This new Costco comes with affordable apartments upstairs—and a rooftop pool
A typical big box store sits by itself in a sprawling parking lot. But Costco’s newest store, now under construction in South Los Angeles, is very different: On top of the retailer’s 185,000-square-foot warehouse, there will be 800 apartments. The project, which broke ground today, is the first to take advantage of a new California law designed to speed up development, according to the developer, Thrive Living. The law, AB 2011, allows commercial projects that include affordable housing to avoid going through CEQA, an environmental law that has often been used to block new construction. “It basically bypasses the primary tool NIMBYs use to block housing,” says Matt Lewis, communications director for the nonprofit California YIMBY (“yes in my backyard”). “And that’s a pretty major change.” To qualify under the law, the building includes 184 units for low-income tenants earning 80% or less of the area median income. [Image: Thrive Living] Thrive Living approached Costco before the bill passed in 2022 to suggest that the retailer might want to be the anchor tenant for a new project—even though the chain has relied on freestanding stores in the past. The company was immediately interested. “I think Costco’s been looking to get into this sub-market for many, many years,” says Jordan Brill, a partner at Thrive Living. “Similar to other retailers of that size, there’s just a barrier of entry because of the scale of the site that they require.” Without the new law, it’s unlikely that Costco would have been able to build a store in the area. “It is really hard to build in the city of Los Angeles, and there’s political baggage around big box in particular,” says Lewis. “So I would bet my money that they were probably looking at the site and saying, ‘They’ll never let us just build a Costco.’” (Costco didn’t respond to a request for an interview.) [Image: Thrive Living] Thrive Living, which owns the site, thought Costco would be well suited for the area—a diverse neighborhood with a large middle-class Black population—because it offers affordable food and could create new jobs. “We saw alignment out of the gate, and began working collaboratively to design a store that would work for them, and still maintain a project that could deliver the level of housing that we need,” Brill says. Some critics have called the boxy, simple design the “Costco prison,” and others argue that it should have included larger units that would be a better fit for families. The apartments are a mix of studios, one-bedrooms, and two-bedrooms, ranging from 350 to 605 square feet. Still, Brill says that the small size meets market demand in the area from seniors who want to downsize, as well as from younger people who spend little time at home. (The development also includes amenities, like a fitness center, workspaces, community rooms next to courtyards, and a rooftop pool.) [Image: Thrive Living] Though construction is just beginning, Brill says he gets daily calls from interested tenants. “We actually have created a hotline to have respective tenants call and sign up because there’s just overwhelming interest,” he says. By one estimate, Los Angeles has a shortage of 270,000 units of affordable housing. The company hasn’t yet announced a timeline for completion, though the Costco store will be built first. The modular apartments will be built off-site in a factory, at the same time, to help speed up the process. The development process took time because the law was brand new. “It’s new for a planning department, it’s new for these agencies, and anytime there’s something new, it takes time and they wanted to make sure that they got it right,” Brill says. But he expects that it will go more smoothly in future developments, and it could be a model for other projects to quickly add more housing in the state. Other retailers are also thinking more about housing—including some grocery stores that are redeveloping their own land to add apartments and make better use of the space. In a project in a Phoenix suburb, for example, Aldi plans to build apartments on its own property. In the U.K., grocery chains like John Lewis and Asda are also developing housing on land that used to contain only supermarkets.
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A typical big box store sits by itself in a sprawling parking lot. But Costco’s newest store, now under construction in South Los Angeles, is very different: On top of the retailer’s 185,000-square-foot warehouse, there will be 800 apartments.
The project, which broke ground today, is the first to take advantage of a new California law designed to speed up development, according to the developer, Thrive Living.
The law, AB 2011, allows commercial projects that include affordable housing to avoid going through CEQA, an environmental law that has often been used to block new construction. “It basically bypasses the primary tool NIMBYs use to block housing,” says Matt Lewis, communications director for the nonprofit California YIMBY (“yes in my backyard”). “And that’s a pretty major change.” To qualify under the law, the building includes 184 units for low-income tenants earning 80% or less of the area median income.
Thrive Living approached Costco before the bill passed in 2022 to suggest that the retailer might want to be the anchor tenant for a new project—even though the chain has relied on freestanding stores in the past. The company was immediately interested. “I think Costco’s been looking to get into this sub-market for many, many years,” says Jordan Brill, a partner at Thrive Living. “Similar to other retailers of that size, there’s just a barrier of entry because of the scale of the site that they require.”
Without the new law, it’s unlikely that Costco would have been able to build a store in the area. “It is really hard to build in the city of Los Angeles, and there’s political baggage around big box in particular,” says Lewis. “So I would bet my money that they were probably looking at the site and saying, ‘They’ll never let us just build a Costco.’” (Costco didn’t respond to a request for an interview.)
Thrive Living, which owns the site, thought Costco would be well suited for the area—a diverse neighborhood with a large middle-class Black population—because it offers affordable food and could create new jobs. “We saw alignment out of the gate, and began working collaboratively to design a store that would work for them, and still maintain a project that could deliver the level of housing that we need,” Brill says.
Some critics have called the boxy, simple design the “Costco prison,” and others argue that it should have included larger units that would be a better fit for families. The apartments are a mix of studios, one-bedrooms, and two-bedrooms, ranging from 350 to 605 square feet. Still, Brill says that the small size meets market demand in the area from seniors who want to downsize, as well as from younger people who spend little time at home. (The development also includes amenities, like a fitness center, workspaces, community rooms next to courtyards, and a rooftop pool.)
Though construction is just beginning, Brill says he gets daily calls from interested tenants. “We actually have created a hotline to have respective tenants call and sign up because there’s just overwhelming interest,” he says. By one estimate, Los Angeles has a shortage of 270,000 units of affordable housing. The company hasn’t yet announced a timeline for completion, though the Costco store will be built first. The modular apartments will be built off-site in a factory, at the same time, to help speed up the process.
The development process took time because the law was brand new. “It’s new for a planning department, it’s new for these agencies, and anytime there’s something new, it takes time and they wanted to make sure that they got it right,” Brill says. But he expects that it will go more smoothly in future developments, and it could be a model for other projects to quickly add more housing in the state.
Other retailers are also thinking more about housing—including some grocery stores that are redeveloping their own land to add apartments and make better use of the space. In a project in a Phoenix suburb, for example, Aldi plans to build apartments on its own property. In the U.K., grocery chains like John Lewis and Asda are also developing housing on land that used to contain only supermarkets.
