Costco reveals when Docklands warehouse will close amid move west

Costco is betting on the future of Melbourne’s western suburbs after confirming it will relocate its first Australian store in Docklands to an $110 million site in Ardeer before the end of the year. 

Located 15km west of the Melbourne CBD, the 5.9 hectare site in an industrial precinct on Ballarat Road in Ardeer is set to be a larger offering compared the retail giant’s current Docklands operation.

A 15,000sqm warehouse will offer an extended range of merchandise, the membership-only retailer said, along with increased parking of up to 760 spaces.

Costco will close its Docklands warehouse in late 2024. Picture: Getty

It will also boast Costco Australia’s largest fuel station – providing 32 bowsers with two high-flow diesel pumps.

Costco Australia managing director Chris Tingman described the relocation as a vote of confidence in the continued growth of Melbourne’s west.

“Costco sees this region as dynamic and fast-growing and we believe that we can bring great value in relation to a wide range of products and services to the community,” he said.

“Our focus is always to find the right location to meet our specifications so that we can ensure every warehouse is comprehensively stocked,” added Mr Tingman, “offering a wide range of products and services of the best quality at the best possible price.”

The Ardeer warehouse is projected to open in late 2024 in line with the closure of the Docklands warehouse.

Strategic move

Docklands Costco opened in 2009 and marked the retail giant’s first location in Australia.

In the 15 years since, Melbourne Docklands has undergone rapid population growth and skyrocketing rents.

PopTrack economist Anne Flaherty noted Costco’s Melbourne move to the western suburbs could likely be attributed to increased outgoings.

“There is more available and affordable space out west and Ardeer is an area that is also growing very rapidly,” she said.

“It’s the fastest growing region in the state and has experienced 12% population growth over the last five years, so I think that it’s a good strategy on Costco’s part to exit Docklands and target that area of Melbourne.”

More jobs, bigger offerings

While the initial cost of the Ardeer site was projected at $62 million, Costo has confirmed the new development will cost approximately $110 million.

In addition to improving member convenience and the overall shopping experience, the company revealed the Ardeer site will create approximately 120 jobs during its construction phase.

Costco will also be relocating approximately 270 employees from the Docklands warehouse to Ardeer.

Costco operates no-frills warehouses with stock stacked on pallets and larger pack sizes, plus a range of specialty services. Picture: Getty

In terms of product offerings, the Ardeer location will feature a variety of specialty services, which include an optical department and hearing aid centre, tyre centre, and the company’s famous food court – which will also house a bakery, fresh meat and produce section and a deli.

Annual Costco memberships are $65 for businesses and individuals, and $130 for executive memberships, which give customers access to purchase thousands of brand-name products in bulk.

Items include everything from groceries, confectionary, alcohol, appliances and automotive supplies to toys, hardware, sporting goods, jewellery, electronics, books, housewares, apparel, health and beauty aids, furniture and office supplies.

Further expansion

Costco’s Melbourne relocation comes as the company looks to significantly expand its presence in Australia.

The big box retailer opened its 14th Australian store and second warehouse in Perth in December 2022. Its 15th soon followed – Costco Coomera on the Gold Coast – in June 2023.

Costco recently revealed to realcommercial.com.au several hotspots in NSW, South Australia, Western Australia and Victoria where it was keen to find sites for new warehouses.

They included Hobart, North Sydney, South Sydney, North Perth, South Adelaide and Geelong.

“Those are kind of the hotspots that we’re trawling through all the time looking for good sites,” said Patrick Noone at the time, now the former Country Manager of Costco Wholesale Australia.

Mr Noone had noted that finding additional sites in Sydney, where Costco currently has three stores, was a priority.

“When you look at the markets in Australia, Sydney is definitely a great market for Costco and we only have three Costcos here with about six million people. So there is a lot more opportunity in that marketplace,” he said.