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As development of Assembly Row continues, IKEA site remains in limbo

In Somerville, Mike DiBenedetto worked on construction of  the Assembly Row project near Assembly Square.

Jim Davis/Globe Staff

In Somerville, Mike DiBenedetto worked on construction of the Assembly Row project near Assembly Square.

SOMERVILLE — An equestrian-themed circus called Odysseo will set up a 10-story, white big top on 12 acres of land where IKEA, the Swedish retailer, abandoned a plan to build a giant furniture store at Assembly Square.

Cavalia, the Canada-based company that runs the Cirque du Soleil-inspired show, received permission from the Somerville Board of Aldermen to stage the production for eight weeks, starting Aug. 7.

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The colorful show will bring some life to the long-idle IKEA site, and city officials think those who attend will provide a significant boost to local businesses.

But after the circus packs up, the future use of the land remains unclear.

Federal Realty Investment Trust is investing $1.2 billion to build Assembly Row — a mix of outlet stores and upscale apartments, trendy eateries, and office space — on 45 acres adjacent to the IKEA site. Federal Realty would also like to buy the 12 acres and build a 100,000-square-foot supermarket, but the plan is stuck in a zoning dispute.

The snag is a rare setback for Federal Realty in Somerville, where it has enjoyed broad support for Assembly Row. About $130 million in state and federal funding has been invested to build roads, utilities, and an MBTA Orange Line stop.

The Board of Aldermen has taken no action on the Maryland-based developer’s request to change the zoning, which now limits buildings at the site to no more than 50,000 square feet.

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Zoning for Assembly Square, a sprawling 143-acre parcel named for a former Ford Motor Co. plant that closed in 1958, was written in 2004 to maximize development on one of the last major industrial parcels in a land-poor city.

“We didn’t want to see big-box type retailers at Assembly Square,” said William White, a 16-year member of the Board of Aldermen and the current chairman. “Our view was, development of more than one store would bring in more tax dollars. We don’t have much land in Somerville for intensive development.

“A number of aldermen, myself included, don’t want to see that size of a building for a single use,” said White. “A supermarket there is fine, but just not one of that size.”

But Federal Realty, which has an option to buy the IKEA site from the Swedish-based retailer, does not appear ready to relent.

“The zoning change remains critical [to Federal’s] decision to acquire the site,” Andrea Simpson, the developer’s director of corporate communications, wrote in an e-mail. “The community has requested additional information regarding the proposed change. We plan to provide that information and pursue the zoning change.”

Simpson declined to name any grocery vendor her company is talking to in regard to the space in Somerville.

Since 1998, Somerville Mayor Joseph A Curtatone has fought hard for the Assembly Square development.

In May 2011, he persuaded aldermen to authorize a $25.8 million bond to finance roads and water systems, funding he thought was critical to getting the project off the ground.

“When you’re building a new neighborhood, you need to build the infrastructure,” Curtatone said during a recent interview at the site.

The first phase, due to be completed at the end of 2014, will include outlet stores and restaurants, according to Federal Realty. A 6-acre public park, with an amphitheater for outdoor performances, is due to open in July.

“We’re on time and on budget,” Don Briggs, Federal Realty senior vice president of development, said of the first phase. “What comes after will depend on market demands. Potentially, there could be a hotel and office space.”

Brooks Brothers and Chico’s were the first two national retailers to sign leases for outlet stores and will open next year. Burger Dive, which opened last November, and Starbucks, which opened May 1, were the first tenants.

Earls, a casual dining chain based in Canada, and J.P. Licks, the Boston-based ice cream chain, recently signed leases. Legal C Bar, a unit of Legal Seafoods, and Papagayo, a Mexican restaurant with locations in South Boston and Charlestown, signed up last September.

Some local shoppers who frequent Assembly Square Marketplace, a strip mall also owned by Federal Realty on the site, hope the development includes their favorite shops.

“I’d love to see a Dunkin’ Donuts here,” said Diane Collins, 56, seated on a bench outside Kmart.

“I’d like it if they had a J. Jill or a Gap, ” said Babette Meyer of Cambridge, who said she sometimes drives to Kittery, Maine, to shop at outlets.

But Dottie Lopes of Wellesley, who said she visits friends in Somerville every weekend, isn’t convinced that Assembly Row will bring new bargains.

“It depends on what outlets they have,” said Lopes, who visited Christmas Tree Shops one recent Sunday. “I don’t always think [outlet] prices are all that great.”

A four-story building anchored by an AMC movie theater will house many of the restaurants and shops. The city’s licensing commission last week approved liquor to be sold at the movie theater, Papagayo, and Burger Dive.

Restaurants and retailers will also be located on the first floor of two apartment complexes and an office building. “We are in the final stages of lease for a good number of our spaces,” said Simpson during an interview at the site. “Just over 60 percent are leased or under commitment.”

Two apartment buildings — Avalon at Assembly Square with 195 units, and AVA Somerville with 243 units — are under construction. Rents will range from $1,900 for a studio at AVA to $3,500 and up for a three-bedroom at Avalon, said Scott Dale, a senior vice president for development at AvalonBay Communities.

“We are marketing to people who want a unique lifestyle, with access to the city, at a price point that is below what they would pay in Boston,” Dale said.

Apartments will open in phases, about 50 to 75 units at a time, and the first units could be ready by November, Dale said.

A four-story building due to be completed by the end of 2014 will include 100,000 square feet of office space. The space will be marketed to technology firms and other emerging industries that can’t afford pricey rents in Kendall Square in Cambridge or the innovation district on the Boston waterfront.

“Kendall Square has a critical mass of biotech and research companies,” said Briggs. “We will offer a better price point. It will be lower than Kendall Square.”

Kendall Square office rents now range from about $48 per square foot to $65 per square foot, depending on the size and location, according to the Boston office of Cushman & Wakefield, a national commercial real estate services firm.

“It is my understanding that Assembly Row is quoting prices in the high $30s to low $40s,” said Kevin Winters, executive director of the firm’s Boston office. “I think they’re going to do well, because the price is a significant discount compared with Kendall Square.”

Kathy McCabe can be reached at kmccabe@globe.com. Follow her on Twitter @Globe-KMcCabe.

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