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Manhattan’s upscale Fifth Avenue, known for being home to luxury stores like Tiffany & Co. and Chanel, will soon be opening a more practical tenant: IKEA.
Ingka Investments, the investment arm of major IKEA retailer Ingka Group, has announced it will take a minority stake in a new tower being developed in New York City’s premier shopping district, paving the way for the Swedish furniture group to open a “customer meeting point” in the iconic shopping district.
The investment marks IKEA’s latest push into the US market, but also continues a recent trend of major international retailers, including LVMH, snapping up prime real estate in major cities around the world.
Under the deal announced on Monday, Ingka Investments, which owns most of Ikea’s stores around the world, will take a one-third stake in the 1 million square foot building at 570 Fifth Avenue, in addition to preferred stock. The remaining two-thirds will be owned by U.S. developer Extell Development Company.
Ingka Investments said in a press release that it has acquired full ownership of 80,000 square feet of retail space, which will house a customer meeting point for IKEA, but noted that IKEA’s plans for the store are still in the very early stages.
As part of an effort to improve “access” for customers in big cities and metropolitan areas, Ikea said last year it had opened more than 70 such meeting points around the world, including mini-stores, pop-ups and planning studios. Planning studios are much smaller than a standard Ikea store and allow customers to meet with consultants and order delivery to their home.
Financial details of the deal were not disclosed. Extell has been developing the site, less than a 10-minute walk from Grand Central Terminal, for nearly two decades, but construction hasn’t started yet. The first tenants are expected to move in by 2028.
“We are pleased to share the news of this significant investment which will support our growth strategy across the United States, a key market for Ingka Group,” said Peter van der Poel, Managing Director of Ingka Investments.
Ikea announced plans last year to open eight large stores and nine smaller planning studios and ordering centres in the United States, betting the world’s largest economy is set to overtake Germany as the world’s largest by sales in the next few years.
New York City has been a tough market for the furniture brand: Ikea closed its planning studio on Manhattan’s Upper East Side after less than three years in 2022 due to high rents and lower-than-expected foot traffic. The retailer also closed its Queens store in 2022, less than two years after opening, leaving it operating only one location in Brooklyn.
Ikea’s investment follows a recent trend of large corporations buying prime real estate in big cities: Kering and LVMH have recently spent more than €5 billion combined on large properties in Europe and the US.
Prada, Kering and LVMH have all announced recent investments on New York’s Fifth Avenue.
