Federal Realty Trust and IKEA have closed on a land swap that will allow the Swedish furniture retailer to begin work on a new 340,000-square-foot flagship store in Somerville’s Assembly Square.

Federal Realty has been negotiating the swap for three years. It puts the Maryland-based REIT in control of 16.6 acres of property along the Mystic River, moving IKEA onto 11.9 acres bordering the MBTA’s Orange Line tracks.

The swap allows Federal Realty to center its 50-acre, $1.75 billion Assembly Square redevelopment along the Mystic. Federal Realty envisions ultimately building out 1.75 million square feet of office space, 1.15 million square feet of retail, 2,100 housing units, and a new Orange Line stop.

Don Briggs, Federal Realty’s senior vice president for development, told Banker & Tradesman the swap "allows us to solve a 10-year dispute" at the site.

"We can harness the waterfront for residential and retail, and tie it to the T stop. IKEA is really indifferent to the value of the water," Briggs said. "They’re here because of the regional access positioning."

Briggs added, "If you’re a project of this scale, you can’t be overly sensitive to where you are in the market cycle. You have to know where you are, and you have to be flexible, but you can’t panic if you’re caught in the down-draft. What we’ve done is continue to move forward in a strategic way. IKEA is huge for that, because they’re not necessarily cyclical, either. They’re in this for the long, long haul. It’s a great location for them, long term. We look at this site and say, for the long haul, there’s real value here."

In July, state officials awarded the project $65 million in state and federal stimulus funds for infrastructure at the site.