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Posted on Thu, Apr 29, 2010 : 6 a.m.

Costco deal in Pittsfield Township signals end to long search for local store site

By Paula Gardner

Costco's high-end warehouse shopping experience inspired Ann Arbor area shoppers to drive to its stores in nearby counties and wonder whether the national retailer would ever build a local store.

The company’s real estate arm tried to oblige, but its search for space in Washtenaw County stalled in Scio Township, then died as the retailer pulled out of all of its development plans in Michigan.

Now the nation’s 9th-largest retailer is reviving efforts to open a local store in a deal that appears to be shaping up as one of the region’s largest retail deals in recent years.

airport plaza.jpg

Airport Boulevard will be at the western edge of the new Costco, according to plans in the works to build the new warehouse store in Pittsfield Township. The location is along Ellsworth Road west of Tyner's Furniture. Some offices on the property now would be demolished.

Melanie Maxwell |

“Costco is looking at Ann Arbor as the most viable place in Michigan,” said Jim Chaconas, broker at Colliers International.

After years of searching for a site to build a store and enter the Ann Arbor market, Costco has a deal to build a store on Ellsworth Road, west of State Street and Tyner Furniture, in Pittsfield Township.

Costco coming to Pittsfield Township?

Officials confirmed on Wednesday that the member-only warehouse club wants to build a local store.

  • The retailer seeks to build a warehouse store and gas station on the north side of Ellsworth Road, between Tyner’s Furniture and Airport Boulevard.
  • The property, owned by developer Jake Haas, now houses several businesses in single-story buildings, which would be demolished. Tenants in those buildings will be relocated, officials said.
  • Costco is doing a traffic study now and has submitted a request for a liquor license.
  • The retailer has met with planning commissioners and other officials, but has not finalized site plans.
  • Costco generated $71 billion in sales in 2009.
The location, said Chris Grant of First Martin Co., “is fantastic.”

Yet it also is not the most likely spot to envision a new warehouse store in a chain where the average footprint of a new store tops 143,000 square feet.

Costco operates 567 stores, 414 in the U.S. It opened 25 stores per year as recently as 2005, but that will slow to 7 new stores in 2010.

A previous location sought by the retailer in Washtenaw County would have given it visibility from I-94 and access from the Zeeb Road interchange in Scio Township. And other locations in Michigan typically feature similar highway proximity and visibility.

In the Ann Arbor market, those types of locations can be rare, forcing - at least in times of major retail expansions - a chase for buildable property on the outskirts of town. So while established centers like Brarwood Mall and Arborland didn’t have the space for a Costco, property on the outskirts was overpriced, too far out or tainted by political hurdles to development.

With the Pittsfield Township deal, Costco apparently has overcome all of those barriers.

And in the meantime, it found a location close to a major interstate and to the county’s population core.

“It’s not Briarwood, but they don’t need the Briarwood draw,” Grant said. And by turning away from Jackson Road, Costco’s move will further anchor Pittsfield Township’s regional retail dominance.

The State Street corridor, said Supervisor Mandy Grewal, “is one of our main gateways into the township.”

Traffic on South State is estimated at 33,000 cars per day south of I-94, a number fueled in part by the concentration of office space along the corridor. Even with a vacancy rate of over 20 percent, an estimated 50,000 people work within three miles of the intersection, according to Landmark Commercial Real Estate.

Meanwhile, Ellsworth accounts for another 14,000 cars per day.

The location also sits between two key shopping districts on State: Briarwood in the city and the new Walmart-anchored shopping center at State and Michigan. And the Ellsworth Road frontage connects the location to the shopping at Lohr and Ann Arbor-Saline Road and, to the east, at Carpenter Road.

Yet the location also will require demolition of existing office buildings in Airport Plaza, along with zoning from the township.

It’s unclear today how Costco will choose to pursue the rezoning, said Grewal. One possibility is for the chain to submit a PUD, seeking spot zoning for the store and gas station instead of a traditional rezoning.

Either way, the move makes it likely that the Planning Commission and Board of Trustees will consider how the entire corridor could be reshaped in coming years. The township already is rewriting its master plan, with attention to two key drivers for the township: Economic development and land preservation.

Areas in existing high-traffic corridors that can be redeveloped to attract new businesses play a role in both efforts, according to the township.

"This is a perfect example of maximizing space and doing infill development," Grewal said. "Costco ... is in line with the types of businesses we've been recruiting to increase the vitality of the State Street corridor."

Attracting Costco to the location on Ellsworth also helps advance several development and redevelopment efforts initiated in recent years near the State and Ellsworth intersection.

They include:

• First Martin’s property at 3965 South St., formerly Enzo’s. The 2.23-acre property at the northeast corner has been approved for a 8,451-square-foot retail center, with a listed rental rate of $19 per square foot.

• The former Pinter’s Flowerland at 3930 S. State, which is listed for $999,000. The township has approved a 9,200-square-foot retail center for the corner property.

• A 5.75-acre parcel just east of the southeast corner that developer Howard Frehsee has submitted site plans to turn nto a 15,750-square-foot retail center with a free-standing building on an outlot.

• A rebuilt Speedway gas station at the southeast corner, which would share access from Ellsworth with Frehsee’s center.

Since 2005, two multi-tenant office buildings also were construction on Ellsworth Road in the township: The Bank of Ann Arbor building and the Covington Office Building.

All of that activity eclipses the building that’s housed Tyner Furniture for 18 years in a former Kmart store set back from the northwest corner.

Owner Fred Miller says he’s talked to developers over the years, and they include representatives of Costco.

“But they were just conversations,” he said. “That was it.”

Miller said he hopes the value of his property goes up due to the Costco proposal, just as he hopes it helps the sale of the former Pinter’s property.

Both Costco and more retail development will increase traffic and visibility at the corner, he said. “It would have to be a plus for me, just from people driving by.”

In the meantime, he’s also open to the possibility of joining a redevelopment effort - but emphasizes that his store, family run for 53 years, will stay open.

“We would talk to anybody,” he said. “We’d consider anything.

“But are we for sale? No,” he said.

Across the street, Frehsee’s project came into the pipeline several years ago then stalled along with the economy. He revived it in anticipation of recovery, and now the Costco news signals that traffic could increase beyond his projections.

“The fundamentals of the intersection (development) were still there,” he said as his reasoning for reviving the plans for his upscale project. “… That corridor is a very solid corridor.”

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



Thu, Aug 26, 2010 : 6:10 a.m.

Costco is another example of strip-mining local economies to vacuum money out of Michigan and into Washington state and China Inc., along the way contributing to the destruction of locally networked economies and civic fabric. Costco, like Walmart and other big-boxers will insidiously absorb local resources without much fanfare, degrading civic life and encouraging people's bulk-shopping addiction. Save a buck and unwittingly contribute to the state's relentless weakening. If you know the frog and boiling water metaphor, it's happing here.


Tue, Aug 24, 2010 : 1:41 p.m.

According to the article a total of 33,401 sqft of new retail space will be built on three sites near to Costco. Have any retail firms committed to leasing rental space prior to construction or are these projects purely speculative? (If entirely speculative I hope that the developers will get enough funding to complete construction. Otherwise..........)


Thu, Apr 29, 2010 : 5:19 p.m.

As a retired retailer (40+ years), I have been a long time customer of Costco and their genesis--Price Club--where Costco co-founder Jim Sinegal had worked previously. The two operations merged about 18 years ago with the Costco name surviving. IMO, Costco is one of the premier retailers in the US. As the sixth largest retailer in the US, Costco's 2009 volume was $71 billion, with an average store volume of $795/sq foot compared to Sam's Club, their closest competitor, $516/sq foot. Costco's success is well earned by the pride of their employees, who enjoy wages above their competition. CEO Jim Sinegal's 2009 estimated pay was $425,000 which pales in comparison to the avarice of Wall Street bankers who have earned the scorn of the American public. A review of the Board of Directors speaks to the integrity of their company. They include Johns Hopkins' Benjamin Carson Sr., a native of Detroit and graduate of U of M medical school; William Gates Sr. whose son founded Microsoft; Charley Munger, a director of Berkshire Hathaway, and a close confident of Warren Buffet, who has many times said that he would not make a decision without Charley's agreement; Jeff Raikes, director of the Bill & Melinda Gates Foundation; Susan Decker, former President of Yahoo. It is understandable why Costco's has emerged as the leading retailer in their category. The Ann Arbor area is fortunate to have this quality operation and Scio Township residents should realize that scorning a quality retailer who would have contributed to their tax base was classic case of myopia.


Thu, Apr 29, 2010 : 2:27 p.m.

Another great job by Scio Twp. Hopefully they haven't blown the possibility of a Tractor Supply store at Baker/Jackson. In these times, I don't know how any gov't entity can justify declining any sort of solid, new retail development.(and I don't mean a strip mall with no tennants lined up)


Thu, Apr 29, 2010 : 11:44 a.m.

I'm glad they are coming to Ann Arbor, Scio Township missed out on a fantastic opertunity when they let them walk away. Now maybe' they see they are not so high and mighty. They give builders the worst time trying to come in. Pittsfield Township will get the jobs and the tax base. Way to go


Thu, Apr 29, 2010 : 11:06 a.m.

I envision this store taking up all the property bounded by Airport Blvd behind Tyners with direct access coming from Airport Blvd and maybe one entrance off Ellsworth as well. To help move traffic better on State, they should seriously consider a traffic circle at Airport Blvd and Research Park Dr. The circles seem to be working just fine on Lee Rd. in Brighton, next to the other local Costco.

Paula Gardner

Thu, Apr 29, 2010 : 9:40 a.m.

Here is a Google map of the location:,+Ann+Arbor,+Washtenaw,+Michigan+48108&ll=42.230821,-83.743329&spn=0.008802,0.016415&z=16 It is difficult to picture where it would be - I just asked writer Janet Miller to head over there to talk to some of the affected businesses. The area proposed for Costco is the "rectangle" in the map formed on two sides by Airport Boulevard, Ellsworth and the Tyner property line. So the dot denoting Cybernet is where the store would be... but Cybernet is just one of the businesses in the buildings there. Also note: Zingerman's Bakehouse is not in the proposed area. I have had questions about that, too.


Thu, Apr 29, 2010 : 9:31 a.m.

So it's a deal now? Great! I hope prints a map showing where the store will be located. I'm having trouble picturing it behind Tyner's. Mr. Miller says no matter what, his store will stay open. Does this mean he would consider a move to another location? I just think that Costco should be on that corner.


Thu, Apr 29, 2010 : 9:13 a.m.

This would be so AWESOME!!!!!!!!!!!!!!!!!!!!!!! With so many office buildings in the vicinity it would mean big business for Costco. I know for a fact that our office would purchase our kitchen supplies and what not from them. But I do agree, the traffic will be a nightmare.


Thu, Apr 29, 2010 : 8:29 a.m.

I like Costco, but oh my god, is the traffic at State and Ellsworth going to be bad.

sun runner

Thu, Apr 29, 2010 : 8:11 a.m.

@blahblahblah: I agree: Ellsworth needs to be made into a four-lane boulevard a la Jackson Rd. Same with State St. south of Ellsworth. The traffic problems which are sure to result from a Costco at that location might be enough to keep me away from the store (even though I'm thrilled Costco is at last coming to Ann Arbor), much like the traffic/parking nightmares at the Washtenaw Whole Foods made me cross that location off my list permanently.

Mumbambu, Esq.

Thu, Apr 29, 2010 : 8:07 a.m.

How the heck is Tyner's still in business? It'd be nice to see the parking lot used for something-anything thatn just sitting there empty.


Thu, Apr 29, 2010 : 8:03 a.m.

Hopefully this will push up the timeline for widening both State and Ellsworth roads through this area.