Costco gets green light to build its biggest distribution facility in Australia

At 33,000 square metres of internal space it will be the company’s largest in Australia and is big enough to service up to 30 stores, a number which Costco is aiming to achieve within 10 years.

The facility is big enough to accommodate Costco’s anticipated growth in the next decade. Image: Costco

At present there are nine Costco stores across Australia, with three more under construction in Victoria, Queensland and Western Australia. Costco plans to open two stores a year to reach their growth targets.

The approval comes as Australian retailers are looking to future-proof themselves against Amazon, which last week announced it would launch its Fulfilment by Amazon service that allows businesses to access the e-commerce titan’s logistics capabilities, including packing, shipping, customer service and returns.

Costco Wholesale Australia’s managing director Patrick Noone said the Oakdale South Industrial Estate site was chosen as “an investment in Costco’s future in Australia”.

“As we expand our business, we require a larger facility to serve the needs of our members here in Australia,” he said.

“This location is ideal for housing our depot and provides hundreds of jobs in Sydney’s booming west.”

NSW Premier Gladys Berejiklian, who made the announcement on Monday, said she hoped the area around Sydney’s second airport at nearby Badgerys Creek would become a “fully integrated economic precinct”.

“Costco is the latest major employer to be setting up shop near the future airport site, helping form what will be an aerotropolis,” Ms Berejiklian said.

Costco, which first entered the Australian market in 2009, purchased the parcel of land in Oakdale South Industrial Estate, from joint owners Goodman and Brickworks for an undisclosed price.

Its current distribution facility in Wetherill Park, which Costco says is too small to accommodate its future growth, will be closed once the new one is open in 2019.

The wider Oakdale estate – including Oakdale Central, South and West – covers more than 300 hectares of industrial land and is expected to be worth more than $2 billion when completed.

Goodman Australia’s general manager Jason Little said the estate’s location close to key motorways, the jobs hub of Western Sydney and the future Badgerys Creek Airport made it a prime site for large retailers.

“By basing its major NSW depot here at Oakdale South, Costco is leveraging the estate’s strategic location in terms of easy access to consumers and the employment pool here in Western Sydney.”

The facility will be developed in two stages and is projected to be completed in time for the launch of Costco’s online shopping next year.