Kimco Realty and warehouse retailer Costco are cancelling plans to add a Costco store to the New Hyde Park, N.Y.-based REIT's Dania Pointe development near Fort Lauderdale, Fla.
"Originally we actually had the Dania project as a power center line up," Kimco CEO Conor Flynn said on the company's fourth-quarter earnings call. "In Phase I, we had an executed lease in place with Costco and as part of that lease there were some framework on site-level cost contribution by both parties which we were trying to finalize," Flynn told investors. "At the same time, the demand from other junior anchors to be a part of Phase I really exceeded what we could accommodate with the Costco being in place," he added.
Flynn said Kimco was happy to let Costco out of the lease because replacing it with more junior anchors is not only more profitable but also more appropriate for Phase II of the development, which will include more uses.
The center's marketing materials call for 1 million square feet of retail and restaurants in addition to 200,000 square feet of offices, plus hotels, luxury apartments and public event space. Phase I was to open this fall, with Phase II planned for 2018.
Flynn said losing Costco hasn't hurt leasing efforts for the rest of the project. "Because of the location, the freeway visibility from I-95, the demand from the junior anchors really actually ticked up regardless of this Costco as a part of the development," Flynn said.