Bronfman to Build Commercial Center by New Ikea

Contrary to reports, Ikea has not chosen venue for second store yet

A lot of cities have hustled to grab a headline by declaring that Ikea will build its next branch there. But sources near the Bronfman group, which has bought the Ikea Israel franchise, says no final decision has been made. One will be, though, within 30 days, the sources promise.

The Bronfman group relates tremendous importance to the location of the next Ikea. The first one, in the coastal city of Netanya just off the main Tel Aviv-Haifa highway, was a stunning success, but this time the considerations go beyond Ikea's success itself. Sources near the group divulged to TheMarker that a strategic decision has been made: building the new store will be an opportunity for the group to enter the Israeli real estate sector, in both commercial and office properties.

The group means to build a commercial center right next door to Ikea II, based on the assumption that just as happened in Netanya ? the Ikea outlet would prove magnetic and stimulate the establishment of a whole commercial area around it. Today the Netanya area around Ikea sports a Power Center, a Tiv Taam outlet, shopping and more.

The upshot is that Bronfman et al are looking for a massive site of at least 20 acres (80 dunams). The Ikea store itself would span 5 acres in two storeys, not including parking space. Another 5 acres would be allocated to stores and the rest to other businesses that lease space, or for offices.

Sources near the group say they do not mean to get into a race to buy shopping centers in Israel, but would be amenable to examining attractive offers, if any materialize.

The sites in question, so far, include one in Holon, one in south Rishon Letzion, Yavneh, and the Ashdod intersection, among others.

Ikea's model is one outlet per two million residents. Bronfman and the Sweden-based Ikea group expect the second branch will double the store's sales in Israel within four years. In 2005, the single Ikea branch that exists achieved NIS 345 million in sales.