Costco steams ahead with bulk grocery rollout
Bulk grocer Costco will open its fifth Victorian store in 2027, with an ambitious national rollout still going strong, backed by soaring profits as shoppers flock to its stores.
Its latest store plan is for Pakenham in Melbourne’s fast-growing south-east in two years’ time, taking up a large allotment in a new logistics centre being developed by Brookfield Properties.
“When deciding on new warehouse locations, the focus is to find lots that are close to our members, and are large enough to house our comprehensive range of goods, specialty services, fuel stations, and car parks,” Chris Tingman, country manager at Costco Australia told The Australian Financial Review.
The US giant now operates 15 warehouses across the country after arriving with its first store in Melbourne’s Docklands in 2009. Members pay between $65 to $130 a year, depending on their membership.
Fuelling that rollout is a 46 per cent jump in profit last year. Financial records show the Australian arm of the company – which also accounts for Costco Taiwan’s operations – reported about $11.37 billion in revenue, and a $279 million profit in the year to September 2024. It delivered a $205 million dividend to its parent entity.
“Our Pakenham warehouse will offer members exclusive access to a range of quality brand-name merchandise at the best possible prices, as well as a range of warehouse services, like a fuel station,” Tingman said.
The company decided to partner with Brookfield at Pakenham, seizing the opportunity to serve its existing membership base in the region. The area also part of Melbourne’s rapidly expanding south-east corridor, he added.
“Our aim is to be a valued part of the local community by creating jobs, bringing an exceptional retail experience and providing a competitive offering for quality goods, services and fuel,” Tingman said.
“We are pleased with Costco’s steady growth within Australia and plan to continue reviewing new opportunities to open more warehouses in the future.”
Industrial land in the Pakenham area trades for about $550 to $650 a square metre, according to market sources. On that basis, Costco’s latest site could be worth between $34 million to $40 million. Neither Brookfield Properties nor Costco commented on the sale price.
Cardinia Logistics Estate will span more than 185,000 square metres across two sites at 60 Greenhills Road and 130 Greenhills Road. Brookfield purchased the properties for about $45 million and $49 million in 2022, respectively, according to property records.
The estate will be built in four stages, with stage one scheduled to be completed by the fourth quarter of this year. It adds to Brookfield Properties more than 480 logistics warehouses, distribution centres and truck yards across 14 countries globally.
Danny Poljak, co-head at Brookfield Real Estate in Australia, said Costco’s arrival would be a commercial catalyst, boosting employment and business opportunities in surrounding areas.
“This transaction will support our development of the remainder of the Cardinia Logistics Estate, which will enhance already-strong leasing enquiry,” he said.
JLL and Colliers have been appointed to manage leases for the rest of the future estate.
Collier’s Gordon Code said he’d noticed an uptick in enquiries as stage one of the estate was close to being completed.
“We’ve been on market for six months, and obviously haven’t done any leasing deals yet, but they are certainly getting a lot closer now,” Code added.
“The Costco deal is only going to help the area and help the leasing. The amenity in the area is going to improve significantly.”
