After 18 months of construction, the country's largest Ikea will open its doors on Dec. 7 and bring a flood of shoppers to the retail complex near Greenbank Road and the Queensway.
Industry observers call the 427,000-square-foot facility one of the largest retail anchors in the city, and expect it to bring more business to nearby landlords, increase surrounding property values and spark new developments.
And as soon as the mall or other nearby buildings give up a tenant, there will be many other prospective retailers jostling to take its place.
'It was time for Ottawa'
Expansion in the works for 12 years
The sheer size of the Ottawa building - clearly visible to Toronto-based Ikea spokesperson Madeleine Löwenborg-Frick as she made a recent airplane landing in the nation's capital - has a lot of people talking about development potential in the area.
At 427,000 square feet, it more than triples the size of the old 113,000-square-foot store, which she said was the smallest in Canada.
"It was time for Ottawa," she said. The project took a dozen years to come to fruition due to discussions with tenants and the community about the traffic impact, she said.
A lot of the floor space is being given over to consumers - more shopping lanes, tripling the number of showrooms to 55, and adding a larger percentage of the products found in Ikea's catalogue.
For example, consumers will be able to order kitchen furnishings and bring them home on the same day, Ms. Löwenborg-Frick said. The old store just didn't have room for that.
"Overall, the entire shopping experience is going to be much better for the consumer with more inspiration, more products to choose from and ease of shopping," she said.
The total "investment" in the project was $100 million, including the construction contract with general contractor Aecon and the cost of moving from the old Ikea location to the new one, she said. The company will not break down the costs further.
According to Primecorp Commercial Realty, the new Ikea will increase traffic by about 40 per cent in the area. Peak Saturday traffic from 2003, when a traffic study was conducted, was 25,000 vehicles, said Nick Pantieras, a principal and investment broker for the firm.
He said he would call it Ottawa's hottest development area, except Primecorp just can't find space there to accommodate new tenants.
"Our national retail group has (received) requests on a weekly basis from many of the national chains that want to be positioned there, and we can't just find it," he said.
While smaller properties surrounding Ikea are available, they provide only a few thousand square feet - most prominently, a development "pad" to the east of the Chapters book store.
"Other than that, the site is maxed out."
Expectations build for retailers
New restaurant set to open on The Properties Group site
On the south side of Iris Street, The Properties Group has a set of buildings. One of the area's biggest attractors - according to a listing on its website - is its "close proximity" to the Ikea.
The property manager is currently building a 7,000-square-foot brew pub for a private group, which, "fingers crossed," will be open in the spring, said Fraser Paddison, who handles commercial leasing for the group.
"It was something that we'd been working on long before the new Ikea," he said, but added the larger building will bring more potential customers to the tenants.
"There's increased traffic and (awareness of the) whereabouts of the location itself," he said.
"Ikea is obviously a flagship centre, and people are driving there from outside of Ottawa as well. So being along that corridor, a lot of people on the site look at it as an opportunity."
The group currently has six tenants in 8,700 square feet of space, which is fully leased. Along with the new restaurant, about 4,000 additional square feet will soon be up for lease in the same building.
It's too early to say who will take the spot, but Mr. Paddison said it likely will be another eatery.
(We receive) requests on a weekly basis from many of the national chains that want to be positioned (near Ikea). - Nick Pantieras, principal, Primecorp Commercial Realty
"We're mainly looking for just retail users because they use the smaller spaces."
Healthy gain to Pinecrest/417 portfolio
New owner eyes expansion next to Globo/Chapters
Land values may continue escalating in the vicinity of Ikea, given how much Briq Nominee sold its property for in 2010.
Briq purchased an office building leased by Public Works at 2475 Iris St. for $15 million in 2006, and the Chapters/Globo retail plaza at 2735 Iris St. for $11 million, according to Ottawa real estate appraisal and consulting firm Juteau Johnson Comba Inc.
In September 2010, an undisclosed private investor bought the properties for $30 million.
"Ikea has to be one of the biggest retail anchors in the city," said Marc Morin, a broker at District Realty who represented both sides in the sale last year, in a 2010 interview.
"You've got triple-A tenants on both sides. It is a strong investment deal and shows (property) values in Ottawa have held and continue to appreciate ... (The portfolio is in) a great location and it's diversified between office and retail."
There are signs that a new building could be constructed on the property in the coming years.
Primecorp's Mr. Pantieras added that the new owner - whom he declined to identify - is "evaluating its options" for a small development area, currently part of the asphalt parking lot, just east of the Chapters.
"It'll be either a free-standing pad, or they will look at expanding the whole building down the road. It's nothing immediate. They want to see how things develop with the Ikea."
Shuffling Sears
Struggling retailer to expand footprint in Ikea-owned plaza
Despite a deep quarterly loss this month and skepticism about its long-term viability among some retail experts, Sears Canada is planning to expand its presence in Ottawa, Ikea said.
Ikea purchased the entire Pinecrest Mall at the same time it moved into the area in 1993. Current tenants include Michaels, Sears and the Bank of Nova Scotia.
Sears' 50,000-square-foot section is at the far east end of the mall, a location that is now just four feet away from Ikea's new front entrance.
"The Sears home building is blocking 50 per cent of the front of our store," said Ikea's Ms. Löwenborg-Frick. "We need to redirect the flow of traffic."
As such, when Ikea shifts into its new quarters, Sears will shuffle to Ikea's old spot, taking up about 79,000 square feet of the Swedish giant's vacated space.
That still leaves 18,000 square feet available for something else, but Ikea remained tight-lipped about the future of the space and how long other tenants plan to stay in their stores.
"We will not discuss any terms or conditions of our leases," Ms. Löwenborg-Frick said.
Sears Canada had a net loss of $46.6 million in its third quarter, which ended Oct. 30.
Last year in the same time period, it posted a profit of $20.8 million.
Tenants of Pinecrest Mall (square feet)
New Sears: 79,082
Linen Chest: 27,663
Michaels: 18,805
Corbeil: 8,008
Milestones: 6,071
Bank of Nova Scotia: 6,049
Montana's: 5,081
Vacant: 18,040
Source: Ikea
Ottawa's Ikea by the numbers - old vs. new
OLD BUILDING
Square footage: 113,000
Showrooms: 18
Checkout lanes: 12
Restaurant seats: 108
Shopping carts: 270
NEW BUILDING
Square footage: 427,000
Showrooms: 55
Checkout lanes: 55
Restaurant seats: 640
Shopping carts: 700
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