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Manhattan’s ritzy Fifth Avenue, known for high-end stores such as Tiffany and Chanel, will soon have a more utilitarian tenant: Ikea.
Ingka Investments, the investment arm of main Ikea retailer Ingka Group, said it was taking a minority stake in a new tower being developed on New York City’s premier retailing street, paving the way for the Swedish furniture group to open a “customer meeting point” in the iconic shopping district.
The investment marks the latest push by Ikea to expand into the US market, but also continues a recent trend of big global retailers, including LVMH, snapping up prime real estate in major cities across the world.
Under the agreement announced on Monday, Ingka Investments, which owns the majority of Ikea stores worldwide, will hold a one-third stake in the 1mn sq ft building at 570 Fifth Avenue, in addition to preferred equity. US developer Extell Development Company will own the remaining two-thirds.
Ingka Investments said in a press release that it will have full ownership of the 80,000 sq ft retail space, where it plans to create an Ikea customer meeting point, but noted that it is still in very early stages of planning for the Ikea location.
Ikea said it opened more than 70 of these meeting points — which span small-format stores, pop-ups and planning studios — globally last year in an effort to improve “accessibility” for customers in large cities and metropolitan areas. Planning studios are much smaller than standard Ikea stores and allow customers to meet consultants and place orders for home delivery.
Financial details of the deal have not been released. Extell has been assembling the site, a less than 10-minute walk from Grand Central Terminal station, for almost two decades but construction has not yet started. The first tenants are expected to move in by 2028.
“We are excited to share the news of this major investment that boosts our growth strategy across the US, a vital market for Ingka Group,” said Peter van der Poel, a managing director at Ingka Investments.
Ikea last year said it planned to open eight large stores and nine smaller planning studios and order points in the US on expectations the world’s largest economy would overtake Germany as its largest country in terms of sales in the coming years.
New York City has been a challenging market for the furniture brand. Ikea closed a planning studio on the Upper East Side of Manhattan in 2022 after less than three years, due to high rent and lower than expected foot traffic. The retailer also closed its store in Queens in 2022 less than two years after opening, leaving it to only operate one store in Brooklyn.
Ikea’s investment follows the recent trend of large companies purchasing prime real estate in large cities. Kering and LVMH have recently spent more than €5bn between them on big real estate locations in Europe and the US.
Prada, Kering and LVMH have all announced recent investment on New York’s Fifth Avenue.
