| Purchase Price | $31,200,000 |
|---|---|
| Annual Rental Income | $1,500,000 |
| Cap Rate | 4.81% |
| Lease Term | 23 Years |
| City | Gilbert |
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Costco Ground Lease – Gilbert, Arizona (Phoenix Metropolitan Statistical Area – Maricopa County)
The Costco Wholesale ground lease located in Gilbert, Arizona represents an extraordinary opportunity to acquire a long-term, passive income-producing investment leased to one of the most stable and creditworthy retailers in the world. Positioned in the heart of the Phoenix MSA—one of the fastest-growing and most economically vibrant metro areas in the United States—this property combines world-class tenancy, exceptional demographics, and irreplaceable real estate in a high-barrier-to-entry trade area.
This ground lease features an absolute triple-net (NNN) lease structure, whereby the tenant, Costco Wholesale Corporation, is responsible for all operating expenses, taxes, insurance, and property maintenance. There are no landlord obligations, making the investment truly passive and ideal for high-net-worth individuals, institutions, and 1031 exchange buyers seeking reliable, bond-like income backed by a Fortune 50 company.
Costco is renowned for its conservative site selection strategy, rigorous development criteria, and long-term operational commitment to each location. Once a site is built and operational, Costco rarely relocates or closes it. The company’s extremely high per-store sales volume, membership-based revenue model, and broad customer base provide outstanding financial performance that translates directly into rent stability for ground lease landlords.
The Gilbert location serves as a key regional hub for the Southeast Valley of the Phoenix MSA, one of the fastest-growing submarkets in the western United States. The surrounding area includes a mix of master-planned residential communities, top-rated schools, commercial developments, and high-income households. With strong vehicular traffic, easy access to major freeways, and proximity to key employment nodes, this property is exceptionally positioned to serve the region’s rapidly expanding population for decades to come.
Tenant Overview – Costco Wholesale Corporation
Costco Wholesale Corporation (NASDAQ: COST) is one of the largest and most successful retailers in the world. With over 850 locations and more than 130 million cardholders globally, Costco operates as a membership-based warehouse club focused on providing a wide array of high-quality goods and services at extremely competitive prices. Its operations span grocery, electronics, appliances, apparel, furniture, pharmacy, fuel, optical, business services, and e-commerce.
Founded in 1983 and headquartered in Issaquah, Washington, Costco has built its business around operational efficiency, bulk pricing, high inventory turnover, and a loyal member base. Unlike many traditional retailers, Costco earns the majority of its profit from annual membership fees rather than merchandise markups, allowing it to keep prices low and drive significant repeat traffic.
Key corporate highlights include:
Costco’s conservative expansion philosophy and focus on long-term sustainability make it a gold-standard tenant for ground lease investors. The company’s infrastructure investment at each site often exceeds $25 million, creating strong incentives for site retention over decades.
Lease Structure – Absolute Triple-Net Ground Lease
This property is leased to Costco on an absolute triple-net ground lease basis. This means the tenant is responsible for all costs associated with the property, including maintenance, structural repairs, insurance, and taxes. The landlord has no management responsibilities, no capital obligations, and receives fixed rent payments throughout the lease term.
Typical lease highlights include:
Costco is known for staying in locations long term, often renewing for multiple decades. The typical lease structure is ideal for long-term investors seeking stable, predictable income streams from a credit tenant with excellent fundamentals.
Market Overview – Phoenix MSA
The Phoenix metropolitan area is one of the largest and fastest-growing markets in the United States. With a population of over 5 million people and a business-friendly climate, Phoenix consistently ranks among the top metros for population growth, job creation, and corporate relocations.
The region has experienced tremendous in-migration from California, the Midwest, and the Northeast, driven by its affordability, low taxes, warm climate, and expanding economic base. The Phoenix MSA has become a national leader in high-tech manufacturing, logistics, healthcare, financial services, and construction. It is also home to major companies such as Intel, Honeywell, Wells Fargo, Banner Health, and Amazon.
Phoenix MSA key statistics:
These economic trends have translated into high retail demand, population stability, and increased need for large-format retailers such as Costco to serve new communities.
Submarket Overview – Gilbert, Arizona (Southeast Valley)
Gilbert is one of the most dynamic and affluent submarkets in the Southeast Valley of the Phoenix metropolitan area. Once a farming town, Gilbert has transformed into a thriving suburb known for its master-planned communities, A-rated school districts, and robust commercial development. The town has experienced exponential growth over the past two decades and now boasts one of the highest median incomes in Arizona.
Gilbert demographic highlights:
Gilbert’s strategic location near Mesa, Chandler, and Queen Creek makes it a hub for both residential living and regional commerce. The Costco property benefits from high daytime and evening population density, substantial discretionary income, and consistent regional draw across Maricopa County.
Property Overview – Infrastructure and Format
This Costco property includes a full-format warehouse with a footprint typically exceeding 150,000 square feet. It is located on a large parcel that accommodates extensive surface parking, a fueling station, and service-specific departments including tire installation, optical care, pharmacy, hearing aid testing, and prepared food services.
Notable features may include:
Costco’s site layout supports heavy foot traffic, bulk purchasing, and repeat customer visits. It also serves as a vital piece of Costco’s regional distribution and omnichannel order fulfillment.
Strategic Investment Case
Owning a Costco ground lease in Gilbert, Arizona means securing income from one of the top-performing retailers in the world while benefiting from the economic strength and growth momentum of the Phoenix metro area. Few retailers offer the level of security and retention probability that Costco does, and few ground-leased assets combine such a creditworthy tenant with irreplaceable suburban infill real estate.
Investment highlights:
Conclusion
The Costco ground lease in Gilbert, Arizona represents a premier example of secure, long-term, passive real estate investment. With a strong corporate lease, no landlord responsibilities, and a location in one of America’s fastest-growing suburban trade areas, this asset checks every box for institutional and private buyers alike.
Investors seeking a best-in-class tenant, high-performing retail real estate, and predictable long-term income should strongly consider this opportunity. With extremely limited supply of ground-leased Costco assets nationwide—and even fewer located in top-tier growth markets like Gilbert—this investment offers not just dependable cash flow, but long-term value preservation and portfolio strength.