Wednesday, December 4, 2024

Legal Weed Grows: Boon For Cali Commercial Real Estate In 2017

Legalizing recreational marijuana in California is creating a gold rush for a decidedly less intoxicating sector: Commercial Real Estate.

Investors have few options to cash in directly on the state’s recent decision to legalize the drug, as there are no publicly traded cannabis producing companies and marijuana remains illegal under federal law. However, they are anticipating a lift in demand for warehouses as legal pot companies search for space to grow their supply.

Shares of industrial warehouse companies such as Prologis Inc, Rexford Industrial Realty Inc and Terreno Realty Corp that have significant exposure to the California market should benefit even if they do not lease to marijuana companies directly, fund managers and analysts say.

This is because cannabis companies are expected to pay above-market rates for older, outmoded facilities that are more suitable for growing plants indoors and storing products containing marijuana, taking out some of the vacancy in an already-tight market and pushing overall rents higher, said Michael Underhill, a portfolio manager at RidgeWorth Capital.

“Cannabis companies are going to find some distressed properties and get them up and running, and in many cases they will have the capital to pay whatever it takes to get space,” said Underhill, adding that this allows companies with more modern facilities to charge higher rents.

For more cannabis business coverage, visit the MJ News Network

 Highway is an essential source for cannabis science, how-to stories and demystifying marijuana. Want to read more? Thy these posts: One Man’s Journey In Pursuit Of The Truth Behind Marijuana ProhibitionMarijuana Myth Busting: Does Holding In Smoke Get You Higher? and A Drag Queen’s Visit To The Cannabis Store

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