Costco Hits Pause on Logistics Center Work at Port of Chehalis

Challenges:Company Looking at Other Options After Discovering Potential Cost of Fill Material on Port Property


Port of Chehalis CEO Randy Mueller reported at a commission meeting on Thursday that Costco has paused work on the port’s property where the company had shown interest in building a large distribution center.

Costco has discovered significant costs associated with leveling out the property.

“At this point, Costco has paused their work on our property — they’re not pulling the plug and they’re not moving forward,” Mueller said. “They’re looking at other sites and seeing what challenges are associated with them … and how that compares to us.”

Preliminary plans for the distribution center describe the building as 1.2 million square feet in the first phase and 1.5 million square feet when the project is fully built out. The Port of Chehalis owns about 35 acres of the 100-acre site. The remaining 65 acres are owned by Puget Western Inc.

The facility would be designed to serve about five states in the Pacific Northwest so there are potentially other counties and other states in play for that project, Mueller said.

Since the port announced the possible project in January, Costco has completed its due diligence work on the site — digging, surveying and testing. The Costco team found that the plot of land they are interested in building on slopes downhill to the northwest.

The low point on one end of the site is 20 feet higher than the low point on the other end, Mueller said.

“Essentially what they ran into is certainly not impossible to solve. It is a relatively straightforward engineering challenge, but it is expensive,” Mueller said. “It’s looking to be quite a bit more expensive than what would be done on flat ground.”

Mueller said it is estimated that Costco will need about one million cubic yards of fill material to level out the property before building.

“It’s a pretty significant challenge, and when you’re balancing the options — it doesn’t work in our favor,” Mueller said to the commissioners. “Even if Puget Western and the port gave Costco the property for free that would still not make up the difference in the extra soil costs.”

If the project is completed it will be the largest building in Lewis County and the third-largest distribution center in Washington state, Mueller said. The project is not a Costco retail warehouse. The logistics center fulfills online orders.

“Maybe we’ll do the math and it turns out this is still the best option for them, but based on the extra expense of the dirt work, at this point, they are focusing on looking at the other locations,” Mueller said.

Mueller told the commissioners that he would keep them and the public updated as he gets more information on the possible project.