Redmond Won't Get A Costco Store After All -- Decision Called `Devastating Loss' For City

REDMOND - Warehouse giant Price/Costco has scrapped plans to move its headquarters to Redmond and build a store at the east end of Highway 520.

"It was a gut-wrenching decision on our part," said company Vice Chairman Jeff Brotman, who met with Mayor Rosemarie Ives and the Redmond planning staff yesterday to deliver the news.

Brotman said the company received new information about its membership base at a time when the Redmond project was held up by the state Department of Transportation because of traffic concerns over the congested intersection of Northeast Redmond Way and Highway 520.

If not for the DOT delay, the Redmond store would probably be under construction now, Brotman said. Originally, the company had planned to open the headquarters in December of last year.

"It's a big disappointment," Ives said.

The mayor said Brotman called two weeks ago with plans to "downsize" the planned corporate headquarters from three stories to two.

The company has outgrown its offices adjacent to the Kirkland Costco store and wants to build a 150,000-square-foot office next to one of its stores, Brotman said.

Price/Costco was to be a major tenant of the Gateway shopping center, the biggest retail development in Redmond in years.

"It's a really devastating loss to the city," said City Council President Sharon Dorning.

Ives said plans are still on for Mervyn's and Target to build stores at the Gateway center next summer. Kemper Real Estate Management Co., which owns Bellevue Square, is the developer of those stores.

Civic leaders have long complained about the city's lack of a retail base, but in the past year Redmond seemed to have shaken the economic doldrums and was expecting a 100 percent increase in the square footage represented by planning applications this year.

Brotman said the company had received all of its building permits from the city, which had done "tremendous work" at getting the proposal approved in record time. Groundbreaking was supposed to happen in February.

But then the project was delayed by state DOT concerns, and in the meantime the company re-evaluated its customer base and decided "it didn't make economic sense" to build a store in Redmond, Brotman said.

Aside from its store in Kirkland, Price/Costco is building two more stores, one in Issaquah and one in south Everett. Brotman said the company thought many potential Price/Costco customers in the Redmond-Woodinville area would shop at the Everett store.

Costco was to be part of a 570,000-square-foot shopping center. Costco owns the land it planned to develop.