ESCONDIDO — A new Costco storefront is coming to Escondido.
The Escondido City Council approved a new lease agreement in late June for the wholesale retailer to replace the former Sears store on Westfield North County property located at the intersection of Via Rancho Parkway and Interstate 15.
The city owns seven of the eight parcels that make up the Westfield property. Six of those seven parcels are leased to tenants, including the Westfield North County Shopping Center, which rents Parcels 2, 5, 7, and 8.
The former Sears store is located on Parcel 1, leased by parent company Transformco until the council approved Costco Wholesale Corporation’s lease takeover during a special meeting on June 27.
The base rent for Costco will be $100,000 per year, which the company will have to start paying either in three years or once the store opens, whichever comes first. The three-year rent grace period is intended to ease the entitlement and construction process for the store.
Deputy City Manager Chris McKinney noted that the City Council was only voting on an amendment to lease the parcel to Costco and not approving any applications or entitlements for the project at this time; however, those applications are expected to be turned in soon after the council’s approval of a lease amendment.
If Costco moves through with the entitlement process and is approved, the city anticipates $35 million in capital investments made to the property.
McKinney also noted that if a gas station is built, Costco would have to undergo environmental remediation of the property and remove the underground gas tanks if the lease is terminated.
Costco’s lease term is 20 years with seven 5-year extension options not to exceed a total of 55 years.
In addition to the lease amendment with Costco, the City Council also approved a 24-year lease extension of the Westfield North County Shopping Center ground lease to end concurrently with Costco’s lease if the company stays the entire 55 years.
The city anticipates $1.5 million in sales tax revenue from Costco during the first year of stable operation, 314 additional jobs and even more potential investment into the Westfield property.
“I think it will be very helpful for the mall,” said Councilmember Consuelo Martinez. “I still shop at the mall, and even though there are some empty spaces there, there’s still a lot to visit, and I think Costco will help bring more people and more business to the mall.”
Councilmember Joe Garcia said the response from residents about Costco coming to Escondido has been mostly positive. However, a few residents have mentioned concerns about traffic and competition with Target at the mall.
Deputy Mayor Tina Inscoe said she shops at Target and Costco and preferred to have the two in one place rather than driving to multiple locations.
“Having an anchor like Costco come in will make it more attractive,” Inscoe said. “I’m grateful that Costco came to us to look at our community and chose to begin this process.”
Councilmember Michael Morasco also welcomed Costco to the city’s District 4, which he represents. He noted that he and Mayor Paul McNamara live close enough to walk to Costco once it opens.
Morasco said Costco is “very good for us, very good for the property, very good for the city.”