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Gary Barnett has a new partner and retail anchor for a Fifth Avenue office and retail development, and that partner typically goes best with a side of meatballs.
Ikea will open an 80K SF retail space at the base of Extell Development Co.'s 570 Fifth Ave. project, and Ingka Investments, the investing arm of parent company Ingka Group, has purchased a one-third stake in the 1M SF project, according to a release.
In the space at the podium of the tower, Ikea plans to house a new retail format, which it described in a press release as a “customer meeting point.” The building is scheduled to be completed by 2028.
The deal is part of Ingka’s plan to improve its retail presence in city centers, Javier Quiñones, CEO and chief sustainability officer of Ikea U.S., said in a statement.
“While we are in the very early stages of planning for the IKEA location, 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,” he said.
The group has opened Ikea stores in Tokyo, Madrid, Paris and London since 2019. It also has studios planned in Vienna, Barcelona, Berlin and Prague, according to the release.
Extell plans to keep its two-thirds stake in the mixed-use tower, while Ingka will also inject preferred equity into the project, Bloomberg reported.
“We have been working on assembling this project for almost two decades,” Barnett, Extell's chairman and CEO, said in a statement. “Ingka Investments’ substantial commitment allows us to move forward with the construction and leasing of the best new office building in New York.”
Ingka’s moves on Fifth Avenue follow months of high-end European fashion houses purchasing their own Fifth Avenue real estate. Around 54% of retail sales and 60% of the dollar volume last year came from end-user retail deals, with luxury retailers continuing to seek space on the famous retail corridor this year.
Prada and Kering, the parent company of Gucci, combined to pay nearly $2B for real estate a few blocks up Fifth Avenue. LVMH is also reported to be eyeing space on the world's most expensive retail strip.
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