As states across the country continue to legalize recreational marijuana sales, the impact on industrial and retail commercial real estate markets is hard to ignore. This year, California legalized the marijuana sales and the trend on commercial spaces is identical to the behavior seen in Colorado back in 2012 and the current demand in parts of Canada. Prices are rising and capital investments increasing to meet the demands of the growing industry.
If past performance is an indicator, expect to see rents on smaller industrial spaces in California to rise by over 50% and significant investments made to modernize and update older Class C properties. Additionally, retail landlords should actively begin developing a plan to manage how marijuana retail will impact the current tenant mix.
Over the past few weeks, we’ve seen a dramatic increase in tenants looking for space to support these emerging businesses in California. More specifically, in tourist prone areas of Los Angeles.
Here’s an overview of what tenants are searching for on RealMassive to find leases for their Marijuana business:
Size – 2,000 – 6,000 Square Feet
Price – $1.00 – $1.60 per Square Foot ($2,000 – $9,600/month)
Class – C
Age of Building – 30 years
As California progresses in developing the legislation and restrictions, the opportunity to capitalize and establish a market are strong. Over time, market saturation will return things to normal as it did in Colorado, but taking advantage of the early market conditions is something commercial brokers need to be tuned in to.
In the meantime, have a look at some of the properties that match the demand in Los Angeles and consider listing similar properties to the RealMassive Marketplace to start generating leads: