The owner of Ikea has bought Topshop’s former flagship store on Oxford Street, once the jewel in Sir Philip Green’s retail empire, for an estimated £378m, creating a new central London home for the Swedish furniture brand.
The deal to buy the long leasehold on the building, which includes the now vacant 9,290 sq metre (100,000 sq ft) Topshop outlet as well as a Nike Town store and a shop used by the footwear brand Vans, will complete in January.
It completes the sell-off of the assets of Green’s Arcadia Group empire, which collapsed into administration in November.
Ikea plans to open a store in the building in autumn 2023, focusing on home-furnishing accessories such as lamps and curtains. There will also be a cafe and a range of room sets on display, with items from the retailer’s full range of furniture available to buy for home delivery.
Funds from the deal will pay off a £312m mortgage taken out on the building in 2019 with the hedge fund Apollo Global Management, while about £40m more is expected to go to Arcadia’s pension fund, which had a deficit of about £300m at the time of the group’s demise.
Peter Jelkeby, the head of Ikea’s UK and Ireland business, said Ikea was looking for more stores in city centres as it wanted to be accessible to a broader range of people and link its online operation and physical outlets more closely.
“Even though online shopping continues to accelerate at a rapid pace, our physical stores, large and small, will always be an essential part of the Ikea experience – as places for inspiration and expertise, community and engagement.
“Bringing Ikea to the heart of Oxford Street – one of the most innovative, dynamic and exciting retail destinations in the world – is a direct response to these societal shifts.”
Jelkeby expects the homewares market to continue to be strong as people update their living space to cope with new demands including working from home, although he said Ikea, like many other retailers, was also suffering from supply chain difficulties, with stock held up at ports, and a shortage of delivery drivers.
The new tenant in one of the most prominent spots on Oxford Street comes after numerous stores in the premier shopping destination closed during the pandemic.
Debenhams, Next, River Island and Gap have shut branches on the street, while Marks & Spencer and John Lewis have applied for planning permission to convert some of their store space into offices.
Krister Mattsson, the managing director of Ingka Investments, which is part of Ikea’s parent group, said: “We firmly believe in the long-term value of the real estate market in London.”
He said the investment demonstrated continued commitment to the UK, where the group recently invested in the location technology company what3words and Winnow, a company that works to reduce commercial food waste.