The dilemma now facing Costco is what to do with the original property, as its current lease on which will not expire until the end of 2008.
Joel Benoliel, senior VP of real estate for the Issaquah, WA-based Costco, tells GlobeSt.com that the obvious, best solution is to find a new tenant to take the space by sublease or assignment. Another alternative being tossed about is Costco purchasing the property and turning it in a successive sale. Benoliel reasons that it may be easier for Costco to find a buyer than to sublease.
The potential for the purchase scenario is dependent on the current owner's willingness to part with his property. Benoliel says discussions with owner, Chip Paulsen Sr., of Palm Springs, CA are in the early stages, and it may be "premature" to move on such a solution until Costco has had sufficient opportunity to find a replacement tenant. Whether a sublease or sale, Benoliel says Costco is "prepared to facilitate a three-way transaction."
Steve McArthur, of the Irvine, CA. Office of Northwest Atlantic Real Estate Services, is Costco's national master broker, and is responsible for disposition of all its excess properties. According to McArthur, Costco is asking $0.36psf, per month for a sublease. However, Costco is "open to offers." McArthur informs GlobeSt.cm that Costco's lease agreement has provisions for two, five-year extensions.
Aside from another big box company, in McArthur's view: "The best tenant for the property would be another retailer that could use the front portion of the building as retail and the back for warehousing." Because of its layout, however, breaking the building up for multiple tenants would be difficult. The structure has an interior clear height of about 22 feet and sits on nine acres adjacent to Interstate 90, near the central business district. It also includes 481 parking stalls.
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