What is the credit rating of Costco?

Costco holds credit ratings of A+ from S&P and A1 from Moody‑s. These strong investment‑grade ratings reflect the company‑s membership‑based business model and consistent revenue growth.

What cap rates are Costco NNN properties trading at in 2026?

As of Q1 2026, Costco NNN properties trade at cap rates of 4.0% to 5.0%. The low cap rates reflect Costco‑s A+/A1 credit quality and limited supply of available properties on the market.

What is the typical lease term for Costco NNN properties?

Costco NNN leases typically feature a 25‑year initial term structured as ground leases. The leases carry a corporate guarantee from Costco Wholesale Corporation with tenants responsible for all operating expenses.

Is Costco considered an investment grade NNN tenant?

Yes. Costco maintains A+/A1 investment‑grade ratings and operates approximately 620 US warehouse locations. With $260 billion in annual revenue and a membership renewal rate above 90%, Costco is one of the most sought‑after NNN tenants.

Costco Credit Rating & NNN Cap Rate

Parent Company	Costco Wholesale Corporation
S&P/Moody’s Rating	A+/A1
Sector	Grocery/Big Box
US Locations	620
Cap Rate Range	4.0–5.0%
Typical Lease Term	25 years
Guarantee Type	Corporate
Stock Ticker	COST (NASDAQ)
Annual Revenue	$260.0B (FY2025)
Typical Price Range	$20.0M–$50.0M

Bond vs NNN Comparison: See how Costco corporate bond yields compare to Costco NNN cap rates, with after tax math, depreciation impact, and 1031 exchange treatment. Costco Bonds vs NNN →

Costco Business Overview & NNN Investment Profile

Costco Wholesale operates as the world’s largest membership warehouse club, commanding approximately 620 US locations. The company’s business model emphasizes high-volume, low-margin merchandise sales supplemented by member fee income, creating exceptional financial stability and cash generation. Costco’s membership-based approach creates customer stickiness and recurring revenue streams that distinguish it from traditional retailers.

From an investment grade NNN real estate perspective, Costco represents the ultimate big-box anchor tenant, combining A+/A1 credit ratings with exceptional unit economics and $260 billion annual revenue. Costco’s very-large-format ground lease structures (145,000–160,000 square feet on 15–20 acre parcels) create trophy real estate assets commanding exceptional cap rates and pricing multiples. The company’s expansion trajectory of approximately 30 new warehouses annually creates ongoing NNN deployment opportunities.

Costco NNN properties provide investors with exposure to the strongest big-box retailer credit, recession-resistant business model, and exceptional member loyalty. While very-large-format warehouses limit the investor universe, Costco properties command premium valuations reflecting their scarcity and operational quality.

Costco NNN Lease Structure

Costco NNN leases follow distinctive 25-year ground lease structures, extending revenue horizons compared to typical retail leases. Buildings occupy 145,000–160,000 square feet on 15–20 acre parcels, representing very-large-format real estate configurations. This massive footprint accommodates both warehouse operations and customer parking areas spanning several acres.

Lease escalations typically incorporate minimal annual increases, reflecting Costco’s long-term partnership approach to real estate relationships. Triple net obligation structures ensure Costco assumes property taxes, insurance, and maintenance responsibility. The extended 25-year term and minimal escalation structure reflect Costco’s preferred real estate partnership model emphasizing stability and mutual benefit over aggressive rental growth.

Costco NNN Cap Rate & Pricing Trends

Costco properties command exceptionally tight cap rates ranging from 4.0% to 5.0%, reflecting the company’s exceptional credit quality, tremendous scarcity of very-large-format warehouse assets, and trophy property status. Cap rates at the 4.0% lower end apply to premium locations with highest member density, while secondary market locations achieve 4.5–5.0% cap rates.

Costco warehouse properties typically trade within the $20 million to $50 million range, commanding premium valuations reflecting the exceptional scarcity of these assets and Costco’s operational excellence. For strategic guidance on big-box retail cap rate analysis, consult our investment grade guide.

Costco Real Estate Footprint & Expansion

Costco operates approximately 620 US warehouses, representing the most selective real estate footprint among major retailers. The limited unit count reflects the company’s controlled expansion strategy and emphasis on market density optimization. Management targets approximately 30 new warehouse openings annually globally, creating ongoing opportunities for investors to participate in new location deployments.

Real estate site selection emphasizes suburban locations with strong demographic profiles and affluent member populations. The company strategically fills geographic gaps while increasing density in established markets. This disciplined site selection process supports exceptional unit-level economics and member satisfaction.

Costco Growth & Market Momentum

Costco continues disciplined expansion of approximately 30 warehouses annually with strong membership renewal rates (~93%) demonstrating exceptional member loyalty. FY2025 revenue crossed $260 billion, reflecting strong comparable warehouse sales and new location contributions. The company’s special dividends continue reflecting exceptional cash generation and capital strength.

Comp warehouse sales remain robust despite economic uncertainties, demonstrating the recession-resistant nature of the membership warehouse business model. The company’s pricing power and operational efficiency support continued profitability enhancement and shareholder value creation.

Costco Investment Pros & Cons

Pros	Cons
A+/A1 rating—exceptional credit quality	Very-large-format creates limited investor universe
Membership model with 93% renewal rate (powerful loyalty)	~$20M+ investment requirement per property
$260B annual revenue with fortress balance sheet	Limited new supply creation opportunities
Exceptional unit economics and cash generation	Seasonal variation in warehouse traffic
30 new warehouse expansion annually

Comparable Costco NNN Tenants

Tenant	Rating	Cap Rate	Sector
Walmart	A–/A2	4.5–6.0%	Big Box/Grocery
Sam’s Club (parent: Walmart)	A–/A2	5.0–6.5%	Warehouse Club
BJ’s Wholesale (parent: BJ’s Wholesale Club)	B+/Ba1	6.5–7.5%	Warehouse Club

Frequently Asked Questions: Costco NNN Investments

Why are Costco properties so expensive?

Costco properties command $20M–$50M valuations due to: (1) exceptional scarcity of very-large-format warehouse assets; (2) A+/A1 credit quality; (3) extraordinary unit-level economics; (4) 93% membership renewal rate demonstrating customer loyalty; (5) trophy asset status among institutional investors. The combination of scarcity and credit quality justifies premium pricing.

Why do Costco leases extend 25 years?

The extended 25-year term reflects Costco’s long-term real estate partnership philosophy and the substantial capital requirements for building very-large-format warehouses. The extended term provides both parties with long-term certainty and supports mutual economic optimization.

What typical property sizes does Costco require?

Costco warehouses occupy 145,000–160,000 square feet on 15–20 acre parcels, making them one of retail’s largest format requirements. This massive footprint accommodates both warehouse operations and extensive customer parking.

How does Costco’s membership model affect real estate performance?

Costco’s membership model with 93% renewal rates creates exceptional customer loyalty and predictable warehouse traffic. The recurring fee income provides financial stability that supports reliable rent payments and long-term real estate partnership commitment.

The Only Costco NNN Advisor Whose Fee Comes From the Deal, Not From You

In NNN buyer representation, the listing broker pays the cooperating commission. That means you get a dedicated Costco NNN advisor handling sourcing, underwriting, financing, and closing — and on the majority of transactions, there is no separate fee to you as the buyer.

Here’s what that buys you:

Find It — On-market and off-market Costco NNN properties sourced and underwritten on your behalf. We know which markets are pricing correctly, which listings are overpriced for what the lease actually says, and where the spread is worth the move.

Fund It — Acquisition financing through 150+ lender relationships: life companies, CMBS, regional banks, and credit unions that know Costco-grade paper. Not the first approval that comes back. The best terms on the table for this specific credit and lease structure.

Exit It — Selling a Costco asset or repositioning through a 1031? Our Capital Markets desk runs a quiet, targeted process. Private investors, family offices, and institutional buyers who are actively acquiring Costco net lease — not a public blast that signals desperation to the market.

Not committed to Costco? Tell us your criteria — cap rate floor, credit tier, lease structure, geography, equity check size — and we’ll find the deal that fits. We represent investors across the full NNN credit spectrum, from QSR and pharmacy to industrial, medical, and big box retail. The tenant is a variable. Your criteria is the constant.

Get Your Free Costco NNN Consultation →

In a 1031 exchange with a deadline? Tell us your timeline — we move faster.

Related NNN Tenants

Own a Costco Property? Capital Markets Strategies Beyond Selling

Maturing debt and considering refinancing? Our capital markets team maintains 150+ lender relationships underwriting NNN properties across investment-grade and non-investment-grade credit tiers. We structure rate-and-term refinancing, cash-out refis, and bridge-to-perm takeouts.

Evaluating a 1031 exchange or disposition? We represent both sides of Costco NNN transactions — whether you are looking to exit at peak value, exchange into a higher-quality credit tenant, or reposition within the same sector.

Need a current valuation? We maintain live comps on Costco NNN transactions and can produce a Broker Opinion of Value within 48 hours reflecting today’s cap rate market.

Schedule a 15-minute capital markets consultation ?

Own multiple Costco properties? Considering an off-market sale?

Investment Grade represents owners on confidential disposition of Costco portfolios and individual properties through off-market direct-to-principal distribution to specialty REITs, private equity funds, and family offices. Costco buyer demand runs deep, and portfolio sales consistently produce stronger pricing than sequential individual sales because the institutional buyer pool is structured around portfolio acquisition.

For multi-property owners considering a portfolio disposition, see Selling Investment Grade NNN Off-Market: Tenant-by-Tenant Buyer Demand. For the full off-market framework covering individual property dispositions, sale-leasebacks, and 1031 coordination, see Off-Market CRE Sales: The Complete 2026 Guide.

The pre-listing conversation is at no cost and fully confidential. Email team@investmentgrade.com or see contact Investment Grade.