Costco Ann Arbor-area store proposal: 'Scio's loss is Pittsfield's gain'

A store the size of Costco - generally about 150,000 square feet - will cover a dozen or more acres, generate plenty of traffic and spur more development around it.

Yet instead of seeing those as drawbacks, it appears that Pittsfield Township officials and residents - and just about all of the greater Ann Arbor area-are throwing down one big welcome mat for the warehouse store chain.

Why do so many people welcome this store's interest in opening near Ann Arbor?

Some of those feelings may come from shoppers’ reaction to the stores. I’ve never been inside one, but their mix of bulk buys and rotating high-end products has built some unwavering customer loyalty.

Some of the reaction also seems to come from the fact that, a few years ago, this area was on the verge of landing a Costco store in Scio Township. And neighbor reaction, paired with official reaction to the rezoning request, shot the proposal down.

Then the real estate market changed amid Costco’s search for space, and the company withdrew from plans to expand in Michigan.

“But they always wanted to be in Ann Arbor,” said Tony Schmitt, a commercial real estate agent at LaKritz-Weber. “I think that says a lot for the community.”

It also says a lot for the community that, amid corporate plans to open only 7 new stores in 2010, the chain is serious about building a store in this market. Michigan, with its high unemployment, has not been a beacon for national real estate investment or expansion.

Yet even as retail development slowed in other areas of the U.S., “there’s always been a perception of Ann Arbor as being different from the rest of Michigan,” Schmitt said. “Its brand, if you will, hasn’t been as tarnished as much.”

Costco’s development team still hasn’t submitted site plans for the property, according to Pittsfield Township’s planning department.

The Pittsfield Township location may not have been an obvious choice. Today, it houses single-story office space, and it’s tucked behind the Tyner Furniture store at the corner.

But the vision of all involved for the chance to reposition the office space into top-quality retail space that’s still close to the highway also speaks to the draw that greater Ann Arbor has for this chain.

And, assuming that the store gets approvals to build, the corridor will be transformed into a high-profile retail area.

“It’s definitely a ‘C’ location,” said Schmitt. “But wherever Costco goes - especially close to a freeway - they’ll turn it into an ‘A’ location.

“That’s what they bring to the area.”

The area, in turn, still presents a very high barrier to entry to major retailers. Few properties are zoned for new big-box stores. Many sites that present rezoning opportunities haven’t made it through planning - examples beside Costco include Home Depot in Scio Township. And two larger developments in Scio, along Jackson Road, lost their traction in the downtown. Even Pittsfield Township saw tremendous resistance build against the Walmart that opened last fall.

For that reason, the two biggest signals that this proposal will work may be the infill location on an existing commercial property and the initial backing of township government.

In fact, Schmitt said, the Ellsworth location - the place that wasn’t the first choice for a Costco - may be an even better location than I-94 and Zeeb Road in Scio Township.

“Scio’s loss,” Schmitt said, “it’s Pittsfield’s gain.”

Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.