After more than a decade of planning, the furniture giant Ikea has decided not to build a second Massachusetts store at Assembly Square in Somerville, punching a hole in the city’s effort to redevelop a huge swath of former industrial property near its border with Boston.
An executive with Ikea informed the city of its decision Thursday, writing to Mayor Joseph Curtatone that the company believes its store in Stoughton is sufficient for Massachusetts and that it will now sell the Somerville property.
“Given the nearly 15 years of time and millions of dollars invested in advancing the project to this point . . . it is unfortunate that now we will not be able to participate in making it come to fruition,” wrote Doug Greenholz, US real estate manager for Ikea.
The announcement did not surprise Somerville officials. Many had questioned whether Ikea would move forward with the store after repeated delays in recent years. The Swedish retailer first became involved in redeveloping the 66 acres at Assembly Square, named for a former Ford Motor Co. plant., in the late 1990s. Its permit to construct a 340,000-square-foot store was due to expire in mid-August.
Curtatone, while expressing disappointment, said Ikea’s decision will not undermine the broader redevelopment of the property, where the developer Federal Realty Investment Trust is leading a $1.5 billion project called Assembly Row.
The development is planned to include outlet stores, restaurants, offices, a park on the Mystic River, and hundreds of new homes. Construction is under way on two apartment buildings and a large retail facility. And the Massachusetts Bay Transportation Authority has started to build a new Orange Line station at the edge of the property.
“For people that were excited about an Ikea store coming to the city, they will be even more enthusiastic about what is going to follow in its place,” Curtatone said. “I have nothing against Ikea. They’ve been an honorable partner. But its decision to leave removes an impediment for other potential development opportunities.”
Curtatone said the city is unlikely to support having another big-box retailer on the property and instead favors a mix of uses similar to what is already being built at Assembly Row. Grocery chains have shown interest in opening in the immediate area. Walmart Stores Inc., for instance, had expressed interest in opening a grocery store at the edge of Assembly Square, but later abandoned its efforts.
Ikea’s departure will delay development of a 12-acre section of Assembly Square, where the city, state, and federal governments have invested tens of millions of dollars to build roads, utility lines, and the MBTA station to help jump-start construction.
An aide to Curtatone, Thomas Champion, said the loss of Ikea will not affect the city’s ability to repay money it borrowed to fund infrastructure improvements. He said the city will be able to repay the bonds using tax revenues the Assembly Row project will generate.
Ikea said it will work with Somerville officials to ensure that any alternate use of its property is consistent with the city’s plans for the area.
The retailer has opened only three US stores since 2009 and does not plan to open any this year or in 2013.
Don Briggs, the Federal Realty executive in charge of the Assembly Row project, said the company will consider buying the Ikea property. He expects the land to attract strong interest from developers.
“You can look around the region, and I can’t see another opportunity like this,” he said. “This is a place that’s really happening, that’s transit-oriented and is a new neighborhood close to downtown Boston.”
Briggs said AvalonBay Communities Inc. is expected to complete construction of the first 200 apartments at Assembly Row in fall 2013. The company will open another 250 units by early 2014. Several stores are also expected to open around that time.