Costco Wholesale will be the 148,000-square-foot anchor tenant for the 330,000-square-foot Gardens on Millenia mixed-use development on Millenia Boulevard, according to documents filed with the City of Orlando.
Veteran Orlando retail brokers told GrowthSpotter Wednesday that with Costco generally considered a "Best in Class" operator for wholesale retail, its presence on Millenia Boulevard could spell trouble for BJ's Wholesale Club, which has been established since 2001 directly west of the future Gardens development, but may be near the end of a lease.
"Costco has taken that market by storm and is making a run for market dominance. There's so little availability for wholesale store sites, you figure they grabbed this because of strong demographics in the Millenia area, and more residential and new apartments popping up nearby," said Cindy Schooler, director of retail and office brokerage at Cushman & Wakefield.
The Millenia Plaza, directly west of the future Costco site, has housed BJ's Warehouse since 2001 but was acquired by a Canadian lending entity in late 2011. BJ's may have two years or less left on its lease term, and could be turned off a renewal with incoming competition, Schooler said.
However, a big enough gap in the wholesaler market may now exist between Costco as a premium option, and BJ's Warehouse and Sam's Club as economy choices, to let two prosper in one of the most profitable shopping markets in the nation, said Justin Greider, vice president of retail brokerage at Jones Lang Lasalle.
"It's not unusual now in the Southeast to find a Costco and either of those other competitors near one another. Because they're membership-driven they can co-exist, and don't usually cannabalize the other's customer base like you see with a Home Depot and Lowe's," Greider said.
"Mall at Millenia was the No. 9 mall in the country last year in terms of sales per square foot, and you see a ripple effect for neighboring shopping centers there. Especially with Ikea, it makes Millenia a regional draw for the Greater Orlando market," he added.
While the Millenia submarket may draw enough regionally to support two wholesalers in the short term, BJ's faces the jeopardy of a store closure, said James Mitchell, senior vice president of retail services for CBRE in Orlando.
"This new location should be a very strong performer for Costco, as it takes a large bite out of BJ's store volume and plays to the regionality of the Millenia trade area," he said.
Spanning 87 acres, Gardens on Millenia is being developed jointly by South Florida-based Stiles Corporation and BBX Capital. The property's first phase includes a 148,000-square-foot multi-tenant retail center, along with a 150,000-square-foot big box wholesale store and a 292-unit apartment complex.
Other retail and outparcel tenants could not be confirmed for the development on Wednesday by a Stiles spokeswoman, who declined to comment due to confidentiality agreements.
The project's contractor is Jon M. Hall Co. of Longwood, engineers are Madden, Moorehead & Glunt of Maitland, and the architect is Charlan Brock of Maitland, GrowthSpotter reported in mid-May.