Just one year after TMG Partners and Alexandria Real Estate Equities acquired 6X6 in San Francisco, the joint venture partners have sold the 250,000-square-foot, cutting-edge retail asset to Netherlands-based Ingka Centres, a division of Ingka Group that owns most IKEA stores worldwide. With a $260 million investment, including the acquisition and redevelopment of the asset, Ingka Centres will transform 6X6 into its first mixed-use shopping center in the U.S., anchored by sister company IKEA.
Developed by Cypress Equities in 2017, 6X6 makes for a striking sight, featuring 270 lineal feet of floor-to-ceiling glass frontage at 945 Market St. in the city’s Mid-Market neighborhood. The sale of the property comes at a time when retail real estate investors have been remaining on the sidelines. “There was only one retail sale transaction in San Francisco in the second quarter of 2020,” according to a report by Cushman & Wakefield, which represented TMG and Alexandria in the disposition of 6X6. “The total retail sale transactions in the first half of 2020 were only a quarter of the transactions in H1 2019, which was $327.2 million.”
TMG and Alexandria Real Estate purchased a vacant 6X6 from Cypress in August 2019, paying $179 million for the asset, according to SEC documents, with Alexandria holding a 99.5 percent interest in the consolidated joint venture. Now, the partners’ sale of 6X6 to Ingka Centres has essentially solidified a future for the retail asset post-pandemic.
In a prepared statement, San Francisco Mayor London Breed describes Ingka Centres’ investment in 6X6 as a move that will be transformational for the Mid-Market neighborhood and a boost to the city’s bid to expedite recovery. As noted in the Cushman & Wakefield report, Moody’s Analytics statistics indicate that sales in San Francisco dropped by 10.6 percent year-over-year in the second quarter to an estimated $29.7 billion.
Ingka Centres plans to work with tenants and partners to redevelop 6X6 into a vital, sustainability-centric destination catering to the needs of the local community. The Ikea store will reflect the company’s current U.S. retail strategy of introducing smaller format locations in city centers. If all goes as planned, Ingka Centres will debut the Ikea store and the initial phase of the redevelopment project in the fall of 2021.