Costco struggling to find suitable sites

Posted by Daniel Palmer on 4th May 2009

Patrick Noone, the Managing Director of Costco’s Australian operations, has reported his American-based firm is struggling to find suitable places for new properties in Australia – where the planning requirements are vastly different to those in the US.

The retail chain, which will open their first Australian store at Docklands in Melbourne in the next few months, requires around three hectares for each outlet due to its operation as a large warehouse operation.

Costco Australia is searching the suburbs of Melbourne and Sydney for sites of up to 15,000 square metres, a search which has proved challenging.

“When you think of retail in Australia right now, and you want to build a Woolworths or a Coles supermarket in a town centre, you are generally looking at 1000 or 2000 square metres of retail space, so in general you can put together a deal or find a space available,” Mr Noone told The Age. “When you come into a town centre like Prahran, for example, an activity centre, and you say you want 14,000 square metres and several hundred car parking spaces on three hectares, that land is generally not available.”

The company is ideally searching for sites around popular suburban hubs and is planning on building their second store in Australia’s most populous city – Sydney.

The Sydney site has not yet been announced, although Costco is currently seeking an amendment to a draft Parramatta local environment plan to build on a vacant 69,000-square-metre industrial site in Camellia.