Swedish furniture-giant IKEA announced last week that it will set up a 380,000-square-foot store by fall 2015 in the city of St. Louis, right along the northern side of Interstate 64 near the Vandeventer Avenue exit.
IKEA has gained worldwide popularity for its relatively inexpensive furniture and flexible designs that can fit into a variety of living or work spaces. The company grosses $36.4 billion globally and $4.1 billion in the United States. According to the St. Louis Business Journal, IKEA’s projected annual sales in St. Louis will be more than $100 million, with land acquisition costs at about $30 million and construction costs at $80 million.
Otis Williams, executive director of the St. Louis Development Corporation, said all of the 38 U.S. IKEA locations draw customers from far beyond the cities they are located in.
“It has always been successful,” he said. “It’s significant that a major name retailer is locating in the city. It gives us the energy for getting other major retail stores to locate here. As the retail comes, they bring jobs for the citizens in the area.”
IKEA leaders expect to create more than 500 jobs during the construction phase and about 300 positions when the new store opens.
IKEA will locate within the CORTEX Innovation District, a $2.2 billion research-park project.
Being within the bioscience district, IKEA will receive a portion of CORTEX’s $168 million tax-assistance from the City of St. Louis. However, Williams said he won’t know exactly how much tax assistance IKEA will receive until after the Tax Increment Financing (TIF) Commission hearing on Dec. 17.
As part of CORTEX’s TIF agreement passed in December 2012, the city has approved $37 million in TIF assistance for the redevelopment area that will include IKEA and a future residential/retail project. The store is expected to generate $250 million in tax revenue over the TIF’s agreement 23-year time period.
Because it will receive city funds, IKEA must abide by the city’s minority participation and workforce goals for construction. The project will follow to the mayor’s executive order (#28) goals of hiring 25 percent minority business enterprises (MBEs) and 5 percent women business enterprises (WBEs).
IKEA must also follow the city’s 2009 ordinance (68412), which sets forth workforce goals on city-funded public works contracts of 25 percent minority, five percent women, 20 percent local workforce and 15 percent apprentices.
The new Whole Foods and City Walk building in the Central West End must also follow the city’s workforce guidelines. The $60-million seven-story mixed use development at 10 North Euclid began construction last week. The City Walk development received $10 million in city tax assistance.
The building’s first floor will feature Whole Foods, a high-end natural and organic foods store. On the upper six floors will be about 177 apartment units. The building also includes a 445-space garage for residents and customers, as well as a club/fitness center.
With the two new retail stores comes entry-level jobs for local residents, said Williams.
St. Louis city has a law on the books that requires companies who receive tax incentives to provide “permanent employment opportunities for the unemployed” and “economically disadvantaged.”
Few people know about the 1987 “First Source Jobs Policy” ordinance (60275) because it’s been waived on every TIF application since 2002, according to a NAACP study. The ordinance requires these companies to hire “entry level” applicants from a “first source” list – and that list is held by SLATE.
The TIF Commission did not require the policy to be included in the TIF agreements for CORTEX or North Euclid.
Williams said he could not remember if he had spoken with IKEA or CORTEX about following the First Source Jobs Policy.
IKEA spokesman Joseph Roth said, “We have participated in a variety of types of programs aimed at ensuring under-served communities have access to opportunities resulting from IKEA coming to town. And we plan to do so in St. Louis as well.”
When asked if the CORTEX district is following the policy, Karin Hagaman, director of project development, said “CORTEX is working closely with SLATE to implement the policy in the district.”