Then You Crash Into Me: The Commercial Real Estate Industry after Legalized Marijuana

herb-2915337The love/hate relationship that seems to be forming between the Commercial Real Estate industry and Marijuana may or may not be on your radar, but it is reality.

Fully legal in nine states, one inhabited territory, three native-American reservations, not to mention Washington D.C., it’s impact has been felt across multiple industries. Some cheer, others protest, but regardless, we in the commercial real estate industry need to be educated on the basic legalities as it has become commonplace for medical use and in some areas, recreationally acceptable as well. The federal law mandates that it be grown and manufactured in the state in which it is sold/consumed.

The demand and, in turn, the value for warehouse and industrial properties has significantly increased in affected regions. Climate controlled warehouses and distressed properties including former storage, data, and manufacturing are all being acquistioned and repurposed. Even the limping retail sector has been affected as in those states where retail sales have been sanctioned, as marijuana retail shops have breathed life into some of those long-time vacancies.

Here’s a run down of the basics for our region:

Pennsylvania: Medical Marijuana approved by Governor Wolf in April of 2016

Maryland: Decriminalized and Medical Use/Manufacturing/Distribution approved

Delaware: Decriminalized and Medical Use/Manufacturing/Distribution approved

New Jersey: Governor Jon Corzine signed Medical Marijuana law in January of 2010

 

There are concerns that this may be another real estate bubble that eventually pops. Even though concerns remain, this industry has sparked new property interest and investment pursuits that we in the industry cannot deny. Both Brokers and Property Owners alike seem to be riding the wave while they can. Time will tell as always.

 

 

 

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And the winning category is…

Distribution CenterEveryone is speculating, forecasting, throwing their opinions up against the wall to see what sticks in regard to 2014 and what it holds for the commercial real estate industry. Realistic observations made by many in #cre present the industrial category as the contender for 2014. When serious Commercial Real Estate Investors were polled and they cited “warehousing” as a hot commodity and a leading performer.

This is a natural response to the retail industry’s desire to move the distributable goods closer to metro areas for effortless dissemination. There are new players trying their hand at the e-commerce game. It’s not just for the colossal behemoths like Amazon.com. Oh no sir or madam. Little mom and pop shops are bellying up and saying, “pour me some of what he’s having”. The warehouse industry doesn’t have to thank their lucky stars. They need to be thanking the retail industry not only getting them back on their feet, but in running shape once again.

As you may have guessed, development has increased in reply to the shout-out for logistics for the e-commerce business models. While our brick and mortar stores limp along, the fulfillment centers are exceeding expectations. Maybe, just maybe this will provide a much-needed boost for the commercial construction industry as well. They are still attempting to recover from their fall from glory in 2007. Watch for potential cost increases in materials, services and land. Welcome to the new age of retail, people. Tech forward, mobile friendly and innovative.