Cannabis companies are paying two to three times more than average prices to rent warehouses in the Denver metro market, according to a new real estate report from CBRE Research.
Most of the marijuana cultivation centers and facilities (96 percent) were paying for spots in Boulder, near the Denver International Airport, north of Englewood in south central Denver and in the Northeast Park Hill, Globeville and Elyria-Swansea neighborhoods in north central Denver, according to the report released this month.
Marijuana companies grew their industrial footprint by 14 percent since second quarter 2015 — when CBRE last took a deep dive into the industry — to 4.2 million square feet at the end of 2016. Overall, the marijuana industry is starting to level off as Denver curbs the addition of new facilities and companies look to be more efficient with their existing spaces, the report states.
"Consolidation and stabilization are two key themes to describe the Denver marijuana industry over the last six quarters,” said Spencer Levy, CBRE 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,” Levy said in a statement.
| Market | Industrial Footprint for MJ Facilities | % of Warehouse Inventory Used by MJ | Average Warehouse Lease Rate per sq. ft.* |
|---|---|---|---|
| Boulder | 366,000 | 10.2% | $9.72 |
| North Central | 857,360 | 3.6% | $7.19 |
| South Central | 1.1 million | 6.5% | $7.24 |
| Airport | 1.6 million | 2.4% | $5.03 |
| Denver Metro Overall | 4.2 million | 2.9% | $6.21 |
| According to CBRE Q4 2016 data. *Includes both non-marijuana and marijuana properties. CBRE Research found the average lease rate for marijuana grow houses in metro Denver was $14.19 per square foot. |
While marijuana facilities in the Denver metro area only make up 2.9 percent of the total warehouse inventory, they have still played a key role in the area by driving up prices and property values. This isn't necessarily a sign of things to come for other metros where the drug is legal, according to CBRE.
"The dearth of space zoned for grow houses as well as caps on the number of marijuana-production licenses allowed could cause the impact to vary widely market by market. There is also a high level of risk from factors such as a change in federal regulation and enforcement," Levy said.
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Business & data reporter Adrian D. Garcia can be reached via email at [email protected] or@adriandgarcia on Twitter.
