Costco Wholesale has decided to retract its offer to purchase the former Sears building lease at North County Mall in Escondido, according to a recent report by the Coast News Group. The announcement has prompted contemplation about the future development prospects for the area and the economic implications tied to this unforeseen shift in plans.
The City of Escondido had previously greenlit the new lease agreement in June 2022, fostering revitalization of the North County Mall property located at 210 E Via Rancho Parkway. Costco was slated to take over the former Sears store situated on the Westfield North County property at the junction of Via Rancho Parkway and US Interstate Highway 15.
The City owns seven out of the eight parcels constituting the Westfield property, with six of these parcels leased to tenants, including the Westfield North County Shopping Center occupying Parcels 2, 5, 7 and 8. The former Sears store occupies Parcel 1, leased by Transformco’s parent company until the Council’s approval of Costco Wholesale Corporation’s lease acquisition. Costco’s lease was to span 20 years, with the option for seven five-year extensions, capped at a maximum of 55 years.
In conjunction with Costco’s lease amendment, the City Council had endorsed a 24-year extension of the Westfield North County Shopping Center’s ground lease, aligning its termination with Costco’s lease if the corporation remains for the full 55-year duration.
Costco was expected to pay a base rent of $100,000 per year while the city had projected a substantial influx of $35 million in capital investments to revitalize the property with Costco’s presence. The city had also foreseen generating $1.5 million in sales tax revenue from Costco’s inaugural year of stable operation, fostering 314 new employment opportunities, and potentially attracting further investments into the Westfield property.
Costco had paid all requisite fees and initiated the development application process. However, their withdrawal has now halted the progress, leaving the City and its stakeholders in a state of limbo regarding the fate of the real estate asset.
Costco Wholesale Corporation is a membership-based retail giant that operates a total of 600 warehouses in the United States and 871 globally. Established in 1983 in Seattle, Wash., by James Sinegal and Jeffrey Brotman, Costco has evolved into a household name, known for its warehouse-style shopping experience and a vast array of products at competitive prices.
