Some things just take a little bit of time to come together. That appears to be the situation unfolding for a new Costco warehouse store at Escondido’s shopping center, formerly known as North County Fair. The Costco deal has been toggled on and off over the last year, but the latest development is clearly in the “on” position. The City will now consider approving a lease agreement directly with Costco at their upcoming public meeting on Wednesday, August 12.
The City action will not be the first time approving plans for a Costco in Escondido. In June of 2022, the City approved a 20-year lease with an additional seven five-year options. That lease would have resulted in $35 million worth of capital investment in the center. Fixed rent payments to the City and sales tax revenue were projected to produce an income stream of $1.5 million, and the new warehouse store, plus the additional gas station, would provide 314 jobs.
The 2022 deal was not directly with Costco. Rather, it was between the City and an entity known as “Transformco.” Officially identified as Transform SR Brands LLC, Transformco was an American privately held company formed in 2019 to buy the remaining assets of Sears Holdings Corporation after it filed for bankruptcy. Sears had been an anchor tenant at the original Escondido Village Mall since 1971 and moved to the newly constructed North County Fair in the mid-1980’s. However, the store closed in 2020 after the entire Sears company filed for bankruptcy.
By 2023, while the building sat vacant beside a busy Interstate 15, the proposed deal had changed to one directly between the City and Costco. The direct involvement of Costco didn’t change the attractive economics for Escondido. The infusion of money into improving the center, the financial benefits to the City, and the number of jobs created remained the same as proposed a year earlier. All that fell apart just before Thanksgiving 2023 with the City’s announcement that Costco had backed out. Although Costco had paid fees and a development application was well underway, they requested work on that application be stopped.
At the time, no reason for the change of plans was given. Nonetheless, speculation ran wide as to the reasons…ranging from Costco’s internal decision-making, rumors of permitting and processing problems, to potential land use restrictions and the impact of state laws requiring the city to use excess lands for housing purposes rather than commercial uses. Some even said it was because the City really didn’t control the property, even though the City is the owner and lessor of nearly the entire shopping center property, including the proposed Costco site. To the trained eye, however, a closer look at the City’s closed session agendas over the last several months shows that Costco and the City were obviously still on speaking terms, including as recently as July 29, 2026, when the City discussed real estate negotiations directly with Costco. The result now appears to be a proposed lease and other materials up for City Council approval on Wednesday, August 12.
The proposed lease would be directly between the City and Costco, and similar to the prior proposal, would be for a base period of 20 years with up to seven additional renewal options of five years each. The City’s staff report notes that the longer term of this lease is expected to not only provide stability for Costco operations but likely encourage additional investment in the shopping center by other leaseholders, thus increasing rent revenues and sales tax revenues even further for the City.
Fixed rent is established at a flat $100,000 per year for the term of the lease, although that rent would not be charged for up to 36 months while Costco obtains the necessary development and approvals. Those approvals are not guaranteed by the lease. In an improvement from prior forecasts, the City now anticipates receiving more than $2 million a year in sales tax revenue from the new warehouse store. And worth noting is that these revenues are unrestricted revenues for the City’s general fund which can be used for the benefit of the residents of the City at the discretion of the City Council.
For those on City staff and the consultants laboring on this task for now more than five years, the result appears to finally be at hand. While the economic benefits will be significant and the jobs will be nice, many in southern Escondido will likely appreciate the many benefits of a Costco warehouse, not to mention the less expensive gasoline and a cheap hot dog and soda.
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