SAN JOSE — Costco Wholesale has bought an office and research building in San Jose in a deal that could enable the discount retail titan to build a new fuel station near its existing warehouse store.
The retailing giant paid $14 million for a building at 1704 Automation Parkway in north San Jose, according to documents filed on June 25 with the Santa Clara County Recorder’s Office.
The property is across the street from a Costco store at 1709 Automation Parkway.
Costco has been in expansion mode in the Bay Area’s largest city in recent years, including the addition of a Costco business center store in east San Jose and a warehouse store in south San Jose.
The seller of the property was a business entity operating as Nautilus Global Commercial Real Estate, the county files show.
Costco bought the building through an all-cash deal, according to the real estate records.
The building totals 84,200 square feet, according to a marketing brochure for the property that Colliers, a commercial real estate firm, has been circulating.
Colliers brokers John Kolyar, Kyle Portal and Brett Taylor arranged the real estate deal on behalf of the property’s seller.
The offering price was $15 million. In January 2024, the building’s assessed value was slightly below $24 million. This suggests that Costco bought the building at a discounted price.
However, it’s possible that the 5.6 acres of land beneath the building is what has caught Costco’s eye in a big way. The building might wind up being bulldozed to clear the way for a future Costco fuel facility.
Separately, in late May, Costco filed an application with San Jose planners. Costco proposed the development of a new fueling station on the site of the office and research building.
“The project will relocate the existing Costco Gasoline facility located at the address above to the developed parcel across Automation Parkway currently occupied by a commercial/office building,” Barghausen Consulting Engineers stated in the filing with the city of San Jose.
The project will include a canopy totaling 23,000 square feet. The site will accommodate 25 new fuel dispensers and four underground storage tanks, each capable of holding 40,000 gallons. The new gasoline station will include a 1,500-gallon fuel additive tank, according to the development proposal.
“The existing fuel facility will be razed and removed from the site, and the existing 4,055-square-foot commercial building will be demolished,” the Costco representative stated in the filing. “The existing underground storage tanks and piping will be decommissioned and removed by state-certified contractors.”
Once the former fuel facility is removed, Costco will pave over that site and create additional surface parking for customers.
The project will add 318 parking spaces for a new total of 1,052 parking spots, the project files state.
“The intent of the relocation is to install a new state-of-the-art facility to provide a more efficient fuel purchasing experience for Costco members,” Costco’s representative stated in the planning documents.
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