What Impact Does The Economy Have On Costcos Products Or Services

David Lee shops at a Costco Wholesale store in May in Portland, Ore. The national chain is opening a shop Friday in Pittsfield Township.

AP Photograph | Rick Bowmer

The Costco Wholesale store opening in Pittsfield Township this week is going to bring more discounted date rings and bulk-packaged toilet paper to the Ann Arbor expanse.

The opening of the 150,000-foursquare-foot discount store about the corner of Land and Ellsworth roads — planned for eight a.k. on June 29 — is certain to take local economic impacts beyond saving consumers money.

The store took x months to build afterward its plans were approved past Pittsfield Township in August 2011. Costco purchased the 17-acre site in the Airport Plaza industrial park from local developer Jake Haas for $7.34 million.

8 part buildings in the industrial park were demolished to make mode for the shop, gas station and 720 parking spaces.

The membership-just warehouse club will probable draw shoppers from beyond the region, with the area's closest Costco stores located in Brighton and Livonia.

Representatives from Costco accept been marketing in the area — including at a kiosk in Briarwood Mall — selling memberships that range from $55 to $110 annually.

As of 2010, Costco had 58 million members worldwide at its 602 warehouse stores. A typical store does about $150 million annually in sales, and the visitor is valued at well-nigh $39.41 billion based on a Wednesday stock price of $91.09.

From road construction projects to job creation, hither are five ways the Costco store will impact the local economy:

1) Task creation

When Costco announced it planned to mass hire 180 employees to work at its new store, the company's website was flooded with applications presently later on, said warehouse managing director Bill Linfield.

Ten days after Costco began accepting applications, more than than one,000 people had applied.

The Costco Warehouse store in Pittsfield Township is ready to open June 29.

Angela Cesere | AnnArbor.com

The company is known for its employee perks, including compensation and career advancement. In 2010, Costco was ranked the superlative retailer to work for past its employees, with an average wage of $17 per hr, according to data collected by CareerBliss.

And fortunately for Washtenaw Canton — which currently has the lowest unemployment rate in the state at five percent — much of the hiring was washed locally.

Pittsfield Township Supervisor Mandy Grewal said the hiring will also bring a concentration of people to the area, where she hopes employees will "choose to live and work."

During the ten months it took to build Costco, the project also provided dozens of construction-related jobs at a fourth dimension when the existent estate market — specially new construction — was still struggling to recover.

two) Traffic increase

Costco customers are willing to travel long distances to store at discounted prices.

The new store is expected to bring hundreds of people a day to the Land and Ellsworth intersection — an intersection that already experiences traffic counts of most iii,500 cars a twenty-four hour period.

Mark McCulloch, project engineer for a new roundabout planned for Country and Ellsworth, said traffic in the area is "heavy now and is expected to increase by xx percent over the next xx years."

Several road improvement projects were undertaken to account for the increase in traffic, including reconfiguring Aerodrome Boulevard every bit a three-lane route and adding a new traffic point at the Airport and Ellsworth intersection.

The roundabout planned at State and Ellsworth is estimated to cost about $2.5 1000000. Construction is expected to begin in 2013 and last from April or May through Labor Mean solar day.

The toll of the roundabout is existence financed in an agreement between Costco, the Washtenaw County Route Commission and the Metropolis of Ann Arbor.

Tom Goldberg, an owner of several shopping centers in Pittsfield Township, said the increase in traffic to the surface area could benefit neighboring businesses.

"In terms of some of the adjacent properties, Costco might be a new opportunity for them considering of the amount of customers that will be driving to the Costco location," he said.

But local commercial real estate broker Jim Chaconas is more cautious: he said Costco is a destination store that people will bulldoze to and and so go straight home.

"You lot take a Walmart, Costco, Sam'due south Club — they are destinations and people get at that place and shop and go home," he said. "You get and get corking meat or dairy and you lot have to get dorsum to your fridge."

3) Hereafter development

Development oft begets development.

That'southward how ane local developer — who has plans to build a fifteen,750-square-foot retail center near the State and Ellsworth intersection — views the new Costco store.

Howard Frehsee plans to build the center, which includes a 5,000-square-foot free-standing outlot building, on a 5.75-acre parcel just east of the intersection'southward southeast corner.

His plans date back several years, merely were stalled because of the economy. He received township approval for his project in 2010 and said he still plans to move forward when the timing is correct.

With the Costco opening nearby, Frehsee sees the potential it could accept on his eye.

"I see Costco being a very practiced draw for potential customers, and I think that we volition definitely have some positive spinoff from that," he said. "People get to a destination-type center and they may or may not finish at something else adjacent door, simply certainly in that location's a greater likelihood that they volition."

He believes that corridor, which he calls a "neat location with bang-up potential," is short on retail. He said his development would have a sit-downward restaurant, carryout food and convenience-oriented retail.

At the same time, he said the real estate market place is still struggling and it's difficult for small business owners to become financing, putting his projection on hold.

There are several other recent or planned developments in the area surrounding Costco, and many developers and township officials have long forecast more commercial possibilities.

To the n of the new shop, Tim Hortons plans to build a drive-thru at the site of the former Enzo's Sports Bar. Plans were approved past Ann Arbor City Council in April to demolish the existing structure and construct a 1,953-square-foot eating house.

Another nearby site — the erstwhile Pinter's Flowerland at 3930 S. Country — has been listed for sale for years. The township has approved a 9,200-foursquare-human foot retail center for the corner property.

In 2010, a new Speedway gas station and convenience store was rebuilt on the southeast corner of the intersection.

The owners of Tyner Furniture — located in a quondam Kmart at 3900 Southward. State St. merely northeast of Costco — accept talked about redeveloping their holding or using a portion of the store'south unused parking lot for an boosted projection.

Tyner Piece of furniture is located northeast of the new Costco store.

Lon Horwedel | AnnArbor.com

Grewal said whether there volition be continued activity at nearby sites remains to exist seen, but said the township's Main Plan strikes a residue between development and country preservation in the area.

iv) Retail competition

The opening of Costco could present a challenge to Washtenaw Canton's existing retailers — peculiarly grocers and the competing Sam's Lodge in Pittsfield Township at Michigan Avenue and Carpenter Road.

But because Costco is a warehouse shop and sells in bulk, some industry experts say the store won't pull customers from nearby grocers and those stores normally don't try to go head-to-head with Costco'southward depression prices.

According to a study by the National Bureau of Economic Research, the drab aesthetic of Costco'southward warehouse stores offer nearby grocers a different competitive advantage: attracting consumers based on convenience and feel.

Chaconas said to wait "some crossover" with the Walmart Supercenter located a few miles south on Due east Michigan Avenue. But Walmart, dissimilar Costco, is a one-cease-store for virtually people, he said.

Goldberg, who has both a Whole Foods market place and a Target at his retail centers on Ann Arbor-Saline Road, said he'south non worried about the contest from Costco.

"Most of the very capable and large retailers that you lot see in Ann Arbor coexist nicely," he said. "I remember (Costco) is very much complementary. From a programmer'southward perspective, I call back it'south positive."

Other retailers that the new Costco shop could threaten are those in the gasoline manufacture.

Co-ordinate to a recent survey by Consumer research firm Market place Forcefulness, Costco ranked equally consumers' favorite place to make full upward their tanks.

The reason: gas at Costco is frequently about 10 cents cheaper than local averages, and even though the lines are commonly longer, people are willing to wait.

Frehsee, who played a key role in redeveloping the Speedway station adjacent to his property, said the station has the benefit of being convenient for shoppers in a hurry.

"Yes, y'all'll accept a lot of people go to Costco to get gas," he said, "but on a day-to-twenty-four hour period basis, when you don't want to expect in a line at Costco, where are yous going to pull in to get gas?"

5) Community Impact

According to township documents, Costco paid $169,729 in holding taxes in 2011. That figure volition increase when the property is reassessed now that the edifice has been constructed, Grewal said.

In comparing, the Walmart store in Pittsfield Township paid $430,129 in belongings taxes in the 2011 tax twelvemonth, according to township documents. Belongings taxes are divided betwixt a number of entities, including the township, the state of Michigan and the school system.

One time the Costco store is reassessed, Grewal said, it is projected to generate $35,000 a year in taxes that will become directly to the township.

Grewal likewise hopes and anticipates the shop will increase neighboring property values.

"I believe property values will exist positively affected with more development as it comes into the region," she said.

"I exercise believe that Costco, and the planned improvements that are going hand-in-mitt with Costco ... will bring more than vibrancy to the region...(and) contribute significantly in increasing the property values for our residents in Pittsfield Township," she said.

View Washtenaw County Business News 2012 in a larger map

Lizzy Alfs is a business reporter for AnnArbor.com. Reach her at 734-623-2584 or electronic mail her at lizzyalfs@annarbor.com. Follow her on Twitter at http://twitter.com/lizzyalfs.

What Impact Does The Economy Have On Costcos Products Or Services,

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