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IKEA Granted One-Year Extension on Permits for Assembly Square Store

An IKEA executive said the furniture giant is "committed" to the project, but there is no set date for construction to begin.

IKEA received a one-year extension from the Somerville Planning Board Thursday night on permits for its proposed store in Assembly Square.

However, an IKEA executive who spoke to the board stopped short of indicating when, or if, construction on the project would begin.

Doug Greenholz, vice president of real estate for IKEA's U.S. operations, indicated that corporate decision-makers at IKEA, which is a private company, have not officially given approval to move ahead with the Somerville store.

IKEA is a large Swedish furniture store known for its flat-pack furniture and modern design.

In receiving an extension on the permits, which would have expired as early as this August, IKEA now has an extra year to officially green-light the store, apply for building permits, which are separate, and begin construction. 

Competing internally for capital
When asked by planning board member James Kirylo when construction would start, Greenholz said, "I wish I could tell you that."

He said the proposed Somerville IKEA store is in competition, internally, with other proposed IKEA stores around the world. "We compete internally for capital on a global basis," he said.

When questioned by board members, Greenholz said that in the United States "we don't have any other pending projects at this moment" and that the proposed Assembly Square store is the only one in the United States at an advanced stage of planning.

Greenholz wouldn't tell Somerville Patch how many proposed IKEA stores, globally, are competing for capital at the moment, but he said that over the past few years, IKEA has opened about 10 to 15 stores a year around the world.

Frustrations voiced
Before granting the permit extensions, some planning board members expressed frustration with IKEA's slow progress.

Michael Capuano, Jr., said IKEA may be concerned with a broader global strategy, but the Somerville store "is, for us, a local project … it's where our Assembly Square is going to be developed or not."

He expressed concern that IKEA would "keep pushing and keep pushing" the dates back, and then eventually decide to build in "Dubai."

"That hurts people here," he said.

Joseph Favaloro said, "It's a little hard for us to buy that we're 14 years into this process and now you're going to Sweeden to get the money."

IKEA first bought land in Assembly Square in the late 1990s.

Greenholz responded by saying, "We've been through many twists and turns with this project." He pointed to legal problems in the early 2000s, when Mystic View Task Force, a community group, filed suit related to plans for the store. That took years to resolve, Greenholz said. After that, there was a land swap deal with , which owns much of Assembly Square, that took years to hammer out. The land swap was complete in 2009, Greenholz said, but that timing "was unfortunate due to the economic crisis."

A squabble over permit expiration dates
There was also ambiguity as to whether or not IKEA needed to apply to the planning board for permit extensions in the first place.

One of the permits was originally set to expire in August, but state legislation passed last summer granted a two-year extension to such building permits across the state—at least in IKEA's view.

The city of Somerville took a different view. It interpreted that state legislation differently, and sent a letter to IKEA in May, according to Greenholz, stating that the furniture store's permit would, indeed, expire in August.

In filing for and granting the permit extensions, IKEA and the city, respectively, have agreed to split the difference; the permits are good for one more year.

The city is pressing IKEA to move forward as IKEA is pressing for more time.

Michael Louca July 19, 2011 at 02:08 AM
they better build this ikea
Joe Beckmann July 19, 2011 at 01:24 PM
With a more aggressive tax policy - at both state and city level - we might see if we're being strung along or they are serious: why do they pay a low tax rate on a high visibility site? Given the DIF financing and the $50,000,000 new subway station - neither of which your article mentions - there are some serious public benefits riding on this obscure Swedish decision making system. And, by the way, are there any restrictions on the slavery-like practices of Ikea contractors which has come out in the past six months? When they first appeared as real estate saviors, they seemed holy with Scandinavian sanctimony. Now they seem as exploitative as Jordan Marsh (now Macy's or K-Mart) ever was.

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