Ikea will open on NYC’s Fifth Avenue as owner takes stake in new office, retail tower
Ingka Investments, the investments arm of Ingka Group, which owns the majority of Ikea stores worldwide, has invested in the largest development on Fifth Avenue in more than 60 years.
Ingka has taken a stake in 570 Fifth Avenue, a one million-sq.-ft. Class-A retail and office tower being developed by Extell Development Company. The building is scheduled for tenant delivery in 2028. Financial terms weren't disclosed. (Eastdil Secured served as the exclusive advisor to Extell on the transaction.)
An Ikea store will be located in the building's prime retail space of 80,000 sq. ft. It will be arranged over two large cellar levels with a corner entrance on Fifth Avenue.
In a release, the company said the investment is another step in Ingka Group's strategy to evolve its retail operations by adapting to urban growth and changing consumer shopping preferences. The initiative involves introducing innovative retail formats in city centers, enhancing accessibility and convenience for customers.
"This next phase of our investment and expansion in the U.S. signals our commitment to bring Ikea closer to people in city centers,” said Javier Quiñones, CEO and chief sustainability officer, Ikea U.S. “While we are in the very early stages of planning for the Ikealocation, we can promise to deliver an experience that is full of inspiration and designed to meet the home furnishing dreams of the many New Yorkers."
Ingka Investments will hold a one-third stake in the project alongside preferred equity components and full ownership of the prime retail space where the Ikea space will be located. Extell will hold a two-thirds stake in the project.
With Ikea retail operations in 31 markets, Ingka Group is the largest Ikea retailer and represents about 90% of Ikea retail sales. It has three business areas: Ikea Retail, Ingka Investments and Ingka Centers.
"We are excited to share the news of this major investment that boosts our growth strategy across the U.S., a vital market for Ingka Group,” said Peter van der Poel, managing director of Ingka Investments. "Investing in Fifth Avenue goes beyond just growing our footprint; it's about changing the way we engage with consumers and playing a part in creating strong, sustainable economies and business communities."
Founded and headed by Gary Barnett, Extell Development is a real estate developer of residential, commercial, retail, hospitality and mixed-use properties, operating primarily in New York City, Utah, and other premier locations across the nation.
"We have been working on assembling this project for almost two decades and Ingka Investments' substantial commitment allows us to move forward with the construction and leasing of the best new office building in New York," said Gary Barnett, Founder & Chairman, Extell. "This will be the first office tower to begin construction in the city post pandemic and it is a great sign of New York's resilience."