IKEA Buys Out Lease for Queens Mall Store for $10M

IKEA is buying out the lease of its shuttered store at the Rego Park Mall in Queens for $10M.

Rego Park Mall, a two-building 954K SF indoor mall located on Queens Boulevard, is owned by Alexander’s, the former department store chain that become a REIT controlled by Vornado Realty Trust.

IKEA’s 112K SF store at Rego Park, which opened in 2021 as IKEA’s first smaller-format store in the U.S, was closed in December 2022 when the Swedish furniture giant pivoted to a different growth strategy.

According to an SEC filing, IKEA’s lease for the space doesn’t expire until 2030, but it included a right to terminate effective in March 2026, subject to the payment of rent through the early termination date and an additional payment of $10M.

In September, IKEA and Alexander’s inked a lease modification moving the lease termination up to April 1, 2024, the filing said. Under the modification, IKEA will pay its remaining rent due through March 16, 2026 and the $10M termination payment.

The Queens store and a plan-and-order studio that IKEA opened on Third Avenue in Manhattan both shut down in 2022 after less than two years of operation as the Swedish furniture giant pivoted to a expansion strategy centered on the South and the suburbs.

Last year, the largest owner and operator of IKEA stores, Ingka Holding BV, invested $2B in the furniture chain to fund an expansion including 17 new stores in the U.S., primarily in the South. The stores are expected to open between 2024 and 2026. When the expansion is complete, IKEA will have 51 stores in the U.S. and two plan-and-order hubs.

There’s large dose of irony in IKEA buying out the Queens lease from Alexander’s. In the 1960′s, Alexander’s built its largest store in Paramus, NJ. The store was famous for a  gigantic mosaic mural on its facade which was created by an artist using water skis in an aircraft hanger (it now hangs in front of Valley Hospital in Paramus).

Alexander’s closed the Paramus store in 1998 when the retail chain went out of business. In 2003, IKEA opened a 370K SF store at the location, at the intersection of state highways 4 and 17 across the highway from the Garden State Plaza. The Paramus store was IKEA’s second-largest North American outlet when it opened.

While IKEA is eliminating its footprint in Queens, the furniture giant isn’t giving up on the rest of Long Island. IKEA recently had a chance to unload its only remaining Long Island store in Hicksville, but it remains committed to the location in the heart of Nassau County.

Earlier this month, a group of local investors teamed to buy most of the 1.1M SF Broadway Commons mall in Hicksville at a steep discount from a Swiss bank.

The investors, who plan to upgrade the historic retail complex, bought it as the entity K/BTF Broadway LLC, which includes Rockville Centre-based BTF Capital; the KABR Group, based in Englewood, NJ; and AJM BRE Venture, a joint venture of Long Island firms AJM Real Estate and Burman Real Estate.

According to a report in the Long Island Business News, the partners bought 728K SF of the 1.1M SF retail complex, which sits on 68 acres. Not included in the transaction was a 240K SF IKEA store, which IKEA owns, and a 137K SF Target store, which Target owns.