COLORADO: The country’s legal marijuana industry more than doubled in size in 2014, to $2.7 billion, and the commercial real estate world is starting to take notice. Reports on the industrial sector attribute extra-strong demand in places such as Denver to the growing, storage and distribution of the plants.
Investment banking firm Chardan Capital Markets recently rated annual marijuana consumption at up to $60 billion, with growth of about 8 percent annually, based on national drug data. Colorado became the new epicenter of the marijuana industry last year, recording about $805 million in combined retail and wholesale sales, according to a new report by the ArcView Group, which provides data on the legal cannabis industry. The company, a proponent of the industry, creates data on the sector for new investors. Troy Dayton, CEO of ArcView, says investors nationwide have turned their attention to marijuana as a future explosive growth market.
“It doesn’t take a rocket scientist to see the industry is going to yield a lot of economic benefits,” Dayton says. “One of the top business sectors to take notice has been the real estate sector.”
Industrial brokers have also taken notice. Commercial real estate services firm Newmark Grubb Knight Frank, for example, said in a 2014 report that marijuana growers have absorbed more than four million sq. ft. of industrial space in Denver since the plants were legalized, lowering the vacancy rate in the region to 4.3 percent. According to a 2014 report by Denver-based Bitzer Real Estate Partners, the marijuana industry single-handedly boosted industrial property prices in the region to levels never seen before. Investment sales transactions in the city of Denver and surrounding county reached the average price of $100 per sq. ft. last year for buildings between 10,000 sq. ft. and 30,000 sq. ft., about four times as high as prices paid before medical marijuana sales began in 2009.