By Shandra Martinez | smartinez@mlive.com
on April 12, 2017 at 11:37 PM, updated April 12, 2017 at 11:53 PM
TRAVERSE CITY, MI -- Traverse City's new Costco isn't just good news for shoppers but for the regional airport.
The retailer's long-term lease for the 18.5 acre site could generate up to $12.3 million for the Cherry Capital Airport, a public airport overseen by the Northwest Regional Airport Commission.
Costco looked at several sites before deciding on the airport property, said Kevin Klein, the airport director since 2011.
"They like that it was near a major landmark," said Klein, adding that some shoppers are expected to drive in from the Upper Peninsula.
The 18.5 acres Costco is leasing is part of 65 acres the airport set aside for development.
The property is part of the original airport which opened in the late 1930s for commercial service. The facility was turned over to the U.S. Navy during World War II.
The 65 acres was initially used as a runway protection zone for a runway that was decommissioned near the end of the war.
During the 1970s and 1980s, local officials began turning the property's northeast corner into an industrial park to generate money for the airport's operations.
Costco will pay nearly $170,000 a year for 20 years for the property. The retailer also has the option to extend the lease for another 40 years. With each 5-year extension, Costco's annual fee goes up 7.5 percent.
If Costco leases the property for the full 60 years, the airport will collect $12.3 million, Klein said.
Last month, the retailer began construction on the new 156,000-square-foot store, which is on track to open in November.
"The community is thrilled," Klein said. "One of the reason Costco chose to build in Traverse City is because there is already a strong membership."
Most of those members currently shop at Costcos in Grand Rapids or Metro Detroit, he was told.
The popular tourist destination is home to several retailers including two Meijer stores and a recently opened Lucky's Market.
"I think they will only strengthen that offering," said Klein, noting that Costco plans to carry locally-grown produce and wines from the Traverse City vineyards.
Klein has already heard from interest from retailers, hotels and even a solar farm interested in leasing the remaining acres.
He says the airport is fortunate to have options for raising money to subsidize its costs, since the facility doesn't receive state, local or federal funding for operations.
Like many other airports, revenues from operations only cover about two-thirds of the costs of operating the facility, Klein said.
Currently, the Cherry Capital Airport has direct flights to New York City, Newark, Atlanta, Denver, Minneapolis during the summer, and year-around to Chicago and Detroit.
The flights are important to Traverse City's tourism industry, Klein said.
