DENVER—Commercial real estate leadership from throughout the Front Range will gather on August 11 to discuss the latest trends and hottest submarkets in the Greater Denver region. With significant exposure to the technology and energy industries, investors have maintained continual interest in Denver's real estate. Industrial panelist Jason Thomas, principal and founder of Avalon Realty Advisors says that underutilized class B and C product is experiencing unprecedented absorption thanks to the marijuana industry, where users pay significantly above-market prices to lease or own space.
“In 3Q 2013 as businesses prepared for expansion and new market entrants began the acceleration of industrial leasing and sale activity to unprecedented levels. At the time, there was an estimated 3 million square feet of industrial space occupied by cultivators (primarily in Denver County), with another 800,000 square feet of greenhouse developments either under construction or already delivered,” he says. “Since the explosion of demand for cultivation space that began in late 3Q 2013, the industry has absorbed an additional 2.5 million to 3 million square feet of traditional warehouses in the Denver Metro, with another 2 million square feet of greenhouse facilities delivered to the market and another 1.5 million square feet under development or in the late stages of planning.”
However, due to regulatory constraints on location criteria, businesses are shoehorned into small delineated areas by local municipalities, he says. “The resulting dynamic is a proliferance of new cultivation facilities having a huge impact on vacancy and lease rates and sale prices.”
From February to March of last year, lease rates for the industry increased 200% to 300% for class B and C properties, he says.
According to Thomas, looking into the future, the medical and recreational marijuana industry will only continue to grow stronger and deeper across the country. “While there are significant hurdles and variables that continue to hamper the industry and provide for an extremely high degree of risk, the industry continues to expand nationally as more states adopt some form of marijuana laws and regulatory schemas.”
And while the continued impact on the Colorado industrial sector will be significant, he says, activity has slowed in 2015 to a more reasonable pace but pricing remains consistently higher than for mainstream users. “Regardless of how one may feel about the 'Marijuana Issue', the fact is that it is a thriving and substantial industry that is impacting our society on all levels and is becoming ingrained in the fabric of our lives.”
Stay tuned to more on Denver as we gear up for our new RealShare Denver event there on August 11th at the Magnolia Hotel. Click here to sign up or learn more.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
