IKEA has canceled plans to build a store in Dublin, saying its stores in Emeryville and East Palo Alto are effectively serving customers on both sides of the San Francisco Bay.

The 14-acre site along Interstate 580 will be sold to Blake Hunt Ventures, allowing it to expand its adjacent retail development.

The international furniture giant's real estate manager in the western United States, Doug Greenholz, sent a letter to Mayor Janet Lockhart Thursday announcing the decision.

He said the 260,000-square-foot Dublin store had been planned at I-580 and Hacienda Boulevard, west of Hacienda Crossings shopping center, before the East Palo Alto store opened in August 2003.

"Since then, we have assessed our Emeryville and East Palo Alto stores fully and evaluated actual regional consumer shopping patterns in a much more detailed manner," Greenholz' letter said. "Based on the regional draw of IKEA, we have concluded that the needs of our Bay Area customers are being served effectively by the existing stores and that a Dublin location is not needed."

Both the Emeryville and East Palo Alto stores are doing well, and IKEA increased its U.S. sales volume from $2 billion to $2.5 billion last year, said Joseph Roth of Expansion Public Affairs for IKEA North America, based in Conshohocken, Penn.

Roth said market research shows the East Palo Alto store effectively serves the Peninsula as a complement to Emeryville, IKEA's first Bay Area store, adjacent to the Bay Street Emeryville mixed-use development.

"Two stores are sufficient for the time being," he said.

IKEA decided to sell the property to Blake Hunt Ventures of Danville, which is in the midst of developing a retail center, Emerald Place, on the northwest quadrant of the 1-580-Hacienda Drive interchange. Details of the sale, including the price, were not disclosed.

The sale will more than double the size of Emerald Place, from 140,155 square feet on 13 acres to approximately 300,000 square feet on 27 acres. In addition to invaluable additional square footage to attract high-quality retailers, Blake Hunt gains greater visibility from I-580, the ability to change the center's orientation from north-south to east-west, and better distribution of parking, said Jerry Hunt, Blake Hunt co-founder and president.

"The canvas is bigger on which to paint, so it gives you more options and more to consider," Hunt said.

Dublin Mayor Janet Lockhart said she was sorry to lose IKEA but that she couldn't fault a company for deciding it was successful enough in a given market. The city's gain is the ability to expand Emerald Place, which it had been trying to accomplish, she said. "I firmly believe when one door closes, another opens."

IKEA, an $18 billion private company based in Sweden, had originally planned to open the Dublin store this fall. In April 2005, Greenholz said plans for the store were being delayed while company officials made off-site improvements, including roadwork and undergrounding of utilities.

As recently as last month, Dublin Economic Development Director Chris Foss said he still expected the store to be built. Roth said Greenholz' letter followed a meeting Greenholz had with the city Thursday.

IKEA's decision was also a surprise to Blake Hunt. "Until very recently we had no idea they were not going to go forward," Hunt said.

Emerald Place is planned as a pedestrian-oriented lifestyle retail center, bisected by a "Main Street" with a central plaza area and featuring upscale restaurants and specialty retail tenants. No tenants have yet been announced.