Living Above a Costco Could Be the Future of Affordable Housing

For decades, the idea of living above a big box store felt more like a joke than a serious policy proposal. Retail spaces were places people visited briefly, not places they imagined building their lives around. Housing, on the other hand, was meant to be quiet, separated, and distant from commercial activity. That long standing divide is now being challenged by economic reality.

In South Los Angeles, a massive mixed use development is taking shape that merges one of the most recognizable retailers in North America with hundreds of new homes. The idea is both practical and symbolic. If cities are running out of space, and housing costs continue to climb, then every piece of usable land must work harder.

At the center of this shift is Costco, a company known for bulk groceries, low prices, and sprawling warehouses. By anchoring a large scale residential project, Costco has become part of a broader conversation about how cities can respond to the affordable housing crisis without waiting for perfect solutions.

A Housing Crisis Decades in the Making

The affordable housing crisis did not emerge overnight. It is the result of decades of policy decisions, market pressures, and demographic changes that have steadily reduced the supply of attainable housing in major urban centers.

In cities like Los Angeles, population growth has consistently outpaced housing construction. Zoning laws that prioritize single family homes, lengthy approval processes, and neighborhood opposition have limited density in areas where demand is highest. At the same time, construction costs have risen sharply due to labor shortages, material prices, and regulatory requirements.

For renters, the consequences have been severe. Rent increases have far exceeded wage growth, forcing many households to spend well over the recommended share of income on housing. Overcrowding has become more common, commutes have grown longer, and housing insecurity has intensified.

Local governments have tried a variety of approaches, including rent control, subsidies, and public housing investments. While these tools have helped some residents, they have not closed the widening gap between supply and demand. Increasingly, policymakers and developers agree that more housing must be built, and it must be built in places that already have infrastructure and access to jobs.

Why Mixed Use Development Is Gaining Momentum

Mixed use development refers to projects that combine residential, commercial, and sometimes office or community spaces within a single site. While not a new concept, mixed use development has gained renewed attention as cities search for ways to grow more efficiently.

By placing housing near retail and employment, mixed use projects reduce the need for long commutes and make daily life more convenient. They also allow cities to increase density without expanding outward into undeveloped land, which can strain infrastructure and increase environmental impact.

In high cost urban areas, mixed use development makes economic sense. Commercial sites often occupy valuable land near transit corridors and job centers. Adding housing above or alongside retail allows that land to serve multiple purposes.

The Costco apartment project represents a particularly bold version of this approach. Rather than integrating small shops or cafes, it anchors housing to a major retailer with a regional footprint.

The Baldwin Hills Development in Detail

The project is located in Baldwin Hills, a neighborhood in South Los Angeles that has long faced economic and housing challenges. Census data indicates that poverty rates in the area are significantly higher than the national average, and access to affordable services has been limited.

The development will include 800 apartment units constructed directly above a Costco warehouse measuring approximately 185,000 square feet. This places the store above the average size for Costco locations in the United States. Beneath the building, two levels of underground parking are planned to serve both residents and shoppers.

Of the 800 apartments, 184 units are reserved for low income households. These units will be distributed across a range of income levels, including 30 percent, 50 percent, and 80 percent of area median income. The remaining 616 units will be designated as affordable and workforce housing, targeting households earning roughly 120 percent to 150 percent of area median income.

Amenities planned for residents include a rooftop pool, a fitness center, landscaped gardens, and shared community spaces designed to encourage social interaction. The total cost of the project is estimated at 425 million dollars, with construction expected to conclude in 2027.

The Developer’s Vision and Strategy

The project is being led by a national real estate firm that focuses on underutilized urban properties. The company specializes in markets where housing affordability gaps are most pronounced.

Founder has described the Costco apartments as a prototype for future developments. Rather than treating the project as a one time experiment, Thrive Living intends to use it as a blueprint that can be replicated in other cities.

A central element of the strategy is financial independence from traditional government subsidies. While many affordable housing projects rely on tax credits and public funding, Thrive Living has emphasized private financing supported by stable retail income.

Costco’s role as an anchor tenant provides predictable revenue through long term leases. That income helps offset the lower rents charged for affordable units and reduces exposure to fluctuations in public funding programs.

Why Costco Works as a Retail Anchor

First, Costco stores attract consistent customer traffic across income levels. Their business model is built on value, volume, and membership loyalty, which has proven resilient during economic downturns. This stability is attractive to lenders and investors supporting large scale developments.

Second, Costco addresses a critical community need. In many lower income neighborhoods, residents travel long distances to access affordable groceries, prescriptions, and household goods. Locating a Costco within walking distance reduces transportation costs and saves time.

Third, from Costco’s perspective, integrating housing creates a built in customer base. Hundreds of residents living above the store represent regular shoppers who are likely to rely on the retailer for daily essentials.

Policy Changes That Made the Project Possible

The Baldwin Hills development is notable not only for its scale, but also for how quickly it moved through the approval process. This was made possible by “Assembly Bill 2011, California housing law”, also known as the Affordable Housing and High Road Jobs Act.

The law allows qualifying housing projects to bypass discretionary review if they meet affordability and labor standards. This streamlined process can reduce approval timelines from years to months.

The Costco apartment project is the first in Los Angeles to be approved under this framework. City officials have highlighted it as an example of how regulatory reform can accelerate housing production without sacrificing worker protections or affordability commitments.

Los Angeles Mayor Karen Bass has described the project as a response to the city’s housing emergency and a demonstration of what is possible when public and private sectors collaborate.

Economic Impact on the Surrounding Community

Beyond housing, the project is expected to deliver substantial economic benefits. Thrive Living estimates that construction will generate thousands of jobs over the course of the build.

Once operational, the Costco store is expected to employ up to 400 workers. Costco is known for offering wages and benefits that exceed industry averages, which can provide greater economic stability for employees.

The presence of the store also keeps consumer spending within the community. Instead of traveling to distant shopping centers, residents can purchase essentials locally, supporting neighborhood economic activity.

Sustainability and Environmental Considerations

Mixed use developments are often promoted as more sustainable alternatives to traditional single use zoning. By combining housing and retail, these projects reduce the need for car trips and encourage walking and transit use.

The Baldwin Hills project aligns with transit oriented development guidelines, allowing higher density near public transportation routes. Residents who live close to shopping and services are more likely to rely less on personal vehicles, reducing greenhouse gas emissions.

Shared infrastructure also improves efficiency. Utilities, energy systems, and parking can be designed to serve multiple functions, reducing redundancy and land consumption.

Design Concerns and Public Criticism

Despite its ambitions, the project has not been free from criticism. Housing activist Joe Cohen, has raised concerns about the building’s layout, describing long corridors and compact units that he argues resemble institutional housing.

Cohen has also questioned whether the housing component was added primarily to expedite approvals under state law. Developers maintain that affordability goals were central to the project from the beginning.

Other critics worry about noise, traffic, and the experience of living above a busy retail warehouse. These concerns underscore the importance of sound insulation, separate residential entrances, and thoughtful site planning.

Broader Implications for Urban Planning

The Costco apartment project reflects a broader shift in how cities think about land use. For much of the twentieth century, zoning laws deliberately separated housing from commerce.

Today, that separation is increasingly seen as inefficient. As cities grapple with limited land and growing populations, integrating uses has become a practical necessity.

Mixed use developments challenge long held assumptions about neighborhood design and push cities toward more compact, flexible forms of growth.

Could This Model Work Elsewhere

If the Baldwin Hills project proves successful, similar developments could appear in other high cost cities. Urban centers such as San Francisco, Seattle, New York, and Washington D.C. face comparable housing pressures and land constraints.

In Canada, dense cities like Vancouver have also been mentioned as potential candidates, particularly in areas with strong transit access and high demand for housing.

Not every Costco site is suitable. Suburban locations dominated by surface parking may be difficult to adapt, while urban sites with underground parking offer greater potential.

The Risks of Scaling the Model

While promising, the Costco apartment model carries risks. Construction costs for integrated projects can be higher due to structural complexity and design requirements.

Community opposition may also emerge in neighborhoods resistant to increased density. Balancing affordability with livability will remain a challenge as projects scale.

Market conditions could shift, affecting retail performance or housing demand. Developers will need to carefully assess each site and adapt designs accordingly.

What This Experiment Signals for the Future

The Baldwin Hills development represents more than a single project. It signals a willingness to rethink how housing is delivered and where it belongs.

By combining private investment with public policy reform, the project offers a potential pathway for addressing affordability at scale.

Living above a Costco may not appeal to everyone, but it reflects a broader reality. Cities must use every available tool and rethink long standing assumptions to meet the needs of their residents.

If successful, this model could influence housing policy, urban design, and retail development for years to come. It suggests that solutions to the housing crisis may be found not in entirely new ideas, but in reimagining how familiar spaces can serve a greater purpose.