Costco moves to Owatonna
In the first of its kind in Minnesota, Costco Wholesale Corp. will be bringing a distribution center to Owatonna beginning next year.
Costco revealed its plans last week to construct a 354,000-square-foot building in the Owatonna Industrial Park located on the west side of Interstate 35 by U.S. Highway 14. Once the center is operational by next fall, at least 175 workers will employed in Owatonna.
Community Development director Troy Klecker said Costco plans to build on a 120-acre site north of Kibble Equipment at 18th Street SW and 39th Avenue. Costco will have room to expand up to 600,000-square-feet, he said. Construction is expected to begin this week.
Klecker said Costco had been looking at several different locations within southern Minnesota before picking the Owatonna location. The city has been courting Costco for about a year on the project, he noted. The new center will serve Costco stores throughout Minnesota and Iowa.
The key to securing the deal, Klecker said, was being able to offer Costco a piece of land with a single owner involved. Another key factor was Owatonna’s proximity to I-35 and Highway 14. “Being close to the interchange is attractive,” he said. “Our highways were a big key to this,” he added.
The Owatonna City Council has approved up to $13 million in tax increment financing for the project. As part of the deal, Costco will spend around $2 million on road improvements in the area.
Klecker called the Costco deal unusual for a community like Owatonna. “Getting a large industrial business that has not been in the community before is rare,” he said. He noted the last time it happened was about 10 years ago when Raven came to town, though it’s a much smaller company than Costco.
Costco’s announcement comes just after two other companies have made plans to either build or expand. Last month, Blooming Prairie’s Minimizer purchased land to build a 100,000-square-foot facility. Daikin, a maker of industrial air conditioners, is expanding with a 150,000-square-foot warehouse next to its current site. Minimizer will bring about 100 new jobs to Owatonna while Daikin’s expansion will add 50 more jobs.
And yet a fourth company is in the process of taking up stake in the industrial park, according to Klecker. Rise Modular is working on purchasing the Chart building across from the Owatonna Country Club. The building will need to be retrofitted, and once that is completed, 80 new jobs will come with it.
“It’s remarkable, it’s wild” said Brad Meier, president of the Owatonna Area Chamber of Commerce regarding the new additions and expansions. “To have all these hit at the same time is remarkable,” he said, adding he is unaware of this ever happening before in Owatonna’s history.
Klecker agrees. “All four of them happening at the same time is very rare,” he said.
Besides the proximity to two major highways, Meier said Owatonna’s closeness to metro areas like Rochester and the Twin Cities are also big draws. “We sit in the middle of everything, our work force has a great reputation and we have the land and infrastructure. We have it all ready for them,” he said.
Meier is thrilled that the Costco project will bring awareness outside of the immediate area to Owatonna. “We hope to make this a key spot in the upper Midwest,” he said.
Klecker is also excited about what the Costco deal could mean for Owatonna. He says other Twin Cities developers will now be paying closer attention to Owatonna because of Costco. “It opens up more possibilities for us,” he said. “There is a lot of momentum when you get announcements like this.”