Downtown San Francisco Is The Launching Pad For A New Ikea Concept In The U.S.

While some are fleeing San Francisco’s sprawling Market Street, one of the world's best-known retailers is doubling down on a long-term commitment to the city's future and treating the beleaguered spot as a launchpad for a new strategy in the U.S.

Following last summer's opening of a new location at 945 Market St., Ikea took the next step in the rollout of a new concept called a "meeting place" by opening a coworking space atop its new store. Meeting places bring together a mix of uses under one Ikea-owned roof and are part of an effort by Ingka Group, which includes Ikea and Ingka Centres.

Instead of opening a standalone Ikea store, the Ingka Group bought the entire 250K SF, six-story mixed-use building on Market Street, with the intent to create a meeting place. An Industrious coworking space is already open, and a food hall is expected to join soon.

Ikea and Ingka Centres are targeting aggressive growth in the U.S., and the new meeting place model will be at the forefront of that expansion.

The model aspires to push beyond traditional retail, by offering not just an Ikea retail store but also other uses that make the space desirable for working, meeting and dining, as well as shopping. 

San Francisco’s Market Street location offers both the city's density and easy access to public transportation for customers and workers, Anna Steyn, new business and innovation leader at Ingka Centres, told Bisnow.

The location does bring challenges. Since the pandemic emptied many of downtown San Francisco's office towers, the area's retail has struggled. The most notable closure came last year when Nordstrom shut down its 30K SF store at the San Francisco Centre mall.

Former owners Westfield and Brookfield Properties walked away from the mall last summer after the Nordstrom closure. Office Depot, Walgreens and even Starbucks have shuttered downtown San Francisco locations since the pandemic.

But a meeting place, while anchored by an Ikea store, seeks to be more than just a home retailer, giving Ingka Centres confidence in its model.

“The entire offering beyond that is tailor-made to what the local community around it wants and needs, and our focus is to create a holistic experience and a place where people can shop, work, play and be inspired,” Ingka Centres' Global Expansion and Development Deputy Director Karoline Nader-Gräff told Bisnow.

After San Francisco, Nader-Gräff said they are looking at markets in the Sun Belt that have seen a lot of population growth, especially in suburban markets with high tenant demand and low vacancy rates. 

“The signals and development we’ve seen, it’s very positive that we can now make very exciting joint investment and expansion opportunities in some key markets across the U.S.,” she said.

Ingka Centres sees the United States as a great market for expansion, largely because it has one of the largest retail markets globally, she added.

Ingka Centres has more than 30 meeting places around the world, but the San Francisco location is the first of its kind in the U.S.

Ideally, instead of being a once-a-month pitstop for new towels or a bookshelf, the meeting place becomes a more frequent destination for remote workers and shoppers alike.

The 46K SF top floor of 945 Market St. is home to the Hej!Workshop, a coworking space co-launched with Industrious that opened its doors in mid-January.

It is just the second Hej!Workshop that Ingka Centres has launched globally. The only other one in the world is in a meeting place space in Stockholm, Sweden, that includes a gym, shops and restaurants, and coworking space.

Industrious runs the day-to-day operations of the coworking space in San Francisco, and so far, demand is no different from their other locations. The remote workspace operator has six locations in the Bay Area, making the Hej!Workshop its seventh space.

“We’ve seen our demand continue to grow since coming out of the pandemic, and [there is] exponential growth for a hybrid work solution,” Industrious Chief Operating Officer Liz Simon said.

The Hej!Workshop coworking space is similar to other Industrious offices in terms of amenities, Simon said, and the difference lies in the design, which was a collaboration between Ikea and Industrious.

Demand for coworking space in San Francisco is on par with their other Industrious locations nationwide and globally, Simon said, and the rise of hybrid work has only made their model more appealing to employers and independent employees alike.

The partnership is one that Industrious hopes to build on at other meeting place concepts that Ingka Centres could launch in the future.

Ingka Centres is not waiting to lease out all of the space at 945 Market St. before launching another meeting place concept in the United States, Nader-Gräff said.

“We’ve been very focused on building a strong team locally [in San Francisco], and now we’re looking at quite a lot of different opportunities in the pipeline, and we hope we’ll execute on them in the next 12 months,” Nader-Gräff said.

Expansion doesn’t mean ground-up construction, necessarily. 

Due to vacancy rates in the retail sector nationwide in the United States, Ingka Centres may consider repurposing existing spaces or buildings, Nader-Gräff said. 

Ingka Centres could also consider site expansions at existing IKEA store locations.

“We have a very large real estate portfolio globally, and what we’re constantly doing is looking at possibilities together to make sure we’re keeping our existing assets current and strong and looking to see if there’s additional building rights on site,” Nader-Gräff said.

In San Francisco, leaders will be watching how the Hej!Workshop performs in an American urban environment in addition to anything they can learn for other expansions across the market.

The next addition to 945 Market St. will be a food hall, called Saluhall.

The property still has space to lease, and while Ingka Center leaders could not offer specifics, the focus for meeting place properties is to offer opportunities for people to meet, connect and be well.

It’s unlikely additional tenants will be companies using a floor for office space, instead retailers, restaurants and possibly gyms or wellness centers are more likely strong candidates for the Market Street location, Ingka Centres leaders told Bisnow.

Ingka Centres leaders see the potential for the 945 Market St. location and acknowledge that since they bought the building vacant, their vision is long-term in nature.

“We believe in the long-term future of San Francisco, and it’s a great city, and it has too much to offer,” Steyn said.