A Los Angeles real estate developer plans to build an 800-unit residential complex above a Costco (NASDAQ: COST) store, marking the first such integration of the retail chain with housing in the United States.
Thrive Living expects to begin construction in early 2025 on the $425 million development that will include 184 affordable housing units. The project will feature a 185,000-square-foot Costco on the ground floor with two levels of underground parking.
The development structure allows Costco’s rent to offset costs, reducing reliance on government subsidies for affordable units. It’s also a built-in client base for the big box retailer. According to Melius Research analyst Karen Short, if there are two tenants per unit, that could lead to as many as 1,600 Costco members at the location.
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The development site is located in Baldwin Village, where the poverty rate is more than double the national average. The project will utilize Assembly Bill 2011, California legislation that accelerates approval for developments meeting affordability and labor requirements.
Construction is scheduled for completion in 2027, with the developer planning to use off-site modular construction methods. Los Angeles Mayor Karen Bass, who used to live minutes from the site, has joined other elected officials in supporting the development in what she called a historically neglected area.
The United States is facing an estimated shortage of 3.7 million housing units, according to Freddie Mac data.
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