Costco jilted Pasco. One Tri-Cities official hopes to rekindle the spark

Costco Wholesale Corp. jilted Pasco when it backed out of plans to site a second Tri-Cities store in the Broadmoor area.

Pasco officials and the property owner, hoping to rekindle the spark, are keeping the door open. Notably, the spot where Costco once planned to build is being reserved for it — just in case.

Officially, the Issaquah-based warehouse club has its eye on Richland, making the odds of reconciliation low.

The company, which has never confirmed details of its plans for a second store in the Tri-Cities, is negotiating to lease a 28-acre site at Truman and Kennedy from the state Department of Natural Resources.

DNR owns the property, which is behind Target in the Queensgate area. A spokesman confirmed this week that negotiations are ongoing but no agreement has been finalized.

Costco offered to lease the site for 55 years in a letter of interest dated June 1.

In Pasco, developers are reserving a spot on the future extension of Sandifur Parkway for Costco in case it reconsiders.

“Costco would be good for Broadmoor,” said Tim Ufkes, a real estate broker with the Seattle office of Marcus & Millichap, which is representing the property owner, Dale Adams.

Dream on

In a rare public discussion about efforts to win Costco back, Port of Pasco Commissioner Jim Klindworth recently asked if everything possible was being done to get it to reconsider Franklin County.

It was an informal question and was not on the agenda for the commission’s Sept. 27 business meeting. Still, it sparked an on-the-record conversation about a topic Klindworth said is of keen interest to residents who want their own Costco.

Klindworth wondered if Costco balked at the cost of the Broadmoor property it once intended to buy.

If so, he mused, the value of the store to Pasco would likely exceed whatever it might cost to make up the difference, suggesting public entities find a way to bridge the gap.

Port officials shot down the idea. The state constitution expressly forbids “gifting” public funds.

Randy Hayden, the port’s executive director, confirmed it supports Costco-related efforts, but it is forced to sit on the sidelines.

Price not the issue

The price of the land didn’t drive Costco to Richland, said Ufkes, the real estate broker.

Ufkes confirmed Costco had a contract to purchase Lot 5, on the future extension of Sandifur Parkway but exited the agreement in mid-2021.

Ufkes recalled asking if it would build the store if the property was given to them for free. A Costco representative told him, “No.”

The broker is part of the team marketing a 671-acre development area within the 1,600-acre Broadmoor area, generally between Broadmoor, Burns Road and the Columbia River.

Multiple developments totaling about 1,000 apartments and single-family homes are already in development, with more to come.

Ufkes said everything possible was done to mitigate the company’s concerns around traffic and infrastructure.

Notably, the city of Pasco is pursuing a $40 million infrastructure project, funded with tax increment financing.

A city spokesman confirmed it is working with property owners, but couldn’t comment on efforts with individual companies such as Costco.

Broadmoor’s developers agreed to give Costco exclusive rights to a sell groceries, gasoline and most liquor in the district.

They later reversed and agreed to allow Fred Meyer to operate a fueling station if it sited a store in the development.

Costco backed out soon after. Fred Meyer, a subdivision of Kroger Corp., didn’t move ahead with its plan, Ufkes said.

Leaving room for Costco

While Lot 5 is being reserved for Costco should it decide to come back to Pasco, Ufkes said there are no ongoing discussions.

“They dropped us like a hot rock,” he said.

Costco hasn’t commented on its plans for Tri-Cities. Its Kennewick store, recently the subject of a $4.3 million remodel, is considered one of the busiest in the company.

In a Sept. 27 call with analysts to discuss its fourth quarter earnings report, Richard Galanti, Costco’s chief financial officer, discussed 2024 store openings.

Costco expects to open 25-30 stores in 2024, with 70% of them in North America, chiefly the U.S. He didn’t mention the Tri-Cities by name, but did indicate the company is interested in beefing up its existing store network.

“We’re finding more opportunities to infill in the U.S. given our high volumes,” he said.

Costco reported net sales of $238 billion for the 2023 fiscal year, which ended Sept. 23, a 6.7% increase over its 52-week 2022 fiscal year.

The company operates 861 warehouses worldwide, including 591 in the U.S. and 107 in Canada.

Sign Up: Boom Town Tri-Cities

Stay up to date on Tri-Cities growth and development with our weekly business newsletter. Get the latest on restaurant and business openings and closings, plus the region’s top housing and employment news. Click here to sign up. In your inbox every Wednesday.