States That Legalized Marijuana Are Living The High Life With A Real Estate Revolution
Legal weed makes certain kinds of real estate very much in demand.
There was a time when growing marijuana was a high stakes gamble. Now though, with more and more states legalizing pot, growers are facing problems that would have once seemed unthinkable. They are running out of warehouses in which to grow it. Given the cash on cash return for marijuana—marijuana sales were $700 million in Colorado in 2014 and $996 million a year later—it’s the green plant that’s worth sacrificing your kale and wheat grass harvest. Warehouse vacancy rates in the state fell from 7.6% in 2011 to just 3.1% in early 2015. Finding places in which to grow the stuff is shooting sales prices into the stratosphere.
Warehouse sizes of under 80,000 square feet are optimal for weed growth (not the kind that grow in your lawn). CBRE reports that the average lease rates industrial properties in Denver for reached $8.40 per square foot, over $2.00 more than the national average. When California’s Proposition 64 to legalize marijuana passed, the State most associated with the hippy culture is about to get high on its own supply. Finding places to grow it year round is soon to light up the commercial real estate market across the Sunshine State.
Loan reps at commercial banks are approving funding for warehouse purchases like they took a walk through the grow rooms before signing the docs. Forbes broke down numbers. But it’s not just warehouse sales and leases that will benefit. Throughout the legalized states, houses with large back yards and basements are becoming hot property.
In Colorado, where homeowners can grow up to six plants at a time for personal use, legal weed is changing the way people buy and sell homes.
“Basements have become very important,” John Grove, a Re/Max agent in Pueblo, Colo., told the local Daily Chieftainas as reported in the Huffington Post. He believes marijuana has something to do with a 12 percent spike in local house prices over the past year.
“We get lots of calls from out of state. Every day we’re showing properties. Part of it is Pueblo County has a reputation for having an open-door policy on pot businesses, so we sort of stick out like a sore thumb.”
“It’s the green boom here in Colorado and real estate is at a premium,” Sally Vander Veer, CFO of Colorado-based Medicine Man, told Inc magazine earlier this year and she wasn’t referring to solar panels. “If you own a building that is zoned properly, not including any improvements, it’s worth millions.”\
The high life indeed.
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