⚠ Buying the Land Was Cheap OnceModerate threat

The 725 warehouses where Costco owns the land were mostly bought when the land was cheaper, in catchments that were suburban rather than built out. That advantage cannot be repurchased, and the company's risk factors are unusually candid about how much harder the next site is.

Costco names the constraints directly: it must "compete with other retailers and businesses for suitable locations"; local land use regulations, community opposition and environmental rules "may impact our ability to find suitable locations and increase the cost of sites"; and "certain jurisdictions have enacted or proposed laws and regulations that would prevent or restrict the operation or expansion plans of certain large retailers and warehouse clubs, including us."¹ It adds a newer one: with growing global demand for electricity and water stress in some regions, it "may have difficulty securing long-term utility contracts for new buildings."

The financial shape of this is already visible. Capital expenditure was $5,498 million in fiscal 2025 for 27 openings including three relocations, and the plan for fiscal 2026 is $6,000 to $6,500 million for up to 35 openings including five relocations². Costco is spending more per year to add roughly 3% to the unit count, and the relocations are units that produce no incremental catchment at all.

The mitigating fact is that a Costco warehouse is a plain box on cheap land at the edge of a catchment, not a mall anchor, which keeps the absolute cost per unit far below a department store's. The unmitigated fact is that the acquisition of a 147,000 square foot site with parking for hundreds of cars is exactly the kind of development American municipalities have spent two decades making harder.

Watch capital expenditure per net new warehouse. Rising steadily in real terms means the land advantage is a legacy asset rather than a repeatable one.