Agribusiness  June 6, 2017

Report: Pot industry driving up rates for industrial space

DENVER — Industrial warehouse space being used for marijuana grow operations in Colorado is commanding lease rates two to three times higher than average for comparable properties, according to a report released Monday by CBRE Group Inc.

Marijuana grow operations are located solely in class B and C industrial space — with 32.3 percent in class B properties and 67.7 percent in class C. Despite being in class B and C space, marijuana facilities are commanding high lease rates.

Based on a sample size of 25 leases signed between 2014 and 2016, CBRE Research found the average lease rate for marijuana grow houses was $14.19 per square foot—two to three times higher than the average warehouse lease rates in the top four cultivation submarkets.

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The report found that 96 percent of operations are concentrated near Denver International Airport, south central Denver, north central Denver and Boulder — with the highest concentration, 38.7 percent, in the airport submarket.

The report said the marijuana industry industrial footprint is stabilizing three years post legalization.

“Consolidation and stabilization are two key themes to describe the Denver marijuana industry over the last six quarters,” said Spencer Levey, CBRE’s head of research in the Americas. “With the Denver City Council’s passage of new legislation in May 2016 putting a cap on the number of marijuana cultivation and retail locations allowed in the city, operators have primarily expanded their business through acquisitions, and efficiency has increased across the local industry.”

The report said that more investors have purchased marijuana-related properties in Denver, and sales prices have risen. The average sales price of marijuana-occupied industrial properties in Denver in 2014 was $98 per square foot; in 2017, it’s at $115 per square foot, a 17.6 percent increase. This represents a 25 percent premium over traditional Class B and C industrial space sales in the market.

While metro Denver’s marijuana industrial footprint has grown 14 percent — or 525,000 square feet — since CBRE last gathered data in the second quarter of  2015, most of that expansion occurred prior to the May 2016 legislation. Since that time, the market size has remained stable. Now,  Denver’s marijuana industrial footprint is 4.2 million square feet,representing 2.9 percent of Denver’s total warehouse inventory.

To view the report, click here.

 

 

 

DENVER — Industrial warehouse space being used for marijuana grow operations in Colorado is commanding lease rates two to three times higher than average for comparable properties, according to a report released Monday by CBRE Group Inc.

Marijuana grow operations are located solely in class B and C industrial space — with 32.3 percent in class B properties and 67.7 percent in class C. Despite being in class B and C space, marijuana facilities are commanding high lease rates.

Based on a sample size of 25 leases signed between 2014 and 2016, CBRE Research…

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