Costco....Please Stay in Your Lane

Published: 2023-02-01 00:00:00

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Someone go get the executives at Costco who thought that having 800 housing units on top of their store would be a good idea and tell them to stop while they're ahead. You read that correctly; retailer giant Costco is planning to experiment with adding housing units to a location in California.

Before we get into the perks, let's think about the impact a store like that could have on a community if it builds its own community. Of the proposed units, 23% (or 184 if you wanted an exact value) would be dedicated to low-income households. The rest of the units would be rented at market price. Building the Costco alone would likely make the area more desirable, but it is unknown what impact the units would make on the value of properties in the area. Costco brings a lot of business and being a well-known subscription-based store, it brings "higher end" clientele which generally increase value.

However, new housing units are a hit or miss; it all depends on what the cost of the units will be and what type of people are drawn to it. If it's cheaper housing with lax rules, naturally it will bring down the value of everything around it, versus, more expensive housing with more strict rules will keep value as is or increase value. Increased property values and therefore cost of living is something that some residents who were interviewed by local news stations expressed concern about.

Locals are also concerned about parking: how will parking work for the 800+ residents and Costco shoppers? Will there be store parking separate from housing parking and if so, what will that look like for the area? A large underground or stacked parking garage for the residents with a regular sized parking lot for shoppers makes sense, but those plans have not been released, so it's no surprise that the local residents are concerned about that as well.

At this point, you are probably wondering why Costo has even proposed building 800 housing units with their store. Well, apparently, the proposed construction of 800 housing units is Costco's response to the attempt to address the housing affordability crisis in the Los Angeles area. In case you weren't aware, housing around any large city in California is unreasonably high, but in Los Angeles, the average one-bedroom apartment costs $2,300. If you want a studio apartment, that will still cost around $1,700 on average. The average salary is around $67,000 per year which comes out to about $5,600 without considering taxes. Which means at least 41% of a working person's income goes to rent alone. It's likely higher than our estimate, since we did not adjust for taxes.

Here's the big question: is Costco offering any perks to their potential residents? The answer is yes. Residents of the Costco housing would have access to deliveries, the pharmacy, and fresh food. These sound like nice amenities in theory, but in practice could be tricky. Does this mean that the Costco will have separate staff for deliveries to the housing units and does that also mean that prescription medications could be dropped off, filled and delivered? In addition, is the food limited to free samples and items already in the store or does this Costco plan to do something different? What will the hours look like for these amenities and services? These are some of the questions we had and we're sure that local residents and people who are considering living in the Costco housing units are asking as well.

For now, we don't have the answers, but we will keep an eye on this particular development and if any interesting updates come through, you'll know too.

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