Sears in Hilo to close

[terracore]

Does Costco even lease mall space? I've only seen stand alone buildings. That smallest Costco at one time was going to expand by 12,000 feet but they made other changes like cannibalizing some of their back storage space instead. The problem isn't really having enough space to stock their stuff (the smallest costco only has a few hundred less items than the largest costco) it's having enough space to fit all the shoppers inside without a line to get in. And a big enough parking lot for all the cars. That's the problem Kona has. Sometimes there isn't any parking and the store is usually packed.

[AaronS]

The parking problem at the Kona stotre should be addressed when the new employee parking lot is completed. Costco recently bought an adjoining parcel for 4.25 million dollars to add 60 employee parking stalls.

https://www.bizjournals.com/pacific/news...ehouse.htm

"Costco has added parking at one of its Hawaii warehouse stores with the purchase of an adjacent parcel that will be used for employee parking.

Costco (Nasdaq: COST) closed on the purchase of the two-acre lot at 73-5588 Lawehana St. in Kailua-Kona on Sept. 16 for $4.25 million, according to public records. The seller was Bacon Finance & Realty Inc."

[terracore]

That's a step in the right direction but doesn't address the crowded store problem. I think a better option would have been for them to open an East side location!

[SBH]

They were almost finished paving that new parking lot yesterday.

[HereOnThePrimalEdge]

Does Costco even lease mall space?

Costco has an average 11% markup.  Stores in shopping malls must pay a percentage of their sales/profits to the mall in addition to rent.  That additional cost may not align with Costco’s business model.

[Obie]

At one time the council voted to pass a resolution to ban big box stores !!

Walmart expanded by putting their inventory into containers.

The vocal minority always wins here, Costco won't be on this side soon !!!

[terracore]

Does Costco even lease mall space?

Costco has an average 11% markup.  Stores in shopping malls must pay a percentage of their sales/profits to the mall in addition to rent.  That additional cost may not align with Costco’s business model.

Costco's markup is only high enough to pay operating expenses.  Their business model is that they generate profit by selling memberships.  In that sense, there would be no percentage rent.

I don't know if malls do percentage rent anymore.  When we leased mall space it had previously been an option but the mall owners got rid of it because they believed people were fudging their numbers to get out of it.  I guess everything is negotiable.  I knew a couple who ran a cafe in a mall and one of the things they put into their lease was that they could break it without penalty if the anchor store left.  It did, and so did they.

[ChunksterK]

"At one time the council voted to pass a resolution to ban big box stores !!" - Obie

Yes, they did, but it didn't apply to Hawaiian Homelands. We got Target and the expansive new Safeway after that silly resolution. I knew someone in the Planning Department at the time who said that even the county bureaucracy had doubts about the binding legality of the resolution. Obie is right, however, about the political climate being hostile for such development. Won't happen.

[HereOnThePrimalEdge]

I don't know if malls do percentage rent anymore.  ... I guess everything is negotiable.

You're probably right.  10 or 20 years ago mall management could call the shots.  I walked through Prince Kuhio Mall yesterday, and they have a lot of space to fill.  Probably by any means necessary.

[AaronS]

There is a couple points I want to make this thread:
1. Home Depot's HHL lease contained an condition that prohibited home improvement businesses from building across from their Hilo store. This is why a Safeway and Target got constructed there instead.

2. Costco explored leasing HHL land for a warehouse, but that was scuttled since they own, not lease, the pads for their warehouses

3. Safeway's real estate unit proposed a shopping complex across from Hilo HPM. The shopping complex was slated to be anchored by Lowe's, but the project fell apart. Safeway sold their real estate division in 2014.