Cannabis Legalization Leads to Heightened Competition for Warehouse Space in Michigan
The state of Michigan voted in favor of legalizing recreational cannabis in November 2018. As regulatory details are being finalized, cannabis production has begun to gear up for future demand. Eager investors are already looking to capitalize by monitoring industrial real estate options for cannabis operations.
These properties will be in high demand over the coming months as recreational cannabis is anticipated to hit the shelves in Michigan as early as 2020. In order to legally sell cannabis products they must be tested, creating a need for organizations to seek out industrial properties for cultivation and testing labs. Cities throughout Michigan have begun releasing zoning maps for cannabis and even though regulatory details are still in the works, this has resulted in investors purchasing warehousing spaces in and near those locations. If investors can get through the regulatory demands of these complex operations – once finalized – there is potential for investors and landlords to receive a substantial return on their investment.
How Legalized Marijuana Can Impact the Michigan Economy
Cannabis growers can be desirable tenants for industrial warehousing as they are willing to pay top dollars for rent. In Denver, leases for spaces that are utilized for cannabis use surpassed the average market rent for industrial space by two to three times between 2014-2016. Colorado now has more dispensaries than Starbucks and McDonald’s locations combined, giving evidence that retail sites for recreational marijuana may help revive struggling suburban strip centers once everything is put into place.
Cannabis cannot be transported across state lines due to federal laws, resulting in a number of deteriorating industrial areas becoming converted into cultivation/manufacturing spaces or even retail shops. To play our part in the economic rebirth, brokers must stay up-to-date on regulations regarding marijuana usage and commercial real estate in order to keep prospects inquiring about marijuana facilities knowledgeable of what is required for these deals. The key to getting a head start in this industry is to begin researching industrial properties in locations where marijuana operations may be a good fit. Here’s a number of Michigan cities that are either opting in or out for recreational cannabis.