This does not take into account the staggering number of indoor grow facilities that supply product to these dispensaries. These grow facilities can range from as small as 5,000 SF to over 80,000 SF. We are also seeing a large demand for commercial kitchens to produce Medical Infused Products (MIP's). It is estimated that over 1,600 properties in Colorado are related to the marijuana industry!
Not only has the industry absorbed a tremendous amount of Class B & C, it has been a boom for a myriad of the construction industry trades like electricians, plumbers, general contractors, architects, fire suppression companies and HVAC companies. A ripple effect of the increase in tenant finish related projects for the marijuana industry coupled with a resurgence of new construction of Class A mixed-use projects throughout the metro area, has been major delays in the permitting and planning departments at the city. Simple build-out projects in industrial spaces can easily take over 100 days to complete.
The legalization of marijuana in Colorado was a windfall for the Denver commercial real estate industry during one of the worst economic recessions. Older obsolete industrial facilities and worn down retail locations were ideal properties for the marijuana industry to absorb! Now that the Denver industrial vacancy rate is hovering around 4%, we are even starting to see new construction of grow facilities. Below is an example of greenhouse that were just constructed near downtown Denver. With utilities being by far the largest operational expense for pot growers, greenhouses are in high demand!
Last week I attended a conference held by the Urban Land Institute that was titled "Cannabis and Real Estate: Is Colorado the New Amsterdam?". Never in my wildest dreams that I think I would attend a 5 hour conference on pot and how its impacting my industry. The cannabis business is here to stay and it's going to be fun to see how all of this plays out and how long the Pot Rush can continue before we see a market correction. Even the marijuana industry will have cycles, it can't stay high forever... or can it?
Please contact Sherpa Commercial Real Estate if you would like to discuss in the industry in more detail!