Costco looks to grow in expanding Juneau retail market

PHOTO/Rob Stapleton/AJOC
JUNEAU - Costco was granted a "no-build" public easement Nov. 27 by the city’s Lands Committee, a subcommittee appointed by the mayor to address the city’s land use issues.

Costco is considering expanding its Lemon Creek store by more than 12,000 square feet.

"Nothing is concrete at this time; we have to get all the pieces of the puzzle down," said Mike Hayes, regional operations manager for the giant wholesale-membership chain.

"We would like to obviously give a better overall product to our members in Juneau," he said in advance of meeting with the city.

The proposal calls for adding 12,118 square feet to the current 74,052-square-foot building, according to documents filed with the city’s Community Development Department.

Before the easement is officially granted by the city, however, it must be approved by the Juneau Assembly. The membership wholesaler will not build on the leased property, but will rent the land from the city for an amount to be determined at a later date.

The Juneau store is one of Costco’s smallest. Only two other stores in the country have been of similar size, Hayes said. One was located in Sequim, Wash. That store was recently relocated. The other is in Warrenton, Ore. It is unlikely the Juneau store will ever be a full-size Costco, but plans are to build "as large as we could expand," Hayes said. The size of the current site limits how much the store can grow. The Juneau store does not currently offer services available at most other Costcos. For example, there is no deli, pharmacy or gas station. Hayes would not say exactly what services the expanded store would provide.

"I don’t think we would put a gas station there," he said.

The Juneau store was built in November 1993, the same year the now-shuttered Kmart store opened. Wal-mart is now renovating that building, with the hope of opening in late summer or early fall 2007.

Jennifer Holder, a spokeswoman for Wal-mart, said the expanded Costco would have "no effect whatsoever" on the new store.

"Costco has a membership," she said. "If it were a Sam’s Club that would be a different story. Costco charges for people to come in the stores, Wal-marts don’t. They are two inherently different business models," she said.

Fred Meyer is also in the middle of a big expansion project, which company spokeswoman Melinda Merrill said "Is plugging right along." It is still slated to be complete in mid-May.

November’s snowstorms have not delayed the construction schedule, Merrill said adding that the expanded Costco won’t affect the Fred Meyer store.

"We compete side by side with Costco with almost all of our markets," she said. "I know we wouldn’t be investing what we would be investing if we didn’t feel the communities could support us. It has been a $20 million-plus investment for us, and it is well worth it."

A new Home Depot is being built just across the street from Costco. The opening for the Georgia-based Home Depot is scheduled for February, according to Kathryn Gallagher, spokeswoman for the supply store.

Hayes said it will help business at Costco.

"With Home Depot going in behind us, it’ll be a good combination of businesses."

12/02/2006 - 8:00pm