore