Costco to open new warehouse under affordable housing development in South Los Angeles

Costco is planning to open a new Los Angeles warehouse beneath an affordable-housing complex, marking a creative expansion strategy for the retail giant.

The project, located in the Baldwin Village area of South Los Angeles, is expected to open in 2027, Costco CEO Ron Vachris said during the company's first-quarter fiscal year 2026 earnings call last month.

"We've got a project in Los Angeles where we're working with some developers [where] there's some affordable housing going above a Costco just north of LAX," Vachris said. "That project will open up in 2027."

Vachris said the unconventional approach allows Costco to enter markets where traditional big-box development would be nearly impossible.

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"That would be a market we would never be able to go into and find 25 acres to build a Costco," he said. "It just wouldn't happen."

The strategy, Vachris added, also helps the company move closer to customers while easing congestion at some of its busiest warehouses.

"We're finding creative ways to get closer to our members and relieve some pressure from some of our highest volume locations," Vachris said. "… We continue to see some opportunities in markets that we would have questioned in the past."

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The project, being developed by Thrive Living, will include about 800 apartments built above the warehouse. The building will also feature a rooftop pool and fitness center, according to the Wall Street Journal.

Roughly 184 of the apartments are expected to be designated for low-income households, the WSJ reported.

Thrive Living founder Ben Shaoul put the total development cost at roughly $425 million, according to the WSJ.

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During the retail giant's Q1 2026 earnings last month, CFO Gary Millerchip also pointed to unprecedented pizza, pie and e-commerce sales during the holiday season.

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Costco and Thrive Living did not immediately respond to FOX Business' request for comment.