Market Musings: IKEA to the rescue?

Mayor Breed is among supporters of the retail giant moving to 945 Market St.

Market Musings: IKEA to the rescue?

This week, we’re firing up the way-back machine. We’re going to a time before we all became doom junkies, pounding our phones like monkeys hooked up to a morphine drip in search of the latest COVID and AQI data, when something called “the Mid-Market Revitalization” was a top priority for local government and business and a major point of contention for the local protest industry.

Oh, you forgot about the Mid-Market Revival? Me too. I’m going to guess I’ve walked down Market Street between Third and Van Ness at least a thousand times over the past decade (the period during which the revitalization is supposed to have taken place). Sure, I’ve noticed the cranes, the construction detritus, the creeping presence of quirky, high-concept lunch spots designed to attract tech workers, but a revitalization? I’m not sure the massively ambitious Mid- Market project put the size of dent into Mid-Market’s attendant culture that it’d hoped for.

Sprinkle in a little COVID apocalypse and Market starts to look like its old self, sprawled out in front of a few new building facades, sure, but mostly otherwise unchanged.

Which is why it was so surprising to hear the news that Ingka Centres, real estate partner of Swedish furniture/culture exporter IKEA, has purchased the famously doomed building at 945 Market, on the corner of Sixth Street, ground zero of the stubborn “old” Mid-Market urban dystopia vibe. You may remember 945 Market — it came to life in 2016 as a flashy, would-be high-end mall called 6X6 (six stories, on the corner of Market and Sixth). “With close proximity(sic) to the prestigious Westfield San Francisco Center and the world famous Powell Street Cable Car Turnaround, 6X6 is sure to become the next ‘must-see’ spot for tourists!” crowed the 6X6 website.

Four years later, 6X6 has attracted zero tenants. Not a one. In 2018, its owners petitioned The City to allow them to convert 48,000 square feet of the 250,000 square-foot building into office space and still nobody showed up. Already sold once, in 2019, 6X6 survives on the back of its 167 underground parking spaces. They are very popular.

I’m not sure how a downtown San Francisco building attracts zero tenants in four years, even one located adjacent to a block that famously had to be spruced up to stand in for the dystopian 1980s Lower East Side of Manhattan for the film production of “Rent.” Maybe high-end retail at the corner of Sixth and Market was just too much of a stretch.

In 2018, Curbed called 6X6 a “canary in a coal mine” signaling the coming urban downturn. This was before COVID, and yet Ingka/IKEA, which already operates 45 properties in Europe and Asia, feels confident enough to make 945 Market its first foray into the U.S. market. Am I underestimating the power of IKEA?

The plan is this: a 70,000 square-foot IKEA, roughly 20 percent of the size of a big box IKEA, is scheduled to open in the fall of 2021, attracting other tenants (including dynamic food options) in its wake. If the concept sounds familiar, San Franciscans, that’s because it’s basically an IKEAfication the 2010 rebranding strategy that brought an urban Target to Metreon. The idea here — that downtown apartment and condo-dwellers want their Target and their IKEA but they don’t want to go to Colma or Emeryville for it — makes sense. Ingka’s general manager Gerard Groener, speaking recently to, put it this way: “Our urban projects are all about getting closer to our customers.”

It’s definitely worked for Metreon, which was on life support prior to its redesign, and it’s spurred Target to open more mini-Targets (Targettes?) throughout The City. Maybe this is the concept that will work at Market and Sixth. Of course, this all happened prior to COVID. Ingka, in choosing this downtown location, is betting against the post-COVID “will the last person to leave San Francisco please turn out the lights?” narrative. Maybe they put faith in retail vacancy rates which, somewhat surprisingly, were unchanged between Q2 of 2019 and Q2 of 2020. Maybe they simply have a ton of confidence in IKEA.

Our mayor certainly does. She’s hoping for an IKEA-fueled jolt to bring the Mid-Market Revitalization back on track. “The presence of this great retailer,” she said recently, “will be transformative of our Mid-Market neighborhood.”

We’ve heard this before, of course; London Breed isn’t the first San Francisco mayor hoping for a Mid-Market magic pill. Wouldn’t it be funny if, after a decade of projects one flashier than the last, that magic pill turned out to be colored with the simple blue and yellow of IKEA?

Larry Rosen is a San Francisco-based writer, editor, podcaster and recovering former Realtor. He is a guest columnist and his viewpoint is not necessarily that of the Examiner. The Market Musings real estate column appears every other week.

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