• Marijuana growers occupied 4.2 million sq. ft. in metro Denver’s industrial market in Q4 2016 – an expansion of 14% since our last round of local research into the industry in Q2 2015. Marijuana grow operations were concentrated solely in Class B and C industrial space, with nearly two-thirds (63.4%) in warehouse space.
  • Based on a sample size of 25 leases signed between 2014 and 2016, the average effective lease rate for marijuana grow houses was $14.19 per sq. ft. NNN—two to three times higher than the average warehouse lease rates in the four top cultivation submarkets.
  • In May 2016, Denver put a cap on the number of cultivation locations, so we can estimate that most of the 525,000 sq. ft. the market has taken up (on net) since our Q2 2015 research was conducted was absorbed prior to Q3 2016. Since then, the market has been stabilizing and consolidating.
  • Consolidation has been the theme for some time – to increase their market share and to take advantage of economies of scale, well-established operators have bought smaller mom-and-pop growers.
  • The updated Viewpoint report also looks into marijuana-occupied property sales, which have seen a 25% price premium over Class B and C warehouses in general. Finally, it discusses some real estate supply and demand dynamics that may influence the applicability of the Denver model in other markets.