DALLAS—The ascendency of marijuana real estate has investors feeling high. But it may be a mistake to invest with the giddy assumption that the market has nowhere to go but up.
For now, the industrial warehouse sector continues to skyrocket as marijuana legalization spreads across the United States. Commercial marijuana is generally grown indoors for security and quality control, and since local laws and zoning codes often limit where such facilities can be located, industrial warehouse rental rates are high in general and exorbitant for growers. In Portland, ME, growers routinely pay three times more than local market value for warehouse space; in Colorado, they've shelled out as much as 10 times the market rate.
Several other factors are driving up the cost of marijuana real estate. The burgeoning industry's need for warehouse space coincides with increased demand for warehouse distribution centers fueled by online shopping.
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