"It's kind of an interesting story," Merriam City Administrator Phillip Lammers says of the events that led an Ikea to this suburb.
Lammers is right. Merriam probably owes its Ikea - slated for a 2014 opening - to the nation's economic downturn and the failure of a big-box retailer.
It all started with Merriam Village, a shopping development off Interstate 35's Johnson Drive exit that never opened.
"Merriam Village was intended to be kind of an extension of Merriam Town Center," Lammers says. "It was like, 'Oh this is going to be groovy.'"
The complex never had a chance. Planned anchor tenant Circuit City crashed into bankruptcy and went out of business in 2009, leaving Merriam Village vacant.
"It's the old cliché: Be careful what you ask for," Lammers says of the failed center. "Had they [Circuit City] launched, had that happened, I don't think we would have an Ikea here."
This past December, the Merriam City Council unanimously approved a deal with the Swedish furniture retailer and erased three years of bad memories with a victory. As part of the deal, DDR Corp., the real-estate firm that owns the land, will sell the 22-acre site to Ikea. Ikea will keep half of a 1-percent sales tax that it generates - up to $19.9 million - over the course of 20 years. The city won't take on any debt or ownership of any buildings or land, and the $19.9 million cap won't go up.
Merriam is poised to reap the rewards of shoppers who are known to drive to Ikea outposts for Klingsbo coffee tables and Poäng chairs. The first year's sales revenue is estimated to earn the suburb $445,000 for the general fund and $200,000 for its capital-improvement projects, according to Lammers. And the state of Kansas is estimated to gain $5 million in the first year.
"In general, they will be the largest sales-tax producer that we have," Lammers says. In addition to stuffing city coffers, Ikea stores around the country have drawn a variety of businesses near them.
"I'm very optimistic that is going to happen because there's a lot of land right around this area that hasn't been developed," Lammers says of the surrounding land owned by DDR.
If you're wondering which businesses might follow, Merriam City Council candidate Todd Boyer is already ahead of you. Boyer did a self-described "very unscientific" study of businesses around 37 other American Ikeas and using Google Maps to find business listings within a quarter mile of the stores.
"The things that jumped out is that there are lots of stores. And the crazy thing is, almost a third of those stores are furniture, décor, lighting stores," Boyer says. Among them are Ashley Furniture, Ethan Allen Design Center, Pier 1 Imports and Sleep Number. "These are things that Ikea obviously already sells and supports themselves [by selling]. These guys enhance that and offer some additional products."
Boyer also found that the Ikeas are surrounded by a total of 169 restaurants (which he says he's most looking forward to having in the area), three Apple Stores, and 24 sporting-goods stores, among other retailers.
There's worldwide precedent for the theory that businesses near Ikeas experience increased sales. In 2010, a Deutsche Bank analyst made a name for the bump in revenue that businesses near Ikea stores receive: the "honey pot effect."
The final hurdles to Merriam's Ikea bliss were cleared with the Merriam City Council's December 17 approval of the plan. (DDR confirmed the sale of the site the next day.)
Construction of the 349,000-square-foot outlet is expected to begin next summer, with a planned fall 2014 opening.
Lammers says the potential for other businesses (or end-users, as he calls them) - and even more tax revenue - to follow Ikea to Merriam is likely to happen.
"I think the good thing is that there are end-users being contemplated in the neighborhood, which I think is really exciting to us. And that's on top of the $8.9 million in the general sales tax," he says. "I was told by a planner that they are already looking at some proposed sites for an end-user near this."
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