Costco Breaks Ground on Innovative Housing Project Above Los Angeles Store

Development

Developer Thrive Living recently broke ground on a unique Costco store with 800 apartments above the retail space in the Baldwin Village neighborhood of South Los Angeles. The project, located at 5035 Coliseum Street on the former site of View Park Community Hospital, represents the first time Costco has built residential units above one of its stores.

Of the 800 rental apartments planned for the low-rise buildings above the retail space, 184 units (23%) will be dedicated to low-income households. The remainder will be offered as unsubsidized, affordable, and workforce housing.

The project is expected to be the nation’s initial Costco Wholesale store with apartments above its retail space, as Los Angeles looks to add affordable workforce housing. According to Los Angeles Mayor Karen Bass, “I used to live just minutes from here, and I know the hundreds of housing units, the thousands of jobs and the new wave of resources that this project will bring to this community has potential to make a generational impact on this neighborhood.”

Construction

The construction method for this ambitious project utilizes innovative building techniques. The retailer and Thrive Living are relying on pre-fabricated apartment modules that can be loaded onto and transported via trucks to keep building and labor costs low. These modules have a smaller footprint, allowing for more units to be created.

The Costco apartment complex will cost $425 million to construct, with work expected to conclude in 2027. According to a Thrive Living press release, constructing the complex will create thousands of jobs, and opening the Costco will create up to 400 new jobs.

Amenities

The planned project will feature numerous amenities for residents, including secure parking, several interior courtyards, a gym, community gardens, a rooftop pool, a full basketball court and two half courts, and various climbing and play structures.

The Costco store itself will offer standard warehouse amenities plus fresh produce, healthy food options, optical services, a pharmacy, and delivery services to help local businesses.

Policy Implications

This mammoth building will be the first new housing unit in the city to move forward under California state law AB 2011, which was designed to combat California’s housing crisis. The legislation streamlines approvals for apartments and mixed-use projects that include affordable housing.

The project is the first to receive approval under Assembly Bill 2011, also known as the Affordable Housing and High Road Jobs Act. The California law, which went into effect throughout the state on July 1, 2023, speeds up the approval process for projects that meet affordability and labor criteria.

In Los Angeles, stores like these are typically hard to get approved, and even when they are green-lit, the process can be long and could cost millions of dollars just in consultant fees. However, if a company wants to build a mixed-use housing project that meets certain state-level criteria—like two-thirds of the building’s square footage being residential space in Costco’s case—then the approval process can be streamlined.

Future Plans

If the model works, Ben Shaoul of Thrive Living says he wants to use the same concepts to build “thousands and thousands of apartments every year, not hundreds.”

The initiative has drawn mixed reactions. Proponents praise the creative approach, emphasizing the convenience and potential to alleviate housing shortages. Critics question the project’s affordability and motivations, suggesting it may primarily serve Costco’s interests rather than genuinely tackling the housing crisis.

While this appears to be a first for Costco, the company is no stranger to mixed-use developments. A Costco with a fitness center on top is located in the dense Houston neighborhood of Greenway Plaza. The company also operates a smaller-format warehouse in Juneau, Alaska, and a location in Arlington, Virginia, that is surrounded by high-rise apartments.