Ikea recently announced that they are opening 8 additional small format stores. Each store is about 8,000-10,000 square feet and is focused on large items such as furniture and room remodels compared to their typical locations that often exceed 200,000 square feet stuffed with everything from meatballs to king-size beds. Customers meet with the store team to help plan and order their selections which can be collected when and where its most convenient. It wasn’t long ago that having a full-size Ikea in an American city was a status symbol. Tina Fey’s character on 30 Rock once refused to move to Cleveland with her boyfriend because of my former hometown’s lack of an Ikea (spoiler alert: they still don’t have one). However, omnichannel shopping means retailers have more options to serve customers both in store and online.

Other retailers are going small too. Long ago when Burlington was known as a coat factory; you’d often find them in Class-C shopping centers taking up as much as 90,000 square feet. Now they are regularly scooping up locations in the 20,000-30,000 square foot range at liquidation auctions for bankrupt stores like Party City and Bed Bath & Beyond in some of the most in demand trade areas in the country. In addition to Burlington, we’ve seen Target get flexible with stores under 40,000 square feet in densely populated areas. Macy’s has gone off-mall with several locations under 30,000 square feet. Lastly, Best Buy is testing a 5,000 square foot store in Monroe, North Carolina and recently announced plans to open over 150 small stores in the sovereign nation of Canada.

While digital integration is one of the reasons retailers have become more flexible on store size in recent years, another driving factor is the lack of available retail space which we’ve extensively covered in these pages in recent months. Availability at open-air shopping centers is at an all-time low of 4%, while the list of expanding tenants keeps growing. We’ve seen a recent surge in retail liquidations in early 2025, however retailers like JoAnn, Big Lots, and Party City all have store footprints in that 15,000-30,000 square foot sweet spot. As noted above, Party City’s store auction resulted in an unprecedented level of bids, with retailers scooping up over a third of their locations. This is good news for retailers like Ross, TJX, Academy Sports, and more who are growing faster than supply can keep up. It might even be good news for the fine people of Cleveland to finally get that Ikea we’ve been dreaming of for over two decades!

Mike Jordan