Marijuana has been legal in Colorado for months, and the demand is as high as ever. This has led to higher demand in another industry that usually is not as busy and bustling in Denver: real estate. Growers are not allowed to grow marijuana anywhere in the state, as there are different regulations in various counties, but Denver allows it. The growers use warehouses for the product so that they can have a controlled environment. Many of the empty warehouses were picked up from the market as soon as the boom began, and the result is that there is high demand for this type of structure today, combined with a dwindling supply.
Different growers are now competing over the warehouse space. It has been estimated that a total area of 4.5 million square feet are already dedicated to the growing of marijuana. This is the same amount of space that would take up 78 copies of the grass surface at Sports Authority Field. Even this much is not enough, but the landlords who own the warehouses know that people are not going to back away from the growing space that they need in this thriving industry, so they have increased their prices to make as much as they can.
People were initially afraid that this might be something of a fad, but the sustained success seems to indicate that it is not. Still, landlords are not wasting any time in raising their prices so that they can make money while the market is hot.
The value of commercial real estate always changes based on how certain markets and industries are functioning. Owners and tenants, much like buyers and sellers, have to work to make sure that a contract is not only valid and legal, but that it reflects the current value.
Source: The Denver Post, “Pot-growing warehouses in short supply as demand for legal weed surges” Steve Raabe, Mar. 11, 2014