Winnipeg Free Press - PRINT EDITION

City, provincial officials knew landing IKEA was a big deal, but couldn't tell anyone

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What was once ugly bush and a place big shipping containers were loaded off trains onto trucks will in days be the mecca for shoppers from Thunder Bay, Regina and all points between.

Winnipeg's new IKEA throws open its doors Nov. 28, ending more than four years of behind-the-scenes political wheeling and dealing in which some of the players couldn't even tell their wives what they were working on -- it was that big a secret.

Some even needed a quick lesson in what the Swedish retail giant is all about.

Such as then-premier Gary Doer.

Being a male of the species, his staff had to quietly take him aside to explain to him IKEA is to women what the Winnipeg Jets are to men.

Simple, yes. Sexist, yes. Productive, absolutely. Because the light bulb went on in Doer's head.

A similar scene played out earlier at city hall. And like Mayor Sam Katz and his planning lieutenants, Phil Sheegl and Barry Thorgrimson, Doer and his staff needed no convincing IKEA and, as its website boasts, "almost 400,000 square feet of smile-inducing home furnishings and accessories in one breathtaking space" would be a good thing for Winnipeg and the province.

But how to make it happen?

Initially, there was some skepticism among some higher-ups in the provincial bureaucracy that the destination store would put down roots in Winnipeg.

"We weren't quite sure it was real," a provincial source said.

But that was soon dispelled.

That's because the one crucial part of the plan had already been put together by developer Michael Nozick, the president of Fairweather Properties Inc.

His company had assembled the 80 hectares of land at Kenaston Boulevard and Wilkes Avenue needed to anchor the IKEA store. The master plan also calls for a separate 200,000-square-foot big-box store, two stores in the 140,000- to 200,000-square-foot range, numerous smaller stores, a 500-unit condo development, a 100-room hotel, a 16-screen movie theatre and a 150,000-square-foot office park.

That land assembly started in the summer of 2002 when CN Rail said it was moving its central depot for truck-train container traffic, located south of Wilkes near Kenaston, to Symington Yards on the other side of the city.

Besides freeing the land, CN's decision eliminated 60,000 trucks a year from Kenaston, the main culprit behind nerve-wracking traffic tie-ups.

The second door for IKEA opened a year later, thanks to then-prime minister Jean Chrétien's government, which agreed to co-fund the expansion of the Red River Floodway. That freed other public money for the long-awaited Kenaston underpass at the CN rail line.

The $30-million underpass, opened in early 2007, was built with the intention of widening southbound Kenaston at some time far in the future.

No one other than the few who held the IKEA-is-coming secret had any idea that future time would happen so fast.

In fall 2008, Nozick came knocking at city hall's door to explain what he wanted to do.

"The development that Mr. Nozick and Fairweather presented to us was a very exciting opportunity," recalled Sheegl, who was the city's property director at the time.

There had been numerous rumoured locations for a potential IKEA store bandied about over the years, but Sheegl said the eventual location wasn't one of them.

The Seasons of Tuxedo, as the retail project would be known, consisted of 19.2 hectares on both sides of the newly built Sterling Lyon Parkway west of Kenaston Boulevard. IKEA would be the anchor tenant.

The city considered the former railway property a "visual blight." What they were now being promised for this land would be the most talked-about city retail development in at least a generation.

Fairweather, the developer, didn't even disclose to the city that IKEA was going to be the project's anchor tenant until the municipality signed a confidentiality agreement. "The hardest thing in my entire life was to keep the secret from my wife (that) IKEA was coming to Winnipeg," said Thorgrimson, the city's current property director. "When I finally revealed that happening, it was just euphoria."

 

The city put together what it calls its tiger team to work with the developer to map out project timelines. Included were representatives from the public works, waste and water and property and planning departments, Winnipeg Transit and others.

On Broadway, the province only referred to it as "the project."

The developer retained its own engineers to do traffic studies and analysis. The city and the developer agreed street widening would be required for both Kenaston and Sterling Lyon.

"We were able to creatively work with the developer to come up with an agreement whereby they would front-end our responsibilities in widening and we would use the incremental taxes of the development to pay them back," Thorgrimson said.

Within weeks, the city and province said they'd spend up to $18.5 million (the province was in for $8 million of it) to complete the roadwork.

With the rapid growth of south Winnipeg, the governments knew they would have to do the infrastructure work sooner or later anyway.

The province jumped on board not just because IKEA's arrival was a big vote of confidence in Winnipeg's place in the retail firmament, but because it would be a tourist draw.

"We did believe that there was going to be a pretty significant tourism impact for the city," the provincial source said. "People will come here to shop."

The province looked at the experiences of other cities when an IKEA store comes to town. They drew a 700-kilometre ring around Winnipeg -- the distance people will drive to shop -- and determined people from Regina to Thunder Bay and all points north and south would make the trek to Winnipeg's IKEA and spend money on other things such as gas, food and lodging.

"There was definitely some quantitative legitimacy to it," the source said. "It's just like the Jets in feeling like we've stepped up to a new level."

There's the quiet hope IKEA may establish its distribution centre for North America at CentrePort, the transportation hub being developed northwest of Richardson International Airport.

Unlike other developments such as the city's rapid-transit project, bringing IKEA to Winnipeg was comparatively easy.

That's because IKEA wanted to come -- they didn't need any carrots other than road access.

"They go to an area where they think they have the trading market to support. Winnipeg was the place," the provincial source said. "You think it was one of those things where we'd have to go out of our way, but it wasn't. They knew they had a market here. They needed a physical location that would be advantageous to them and accessible.

"It was a very easy thing to do, considering how long people were waiting for something like this to happen."

bruce.owen@freepress.mb.ca larry.kusch@freepress.mb.ca

 

IKEA's arrival is just the start.

Marshalls, the U.S. discount retailer, is opening a 28,000-square-foot store next spring in the Polo North development under construction on the former Winnipeg Arena site next to the Polo Park mall.

Chic U.S. retailer Nordstrom, which is opening its first four Canadian stores in Toronto, Ottawa, Calgary and Vancouver starting in 2014, is rumoured to also be looking at Winnipeg.

"Retailers are pretty savvy, and you're going to see it certainly over the next several years," a provincial source said. "You'll see a lot more American retailers moving into Canada."

The Free Press got a sneak peek inside the new IKEA store in Winnipeg Wednesday. The 390,000-square-foot store will have the grand opening to the public on Wednesday, Nov. 28.

Republished from the Winnipeg Free Press print edition November 22, 2012 B1

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