USA - Ikea, the Swedish furniture giant, is establishing a small-format store in a significant retail and office project on Fifth Avenue in New York City, an area where luxury brands have faced challenges post-pandemic, deterring shoppers.

Ingka Investments, the investment division of Ingka Group that owns the majority of Ikea stores worldwide, disclosed its investment in 570 Fifth Avenue as part of Ingka Group’s long-term strategy to enhance its presence in urban retail. The mixed-use building, developed by Extell Development, spans one million square feet and is slated for completion in 2028. According to CoStar data, the site was purchased by the company in December 2019 for USD 263.7 million.

The partnership between the two firms marks the largest development on Fifth Avenue in over 60 years, according to Ingka. With a 33% stake in the new Class A tower, Ingka Investments will have full ownership of the prime retail space where Ikea's customer meeting point will be located.

The new store will occupy 80,000 square feet spread across two large cellar levels with a corner entrance on Fifth Avenue, at the intersection of the Plaza and Grand Central Districts.

"Investing in Fifth Avenue goes beyond expanding our footprint; it's about changing how we engage with consumers and contributing to creating strong, sustainable economies and business communities," said Peter van der Poel, Managing Director of Ingka Investments, in a statement.

Earlier this year, Ikea announced plans to open four new small-format locations in the United States as part of a USD 2.2 billion expansion strategy to increase its presence in America.