By Andrew Gomes
Advertiser Staff Writer
Costco Wholesale is close to completing a deal to replace its Salt Lake store with a new warehouse and gas station next to Dole Cannery in Iwilei that could be open by the end of the year.
The Issaquah, Wash.-based members-only retailer is negotiating with Cannery owner Castle & Cooke Inc. for a site mauka of Home Depot.
Joel Benoliel, Costco’s senior vice president for real estate, yesterday would not discuss details of the deal, but said "we’re continuing to work on it, and we’re getting very close."
Robert Urquhart, Castle & Cooke vice president, said yesterday that there would be an announcement if a deal is completed. "We’re still talking to Costco," he said.
New and bigger stores that sell more fresh foods, gas and special-order merchandise are part of Costco’s sales strategy. The company, which has about 350 warehouses worldwide, expects to open 35 to 40 such stores this year.
Benoliel said the move is being pursued to provide customers with a full-size store and larger parking lot. Costco’s Salt Lake store is 120,000 square feet, almost 30 percent smaller than the company’s newest Hawai‘i store, a 155,000-square-foot warehouse in Waipi‘o Gentry that opened last July.
Costco operates three stores on O‘ahu, in Waipi‘o, Salt Lake and Hawai‘i Kai. Only Costco Waipi‘o sells gasoline. The Hawai‘i Kai store is the company’s smallest at 110,000 square feet.
By moving its Salt Lake store closer to town, Costco would be part of a migration trend among "big-box" retailers to centralize stores. The strategy brings more convenience to shoppers and more competition to smaller retailers.
"A lot of boxes have tried to penetrate the urban core — some with success, and a lot haven’t been able to get there," said Jon Eric-Greene, senior vice president of retail services for local commercial real estate firm Colliers Monroe Friedlander.
The inward movement began in September 1999 when Home Depot opened a store in Iwilei next to Dole Cannery. Wal-Mart Stores Inc. followed last year with plans to build a Wal-Mart and Sam’s Club, a members-only competitor to Costco, on the Ke‘eaumoku "superblock." Construction of that project has not begun.
Greene added that other big-box retailers will consider options to put stores closer to the densely populated area between the airport and Hawai‘i Kai. Costco’s Salt Lake site is unlikely to remain vacant. "I think it’s definitely an infill opportunity for one of the boxes," Greene said.
Executives at Home Depot and Lowe’s could not be reached yesterday, but local real estate brokers said both companies are looking at the warehouse Costco leases at Bougainville Industrial Park in Salt Lake as an expansion possibility if Costco moves.
Eric Tema, director of real estate for the MacNaughton Group, which redeveloped Bougainville Industrial Park, said Costco transformed the area from a sleepy industrial neighborhood to a busy mixed-use complex. "It’s a good real estate location. Costco has been successful there for many years," he said.
Costco operates five stores in Hawai‘i now, including one on Maui and one on the Big Island.
Andrew Gomes can be reached by phone at 525-8065, or by e-mail: agomes@honoluluadvertiser.com
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