Why Is It The Right Time To Invest In Legalized Medical Cannabis Warehouses?

Does cultivation of recreational and medical marijuana represent a pot for gold for commercial real estate in the United States? It can be beneficial to invest in marijuana warehouses only if investors carefully and quickly pounce on opportunities.

Growing, selling and using recreational marijuana will be fully legal in California and Massachusetts by early 2018. These are two heavily populated states of the United States of America. These states are potential hot spots for industrial real estate investors to purchase properties for storing marijuana in legalized manner in a warehouse.

It is not simple as just snatching up a class B and class C commercial property and signing up tenants to take advantage of an impending boom in commercial space growers. If you are real estate investors who want to capitalize on the current trends of marijuana warehouses then you should act fast.

You have to find the right commercial property in these in California and Massachusetts as soon as possible and hopefully in an area that you have a high chance of being able to have it licensed with limited competition.

Real estate investors in California and Massachusetts must pay attention to local nuances in marijuana markets that they are eyeing. For example, the state laws in Colorado are not the same as they are in the state of California.

The same holds true for local ordinances in the Denver area versus those in the state of inland empire region of the Southern California.

Whether a locality allows marijuana cultivation or not is one of the most important factors one must consider while choosing a right warehouse for storage of recreational or medical marijuana.

It is also important to consider whether the cultivation must be done in an enclosed space or not.

The real estate investor must analyze the condition of the local industrial market. In addition, they must take into account that the marijuana remains illegal under federal law, which complicates financing and banking activities connected to marijuana operations.

The opportunity is real but so is the risk as the industrial space for marijuana is an emerging industry in the United States of America. The high risk associated with marijuana warehouses can result in high rewards.

As per the CBRE report published in early June, it was reported that the average rental rate for marijuana-growing sites in the Denver area were $14.19 per sq. ft., which was two to three times higher than the average warehouse rental rate in the United States of America.

4.2 million square feet space was occupied by the marijuana growers in the city of Denver in the fourth quarter of 2016. It is about 3% of the total warehouse market in the region.

The industrial spaces for cultivator of marijuana in Denver range from 5,000 sq. ft. To 80,000 sq. ft., with 10,000 sq. ft. To 20,000 sq. ft. Being the "sweet spot". It is essential to understand that the warehouses occupied by marijuana businesses are sold for $115 per sq. ft. In the Denver market. According to CBRE, it is 25% more than the selling the traditional class-B and class-C industrial spaces in the region.

The consolidation among marijuana cultivators was reported in the Denver market, in the report published by the CBRE. It was reported that the consolidation happens because of the established operators were purchasing the marijuana for the purpose of boosting the market share and realizing economies of the scale in the region.

After the legalization of Marijuana, it is estimated that the real estate industry for marijuana warehouses will be worth $5.8 billion by the year 2021. Many experts recommend real estate investors to approach the situation with a "long-term operational mindset" instead of a "pure speculator mindset." They should stick to a solid business plan so that the odds are higher return is possible in this rapidly shifting market. Real estate investors will surely be keeping tabs on the industrial real estate market for marijuana-growing operations in places like California and Massachusetts.

This update is provided to you by Park West Capital. With over a decade experience specializing in real estate financing and commercial lending opportunities. We have assisted numerous clients with growing their real estate portfolios and providing the funding resources. We firmly believe in accountability, excellence, integrity, entrepreneurship, and teamwork. Contact us at 800-969-4901 to learn more about how we can professionally assist you with your investing needs or fill out our hard money loan application and we'll get in touch with you.