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. Last Updated: 07/27/2016

Largest IKEA Shopping Project Forges Ahead

IKEA's largest outlet in the world is steadily going up on the northwest outskirts of Moscow, and officials close to the project said Monday that neither economic crisis nor the lack of tenants will delay the Swedish retailer from opening on schedule next year.

IKEA's store is one of five buildings under construction on a 40-hectare plot in the suburb town of Khimki. The structures will be part of a giant $100 million, 100,000-square-meter shopping center and is scheduled to open Oct. 10, 1999. The project, which is completely financed by IKEA, is the first of five supercenters that the Swedish giant plans to build in Moscow over the next five years.

The crown jewel and anchor of the shopping center is the enormous 30,000-square-meter IKEA furniture store, which the retailer says will employ 350 people. The mall will also boast a gallery with 20 to 30 boutiques, a food court and an entertainment center with a multiplex cinema and a bowling alley.

"It will be the largest IKEA center in the world," said Natalya Oreshina, a retail property consultant at Stiles & Riabokobylko real estate services, which is handling leasing for the mall. "The store itself is about double the size of what they have in the rest of Europe."

Project officials said they are forging ahead with their ambitious plans despite the financial storm that has swept 60 percent off the value of the ruble for one simple reason - Russian consumers still shop.

"Anytime anybody is doing anything with their house or apartment, they will go there," said Mark Stiles, partner at Stiles & Riabokobylko.

But with the crisis comes the inevitable hesitancy of retailers, both local and foreign, to commit to retail space in an unstable economy.

No contracts have yet been signed for space at the shopping center, Oreshina said. "There is a lot of interest in this project," she added. "Companies are prepared to go for it."

Contracts or no contracts, IKEA will still throw open the doors of its superstore on schedule, Oreshina said.

The opening of the rest of the complex will be delayed, however, if retailers don't commit to space this year, she said.

"If contracts are signed this year, other shops can open at the same time [as the IKEA store]," Oreshina said. "But if they are signed next year in January and February they will have to open in late October or early November."

Stiles and Oreshina declined to say how much IKEA is asking for rent. Oreshina said the price varies depending on the tenant. Retail experts said average rents for downtown space is $3,000 per square meter. Ramenka, a Turkish retailer that last week opened a giant Ramstore hypermarket in northern Moscow, leases space for $1,000 to $2,000 a square meter.

Ramstore is also competition for IKEA. Ramenka on Friday received a multimillion-dollar World Bank loan to construct additional shopping centers in the capital.

Stiles said the IKEA project had nothing to fear from the competition because of its sheer strength.

"We think it will help the entire market," he said. "The more good quality center markets there are, the better it is for everybody.

"What it will do is create an environment that is a very strong draw because of the major anchor tenants," he said.

With this retail base, IKEA expects to draw 100,000 customers to the complex every week.

This estimation is based on IKEA's experience in Eastern Europe and the demographics of Moscow, Oreshina said.

Analysts said the figure seemed reasonable, not withstanding the site's location being some distance from the center. Ramstore reports that 10,000 customers a day visit its first hypermarket in western Moscow and predicts that number will double at the new 20,000-square-meter hypermarket.

IKEA is taking into consideration the fact that its site on Leningradsky Shosse is located out of the city limits and thus may discourage shoppers. Plans are being drawn up to offer a shuttle from the city center, a service many large shopping malls in the United States and other countries offer.

The IKEA center will also have parking lots with a 7,000-car capacity.

The shopping center may become Moscow's only mall to never close, Oreshina said. "Some companies are asking us to keep it open 24 hours," she said.

If all goes as planned, IKEA will expand the 100,000 square meters of retail space at this first site in the upcoming years, project officials said.

Production is also on schedule for IKEA's four other huge shopping centers, they said. Within 18 months of the Leningradsky Shosse complex's completion, IKEA plans to open a second shopping center in Komonoko in southwest Moscow. The other three centers are expected to be constructed within similar time frames.

IKEA has 150 outlets in 29 countries around the world. The retailer's turnover in 1997 was $6 billion.