Apr
04

Industrial CRE News: Legalization of Marijuana Increasing Demand for Industrial Warehouses

According to the New York Times, industrial real estate is experiencing a pot fueled “boom”. In the US states where steps have been taken to make marijuana legal, the demand for grow & pot processing warehouses and industrial spaces has increased with some “factories, warehouses, and self-storage units…being re-purposed for cultivation and processing of potent marijuana”.

While some in the real state industry view grow facilities as a gamble due to the fact that marijuana remains an illegal substance at the Federal level, for now Landlords across the nation are taking advantage of the premium rents being achieved for such facilities. Commercial real estate research firms are reporting prices for warehouse spaces increasing “by more than 50% from 2010 and 2015” in the Denver market where recreational pot was legalized in 2012. But, Denver is not the only commercial market experiencing a boom in industrial real estate activity. According to the New York Times, industrial areas “from Monterey, CA to Portland, ME” have undergone a transformation spurred by the pot industry and, “once-blighted neighborhoods and sending property values soaring.”

Furthermore, according to BISNOW, “legal pot sales hit $6.7B in 2016 and are expected to rise above $20B by 2021.” With increased sales of legal pot, the demand for industrial space will continue to grow, potentially creating a “new sector in the industrial real estate market.” But, with the new Federal Administration in place, some in the industry are concerned that the weed bubble will pop due to stricter regulation of pot sales and pot cultivation.