Costco, a retail chain known for its cavernous buildings filled with piles of merchandise, is working on a deal in Los Angeles to place apartments full of potential customers on top of planned stores.
The Kirkland, Wash.-based company will be a ground floor retail tenant as it redevelops a 5-acre commercial lot into 800 apartment units. 5035 Colosseum Street It is located in the LA district of Baldwin Hills. This is according to developer Thrive Living, an affiliate of New York-based Magnum Real Estate Group, which released a statement and renderings of the project earlier this month.
The developer is seeking approval from the city of Los Angeles to build the project in a dense neighborhood southwest of downtown Los Angeles. That said, the deal could have national retail implications for Costco, a retailer known for its large parking lots and independent stores.
A rep for Thrive Living declined to comment on Costco’s size, but said it has two basement levels and several ground level parking lots. A Costco representative did not respond to CoStar News’ request for comment.
Gabe Kadosh, vice president of Colliers in Los Angeles, said Costco appears to be testing the concept in an apartment development. He said it’s not common for superstores to become ground floor retail tenants, and he and other real estate professionals have been discussing it recently. Costco is a highly desirable tenant due to its popularity. This increases the property’s value and drives traffic and demand to other properties nearby.
“It’s certainly fascinating and something people are looking at,” Kadsh said. “Developers will pay attention.”
Costco is no stranger to mixed-use developments and even smaller stores. With a fitness center on top, Costco is located in the dense Houston neighborhood of Greenway Plaza. Costco, meanwhile, operates a warehouse in a small space of about 72,000 square feet at 5225 Commercial Boulevard. Juneau, Alaska, according to CoStar data.
A Costco with apartments above the store may seem unusual, but Costcos are often built near residential areas, and the Costco at 1200 S. Fern St. in Arlington, Virginia is surrounded by high-rise apartments.
The superstore chain operates 847 warehouses around the world with an average size of 146,000 square feet, according to its website. Costco will be the company’s first in South Los Angeles. The superstore, which offers bulk goods, groceries, pharmacies and more, plans to create 400 new jobs at its future Baldwin Hills location.
Meanwhile, Thrive Living aims to reserve about 23% of the units, or about 184 apartments, for low-income families in future Costco mixed-use developments.
Los Angeles Mayor Karen Bass “declared a housing emergency in Los Angeles and we are on the phone,” Magnum Real Estate Group partner Jordan Brill said in a statement. The company is focused on addressing Los Angeles’ acute housing affordability crisis, but makes a long-term commitment to developing community-friendly products and services that enrich the living experience for its residents and neighbors. It attracts retailers willing to serve.”
The approximately 55,000-square-foot office is located at 5035 Coliseum St., according to CoStar data. The property was sold for his $18.2 million in September 2019 to an entity affiliated with Los Angeles-based housing developer Universal Standard Housing. Universal Standard Housing is no longer part of the project, a spokesperson for Thrive Living told his CoStar News in an email.The entity that owns the property now has its address in New York City, according to California records. listed as the same address as Magnum Real Estate Group.
Inglewood/South LA Retail MarketAccording to CoStar data, including redevelopment sites, the average rent is $26.83 per square foot, below the LA average of $35.31 per square foot. The market’s average vacancy rate is 3.6%, below the Los Angeles average of 5%.
According to CoStar data, the Inglewood metropolitan area’s apartment market, which includes redevelopment sites, has a vacancy rate of 4.4%, above the LA average of 4%. The average asking rent in the market is $1,650 per month, well below the LA average of $2,191 per month.