Don't Just Shop at Costco.Live on Top of One.

A Los Angeles apartment development is a first for the retailer.

- REBECCA PICCIOTTO

A REAL-ESTATE DEVELOPER in Los Angeles is testing a new blueprint for affordable housing: stack apartments on top of a Costco.

Thrive Living is planning to begin construction in early 2025 on an 800-unit affordable housing complex with the megaretailer on the ground floor in the Baldwin Village neighborhood of South Los Angeles. The project, which includes a rooftop pool and fitness center, would have 184 apartments for low-income households.

The property would be the first residential development in the U.S. with a built-in Costco, which is best known for its fiercely loyal customers who load up carts with everything from bulk pickles to gold bars. The rent that Costco Wholesale pays Thrive will help the developer rely less on government subsidies for the affordable housing, according to Thrive's founder, Ben Shaoul.

If it works, Shaoul said he hopes to use the same tools elsewhere to create more affordable housing. "I want to build thousands and thousands of apartments every year, not hundreds," said Shaoul, who also runs Magnum Real Estate Group, in New York.

The Baldwin Village location would give Costco access to a densely populated urban market as well as an automatic customer base in the apartments upstairs.

Many residents might join the tens of millions of Costco members who pay fees to shop there.

If there are two tenants per unit, for instance, that could lead to as many as 1,600 Costco members "right there," said Karen Short, a Melius Research analyst.

Big-box retailers are known primarily for their suburban locations, were the stores are the size of a couple of football fields and surrounded by hundreds of parking spaces. In recent years they have been pushing more into cities with smaller stores and new designs.

Target and Whole Foods have anchored apartment buildings to gain access to urban populations.