Katelyn Baker
Well-Known Member
This campaign season may be one of the most contentious in recent memory, but there are five states offering a little something that could mellow everyone out.
Largely overshadowed by the ruckus of the presidential race, proposals to legalize the recreational use of marijuana are on the ballot Nov. 8 in Arizona, California, Maine, Massachusetts and Nevada. Another four states - Arkansas, Florida, Montana and North Dakota - will be voting on medical marijuana.
Legalized marijuana doesn't just benefit cannabis advocates, though. It can also be good stuff for commercial real estate players - specifically, those who get in on the action in the industrial sector early enough to buy, finance or lease out warehouses that can be used for marijuana. (See examples below and here for data about California warehouses.)
What happens after marijuana is legalized is very much a real estate story.
"With so many obstacles and regulations in our way, owning your real estate is the only thing we can control in this industry," Sally Vander Veer, CFO of marijuana dispensary Medicine Man, told Inc.com. "It's essential to long-term success."
Vander Veer ought to know; Medicine Man is based in Denver, where Colorado businesses began selling recreational marijuana in 2014, two years after recreational use was legalized in the state.
To find out what could happen with industrial properties in states that vote to legalize marijuana, let's check out the budding warehouse business in Colorado.
As we've discussed before, marijuana sales in Colorado reached about $700 million in 2014, which jumped to $996 million a year later. Around the same time, warehouse vacancy rates in the state fell from 7.6% in 2011 to just 3.1% in early 2015.
Growers are most interested in warehouses smaller than 80,000 square feet, the Wall Street Journal reported last year, with some highlighting those between 8,000 square feet and 20,000 square feet as a popular size for indoor marijuana farms. The warehouses can be used for growing marijuana as well as packaging and storing it, the Journal notes.
And how are those Colorado warehouses doing on the market? Pretty well, it turns out.
CBRE reports that average asking lease rates for industrial properties in northern Colorado, including Denver, reached $8.40 per square foot in in the first half of this year. This compares favorably with the average industrial rent of $6.30 per square foot nationwide in 2016 reported by Marcus & Millichap. Mark Bowen, vice president of the Denver office of DCT Industrial Trust, a real estate investment trust specializing in industrial properties, said last year the marijuana industry had driven up the cost of warehouse space by 60% or more and increased lease renewal rates by 25%.
Other REITs that could potentially blossom thanks to the warehouse trend include New York-based Kalyx Development, which specializes in what it calls "cannabis real estate," and First Industrial Realty Trust, an industrial-property REIT that is headquartered in Chicago and lists six California warehouses under 50,000 square feet in its online property finder.
If Colorado is anything to go by, California could have an industrial-sized hit on its hands in the coming years. We took a look at a few warehouses in California, where Proposition 64, as the Golden State's legalization measure is known, is widely expected to pass next week:
1115 and 1127 Santa Fe Ave. | Los Angeles
These warehouses on Santa Fe Avenue, just off the Santa Monica Freeway and west of the Los Angeles River, come to a combined total of 17,836 square feet. They are financed by a one-year loan of $2.85 million issued by L.A.-based Preferred Bank that matures in a little over a month, on Dec. 13.
2210 Magnolia St. | Oakland
Located in the Bay Area port city of Oakland, this 19,836-square-foot warehouse is financed by a $1 million loan issued by San Francisco-based commercial real estate lender Capital Access Group in 2012.
3640 Francis Ave. | Chino
This 16,885-square-foot warehouse is close enough to Los Angeles and Anaheim for deliveries to arrive in those cities in under an hour. It is financed by a $1.78 million loan issued by L.A.-based Pacific Western Bank in 2012.
The timing is right for those involved in industrial real estate or in the cannabis industry in California - or other states that end up legalizing recreational marijuana - to spark up some warehouse deals as the haze surrounding the election gradually begins to disperse.
News Moderator: Katelyn Baker 420 MAGAZINE ®
Full Article: Marijuana Legalization Is Really A Real Estate Story, And That Has Big Implications For California
Author: Ely Razin
Contact: Forbes
Photo Credit: Brendan Smialowski
Website: Forbes
Largely overshadowed by the ruckus of the presidential race, proposals to legalize the recreational use of marijuana are on the ballot Nov. 8 in Arizona, California, Maine, Massachusetts and Nevada. Another four states - Arkansas, Florida, Montana and North Dakota - will be voting on medical marijuana.
Legalized marijuana doesn't just benefit cannabis advocates, though. It can also be good stuff for commercial real estate players - specifically, those who get in on the action in the industrial sector early enough to buy, finance or lease out warehouses that can be used for marijuana. (See examples below and here for data about California warehouses.)
What happens after marijuana is legalized is very much a real estate story.
"With so many obstacles and regulations in our way, owning your real estate is the only thing we can control in this industry," Sally Vander Veer, CFO of marijuana dispensary Medicine Man, told Inc.com. "It's essential to long-term success."
Vander Veer ought to know; Medicine Man is based in Denver, where Colorado businesses began selling recreational marijuana in 2014, two years after recreational use was legalized in the state.
To find out what could happen with industrial properties in states that vote to legalize marijuana, let's check out the budding warehouse business in Colorado.
As we've discussed before, marijuana sales in Colorado reached about $700 million in 2014, which jumped to $996 million a year later. Around the same time, warehouse vacancy rates in the state fell from 7.6% in 2011 to just 3.1% in early 2015.
Growers are most interested in warehouses smaller than 80,000 square feet, the Wall Street Journal reported last year, with some highlighting those between 8,000 square feet and 20,000 square feet as a popular size for indoor marijuana farms. The warehouses can be used for growing marijuana as well as packaging and storing it, the Journal notes.
And how are those Colorado warehouses doing on the market? Pretty well, it turns out.
CBRE reports that average asking lease rates for industrial properties in northern Colorado, including Denver, reached $8.40 per square foot in in the first half of this year. This compares favorably with the average industrial rent of $6.30 per square foot nationwide in 2016 reported by Marcus & Millichap. Mark Bowen, vice president of the Denver office of DCT Industrial Trust, a real estate investment trust specializing in industrial properties, said last year the marijuana industry had driven up the cost of warehouse space by 60% or more and increased lease renewal rates by 25%.
Other REITs that could potentially blossom thanks to the warehouse trend include New York-based Kalyx Development, which specializes in what it calls "cannabis real estate," and First Industrial Realty Trust, an industrial-property REIT that is headquartered in Chicago and lists six California warehouses under 50,000 square feet in its online property finder.
If Colorado is anything to go by, California could have an industrial-sized hit on its hands in the coming years. We took a look at a few warehouses in California, where Proposition 64, as the Golden State's legalization measure is known, is widely expected to pass next week:
1115 and 1127 Santa Fe Ave. | Los Angeles
These warehouses on Santa Fe Avenue, just off the Santa Monica Freeway and west of the Los Angeles River, come to a combined total of 17,836 square feet. They are financed by a one-year loan of $2.85 million issued by L.A.-based Preferred Bank that matures in a little over a month, on Dec. 13.
2210 Magnolia St. | Oakland
Located in the Bay Area port city of Oakland, this 19,836-square-foot warehouse is financed by a $1 million loan issued by San Francisco-based commercial real estate lender Capital Access Group in 2012.
3640 Francis Ave. | Chino
This 16,885-square-foot warehouse is close enough to Los Angeles and Anaheim for deliveries to arrive in those cities in under an hour. It is financed by a $1.78 million loan issued by L.A.-based Pacific Western Bank in 2012.
The timing is right for those involved in industrial real estate or in the cannabis industry in California - or other states that end up legalizing recreational marijuana - to spark up some warehouse deals as the haze surrounding the election gradually begins to disperse.
News Moderator: Katelyn Baker 420 MAGAZINE ®
Full Article: Marijuana Legalization Is Really A Real Estate Story, And That Has Big Implications For California
Author: Ely Razin
Contact: Forbes
Photo Credit: Brendan Smialowski
Website: Forbes
