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Originally published November 12, 2009 at 12:09 AM | Page modified November 12, 2009 at 12:41 PM

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Costco Wholesale opens first Manhattan store

Costco expects sales for the 110,000-square-foot East Harlem store — its 563rd worldwide — to reach $220 million a year, almost double the $131 million of its average location but still not approaching its biggest-volume warehouses in Hawaii and South Korea.

Seattle Times business reporter

Jeff Brotman, Costco Wholesale's chairman, has waited at least a decade for this day, when the chain he co-founded opens its first store in Manhattan.

In that time, he found a retail space big enough for a Costco warehouse, then backed away when rents got too pricey. Costco re-entered the East Harlem development after the recession brought prices back to earth and caused Home Depot to bow out. "We were pushed out at the eleventh hour but came in [the] back door," said Brotman, who already is scoping out spaces farther south in Manhattan to pick up customers who don't want to travel as far north as East Harlem.

The new store was also a spark for city politicians to push Costco to accept food stamps, which it now plans to do nationwide.

New York City Council Member Eric Gioia has been asking Costco to accept food stamps for a couple of years, said his press secretary, Eric Koch. "When we found out it was opening a store in East Harlem, a neighborhood with a high density of food-stamp recipients, we took the torch back up."

Executives had opposed the idea, saying their affluent customers — who pay $50 a year to be members — do not tend to be food-stamp recipients. CEO Jim Sinegal recently said the recession has changed that picture.

Costco expects sales for the 110,000-square-foot East Harlem store — its 563rd worldwide — to reach $220 million a year, almost double the $131 million of its average location but still not approaching its biggest-volume warehouses in Hawaii and South Korea.

It's the first tenant to open in a 485,000-square-foot project called East River Plaza that also includes Target, Best Buy and Marshall's and that took nearly two decades to complete, The New York Times recently reported.

Manhattan has long been a stronghold against big retailers largely because of scarce and pricey real estate, Brotman said. "Even smaller formats like grocery stores have not been able to penetrate."

Just getting within 75 miles of the densely populated island takes an effort, he said.

As of today, Costco has warehouses in four of New York City's boroughs — Brooklyn, Manhattan, Queens and Staten Island. It's still missing the Bronx.

"I've been pounding away for years in the region," Brotman said. "It's the last bastion of markets where we haven't penetrated to any depth."

Costco will carry the same massive packages of toilet paper and mayonnaise in Manhattan as it does elsewhere, but the parking won't be as generous.

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Most Costco stores attract 5,000 to 7,000 cars a day, Brotman said, which the new location could not accommodate. He expects people to take cabs and public transportation and share rides.

He also thinks they will share memberships, something rare in the U.S. but common among customers in population-dense parts of Asia.

"You can only bring one friend, but it doesn't bother us if people want to shop together," he said.

Brotman declined to say where he's looking elsewhere in Manhattan. Like so many real-estate projects, the one he's had his eye on is stalled anyway.

"I had several deals in the pipeline where we were going to be part of a brand-new office building — so the ground floor or basement of these buildings — but they've been put on hold or killed," he said.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

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