Costco Companies Inc., the big, Issaquah, Wash.-based membership warehouse chain, is searching for a new home for its cramped, 16-year-old store on Third Avenue southeast of downtown Spokane, knowledgeable real estate sources here say.


Costco executives who are familiar with the companys real estate transactions couldnt be reached for comment. However, the company is said to be seeking a site of up to 15 acres near downtown, due to its strong relationship with business customers, where it could develop a new, 155,000-square-foot store.


Costco said in an earnings release last month that its expansion plans for the remainder of its 1999 fiscal year call for opening 12 to 14 new stores, including four relocations of existing warehouses to larger and better-located facilities, but it didnt disclose where those relocations would occur.


Few available acreages of the size Costco is said to be seeking, particularly that dont involve multiple ownerships, exist on Spokanes downtown perimeter. One is Metropolitan Mortgage & Securities Co.s 76-acre Summit development site west of downtown, but Greg Weed, manager of Summit Property Development, which handles Spokane-based Metropolitans real estate interests, declines to comment on reports that Costco is looking at the Summit site.


For a number of years, Metropolitan has been proposing to turn that long strip of land, on the north bank of the Spokane River west of Monroe Street, into an urban village that would include public services, business offices, specialty shops, restaurants, fitness facilities, and residential neighborhoods.


However, rather than kick off the ambitious project with any speculative buildings or major infrastructure improvements, the company has opted to bide its time while it searched for a key tenant that could be a cornerstone for the big development. The project was dealt a setback in 1995 when state legislators refused to fund plans for a proposed 250,000-square-foot, central state office building on the site. More recently, Metropolitan has lobbied hard to have the site considered for construction of an expanded convention center facility, although the likelihood of that occurring appears slim.


Significant zoning and traffic-related hurdles, as well as possible neighborhood opposition, would have to be overcome for a Costco store to be built on part of the Summit site.


Costco opened its warehouse store at 800 E. Third in December 1983, taking over a building that once had housed an auto dealership. It spent about $2 million expanding the building to about 120,000 square feet of floor space in 1989, and it recently remodeled a portion of the building, moving the pharmacy, expanding the restrooms and optical center, and installing a larger eating area. Despite those expenditures, the site offers little other room for further expansion, access is limited, and parking often is crowded.


Jim Sinegal, Costcos president and CEO, said in an interview about two years ago that the Third Avenue store site isnt ideal. He added, however, that the company believed it was covering the Spokane-area market adequately with that store and a 117,000-square-foot warehouse store it opened at 7619 N. Division in October 1992, and had no plans to open a third store. The company had been reported several years earlier to be looking at potential store sites in the Spokane Valley.


Costco now operates more than 300 warehouse stores. Although most are in the U.S. and Canada, it also has stores in Mexico, the United Kingdom, and the Pacific Rim. It recently opened its first store in Japan, and stock analysts say the store is performing well. Its on pace to generate more than $70 million in sales in its first year, which compares with typical annual sales of $40 million for a first-year Costco store, they say.


Costcos Internet site, which the company launched last November, also is reported to be doing well. Analysts say the company expects Internet sales of more than $20 million this fiscal year, which ends Aug. 31, and $100 million next year.


Costco had total revenue of $23.8 billion in its 1998 fiscal year. It recently reported a 13 percent increase in net sales for the first 35 weeks of its 1999 fiscal year, compared with the year-earlier period.