Ikea franchisee scouts for shopping centres as ‘big box’ spaces fill up

It may soon be possible to buy a Billy bookcase or a Poäng armchair at your local shopping centre, after Ikea’s largest franchisee, Ingka Group, said it is on the hunt for more locations in British towns.

Sebastian Hylving, Ingka Group’s managing director, told the property website Bisnow that the company was actively looking to acquire shopping centres in UK towns, which it can redevelop, installing Ikea as an “anchor” retailer. Ingka Group’s stores are responsible for about 90% of retail sales at the Swedish furniture giant.

The company, which is best known for its huge out-of-town “blue boxes”, opened its flagship London store on the site of the old Topshop on Oxford Circus in May last year, after buying the seven-storey, 239,000 sq ft building for £378m in 2021.

Ingka has also already bought two shopping malls in the UK, including Kings Mall in Hammersmith, which it bought in 2020, opening its first UK Ikea “small store” there in 2022. At the time of the acquisition, it said it expected the combined cost of buying and redeveloping the mall to be £170m.

In 2023, it added Churchill Square in Brighton to its portfolio for an estimated £145m; an Ikea store opened on the site of the former Debenhams there last August. It is understood that Ingka was also among the final bidders for the Merry Hill shopping centre in the West Midlands, the UK’s ninth-largest shopping mall.

Stephen Springham, head of retail research at Knight Frank, said so-called “big box” retailers like Ikea, whose traditional stores tend to be about 250,000 sq ft, are facing a pinch as out-of-town shopping locations fill up.

“Ikea can’t really expand out of town any more, so it’s kind of by default that they are looking at city centre locations,” he said. “There are 31 new [out-of-town] schemes supposedly in the pipeline by 2033, but they’re all pretty small. Not many are more than 100,000 sq ft.”

Research published last month by Savills showed out-of-town retail parks are “effectively full”, with just 1.8% of space still available, the equivalent of less than a year’s supply.

Nick Symons, a partner at FMX Urban Property Advisers, said Ingka’s strategy of buying up shopping centres would not only give it income, but also the pick of the best stores. “Trying to find the sort of stores they’re looking for in a leasehold format is hugely challenging,” he said. “If you can buy the scheme and create the income around you and you end up with an optimum store, that’s a double win.”

Ingka Group did not respond to requests to comment.

Photograph by Marcel Bonte/Getty Images