Pot Growers Running Out of Room in Colorado
Legal marijuana is delivering a powerful buzz to the typically unglamorous Denver industrial real estate market.
Booming sales of cannabis have pot merchants scrambling to find enough vacant warehouses suitable for growing their product.
Not every municipality in Colorado allows marijuana cultivation, and in Denver, where it is OK, very little space is available. Denver's industrial vacancy rate of 3.1 percent is abnormally low — the lowest in decades, according to brokerage firm Colliers International.
Commercial real estate tracker Xceligent Inc. estimates that marijuana cultivation and manufacturing facilities in the city occupy about 4.5 million square feet — the equivalent of 78 football fields.
"This industry has come on so fast that initially I was uneasy — it seemed like a fad," said Brad Calbert, president of the Colliers International brokerage in Denver. "But what's making it sustainable is supply, demand and capital. Supply is deficient, demand is excessive, and capital is abundant."
Rabid demand for warehouses is pitting pot dispensary against pot dispensary, while landlords capitalize by charging premium lease rates.
Industrial brokers report instances of warehouse space leasing for as much as four times the prices paid before medical marijuana sales began to boom in 2009.
The newest wave of impact in the industrial market is occurring as recreational pot sales, which began Jan. 1, are robust. State budget officials are projecting sales of $613 million over the next year — more than 50 percent higher than previous projections. That's on top of an estimated $345 million in medical dispensary sales. January sales tax figures released Monday suggest that the market may be smaller than those projections.
Some recreational stores have been forced to curtail sales because strong demand from customers has outpaced supply.