In the midst of a pandemic, a troubled mall project in San Francisco has a new owner, through a deal that could rejuvenate a stretch of Market Street.
Ingka Centres, the mall owner division of IKEA’s parent company, has purchased San Francisco’s long-vacant 6X6 shopping center, in a rare sign of retail expansion in the struggling Mid-Market district.
The beleaguered 6X6 mall at 945 Market St. has sat empty since it opened in fall 2016, grappling with diminished demand from retailers and nearby drug use and dirty street conditions. Its only active business has been a 167-space parking garage.
“We’re proud to confirm that Ingka Centres has purchased the 6X6 building at 945 Market Street,” IKEA told The Chronicle. IKEA said its U.S. retail division would play an “integral role” in the project, plans for which would be revealed “in the near future.”
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The arrival of IKEA, the world’s largest furniture retailer, could provide a significant boost to Market Street, which has seen shopping activity plummet during the coronavirus pandemic. The Swedish retail giant has no stores in San Francisco, with its closest location in Emeryville.
Ingka Centres operates 45 malls in Europe, Russia and China. The malls are anchored by IKEA stores but also offer entertainment and restaurant services to shoppers. In May, the division told Reuters that it was looking to enter the U.S. market.
“This investment and the addition of IKEA will be transformational for our Mid-Market neighborhood, and a welcome reminder that while the present is challenging, San Francisco remains a place businesses want to locate,” Mayor London Breed said in a statement. City staff spent months working to attract IKEA, she said.
“We’re going to continue working to bring new retailers, new employees, and new visitors back to the heart of our city to help speed our recovery,” Breed said.
The sales price wasn’t disclosed.
The six-story, 250,000-square-foot 6X6 was a sleek, glassy project that cost around $150 million to build. Developer Cypress Equities sought retail tenants for years, but sold the empty property almost exactly a year ago to Alexandria Real Estate Equities and TMG Partners.
The two companies were also unable to lease the property and the retail environment became more grim as the pandemic spread. A block east, Gap permanently closed its Market Street store, while the Westfield mall was closed for months during shelter-in-place rules.
But IKEA’s sheer size has made it more resilient than other major retailers, particularly compared to the apparel sector, which has seen multiple bankruptcies this year. IKEA reported retail sales of $48.9 billion in the 2019 fiscal year and had 211,000 employees and 433 stores.
“We enthusiastically welcome Ingka Centres to San Francisco, and believe that they will be a great addition to the city and the neighborhood which has been patiently waiting for this building to welcome tenants,” Matt Field, president of TMG Partners, said in a statement. “We are thrilled to be able to execute a signature retail transaction in this current environment.”
IKEA parent Ingka Group previously expanded in the Bay Area in 2017, when it acquired TaskRabbit, a San Francisco startup that links gig workers to jobs that range from house cleaning to furniture building to plumbing. The move bolstered IKEA’s digital offerings as online-only furniture makers such as Wayfair gain market share and retail giants like Walmart offer assembly services through Handy, a TaskRabbit rival.
Source: San Francisco Chronicle