Costco Grabs San Jose Offices for $14 Million

Costco is preparing to grow its footprint in San Jose with a $14 million purchase.

The wholesaler just bought an 84,270-square-foot office and research building at 1704 Automation Parkway in an all-cash deal with plans to turn the site into a new fuel station, The Mercury News reported. It would be an addition to the Costco warehouse across the street at 1709 Automation Parkway. The office building’s assessed value in January 2024 was less than $24 million.

Issaquah, Washington-based Costco bought the property from Nautilus Global Commercial Real Estate, an affiliate of Fremont, California-based Nautilus Global Investment. Nautilus bought the property in 2017 from New York-based Atlas Real Estate Partners for $21.5 million, according to the Silicon Valley Business Journal.

Costco filed an application with the city of San Jose last month to develop a new fueling station at the 5.6-acre site. It would replace an existing Costco fuel station on the southern side of the 1709 Automation Parkway parcel. The outpost would have 25 new fuel dispensers and four underground storage tanks holding 40,000 gallons each, as well as a 1,500-gallon fuel additive tank.

The goal is to “install a new state-of-the-art facility to provide a more efficient fuel purchasing experience for Costco members,” a Costco representative stated in planning documents, according to The Mercury News.

“The existing fuel facility will be razed and removed from the site, and the existing 4,055-square-foot commercial building will be demolished,” a Costco representative said in the filing. “The existing underground storage tanks and piping will be decommissioned and removed by state-certified contractors.”

After the original fuel station site is flattened, Costco will turn it into 318 parking spaces, making for a total of 1,052 parking spots on the property.

Costco has been expanding its presence in the South Bay over the past decade.

It opened a warehouse at 6898 Raleigh Road in south San Jose in 2017, and in 2020, it opened a business center store at 2376 South Evergreen Loop in east San Jose. Other nearby Costco locations include 2201 Senter Road and 5301 Almaden Expressway in San Jose; 1601 Coleman Avenue in Santa Clara; and 150 Lawrence Station Road in Sunnyvale.

Meanwhile, in Southern California, Costco is similarly growing in Orange County. It just acquired a former Bed Bath & Beyond location in Mission Viejo with plans to turn it into a fuel center. And in Lake Forest, Costco snapped up a former Regal Cinemas location spanning 160,811 square feet with plans for a new warehouse.

— Chris Malone Méndez