IKEA Enters Colorado with Groundbreaking on 415,000-SF Denver-Area Store
- May 07, 2010
May 7, 2010
By Barbra Murray, Contributing Editor
There are signs of life in Denver’s retail market and Swedish affordable home furnishings retailer IKEA is expected to further improve conditions as it breaks ground on a 415,000-square-foot store in Centennial, Colo. With the start of construction, IKEA has paved the way for its debut in the state of Colorado.
IKEA Centennial will occupy a 13.5-acre parcel just off Interstate 25, about 15 miles south of Denver. In addition to shopping space, the property will feature a 500-seat restaurant and 1,500 parking spaces. Development of IKEA Centennial will produce an aggregate 500 construction jobs, and when it opens its doors, the store will have approximately 400 employees on staff. Centennial-based Saunders Construction Inc. is the project’s general contractor, and is on target to wrap up construction in fall 2011.
Metropolitan Denver’s retail market appears to be in recovery mode. Its vacancy rate dropped from 8.1 percent in the first quarter of 2009 to 7.7 percent in the first quarter of 2010, according to a report by real estate services firm Grubb & Ellis Inc. Much to analysts’ surprise, the first quarter brought an initial resurgence in customer spending and fewer than expected store closures. For IKEA Centennial, there’s already a strong customer base in place.
“We have nearly 50,000 customers in Colorado without even having a store there; they’ve been shopping online and at our stores in Utah and Arizona,” Joseph Roth, Director of U.S. Public Affairs based out of IKEA North America’s Conshohocken, Penn. headquarters, told CPE. “We only have 37 stores in the country, so there continues to be a market for us. People put a premium on good furniture that’s affordable and that’s what we offer.”
IKEA North America’s parent company, Helsingborg, Sweden-based IKEA, is a private entity and will not publicly reveal IKEA Centennial’s development cost. However, with the City of Centennial involved, there are some numbers floating around. IKEA approached city officials for their assistance in making the project a reality a few years ago, and in 2008, the international furniture retailer signed a development agreement with Centennial that called for the city to reimburse IKEA $18 million of the $36 million required for public and public-related improvement expenses involved in the project.
The entire price tag for the new store is quite a bit larger, according to the 2008 deal. “The cost to build a facility like this on the site they’ve selected is pretty enormous,” Corri Spiegel, Economic Development Manager for the city of Centennial, told CPE. “We don’t know what the current cost is, but it was over $79 million at the time of the development agreement.”
The impending arrival of IKEA Centennial has already impacted the commercial market in the area. “The store will definitely spur additional retail; there’s definitely been a kind of buzz around what’s going to happen now that construction has begun,” Spiegel said. The Grubb & Ellis report also notes that the area has experienced a rise in tenant activity and a drop in vacancies with the announcement of the store’s planned 2011 completion date.