Based in Las Vegas, Douglas french writes about the  economy and book reviews. 

The New American Way: Get High and Shop Online

The New American Way: Get High and Shop Online

Retail’s loss is industrial’s the land market that is.  The Wall Street Journal reports, “Prices for industrial land have shot up this year due to strong demand for warehouses and a diminishing supply of viable sites, according to real estate services firm CBRE Group Inc.”  

Since 51% of all Americans prefer to shop online and 67% of Millennials and 56% of Gen Xers prefer to shop on online rather than in-store, the need for warehouses will only grow.  As far as demand for retail space, not so much.  

Esther Fung mentions that Northern New Jersey industrial land averaged $1.75 million an acre in this year, an increase of 17% from 2016. Warehouse lease rate are $11.50 a square foot a year. Fung writes that in the California’s Inland Empire, the average price rose 35% this year from a year ago, reaching $980,000 an acre, according to CBRE.

“This situation won’t go away any time soon, because the markets where distribution centers are most in demand—typically near or in densely populated city centers—have scant available land for industrial uses,” David Egan, CBRE’s global head of industrial research told Ms. Fung.

“Average prices of prime industrial land in Chicago, Houston, Las Vegas and Atlanta rose by 14% to 17% in 2017 from a year earlier,” Fung writes.

What she doesn’t mention is the demand for warehouse space by cannabis growers.  

David Gelles wrote for the New York Times back in April,

In the more than two dozen states that have moved to legalize pot, factories, warehouses and self-storage facilities are being repurposed for the cultivation and processing of potent marijuana plants and products. Suburban strip malls and Beaux-Arts buildings have been reimagined as storefronts selling pre-rolled joints and edibles.

Patricia Kirk writes for National Real Estate Investor,

In states where voters approved recreational marijuana use in November—California, Nevada, Massachusetts, and Maine—the industrial real estate sector focusing on marijuana production is currently in the early-stage Colorado model, with investors rushing to buy up industrial properties in cities that allow pot-related operations, causing values to skyrocket.

With California a few days away from recreational pot being legal, “In areas where growers and related businesses can get licensed there’s now a land grab and a willingness to pay a premium,” writes Kirk.

Growers are focusing on the hybrid greenhouse-warehouse space model and retrofitting existing buildings, Jim Fitzpatrick, a former Costa Mesa planning commissioner who now heads Solutioneers, a consulting firm that provides compliance and land use services to cannabis firms told Ms. Kirk. “Right now it’s all about getting out of the gray market and into the regulated market. They will take less than the ideal space and scale it later.”

Mr. Gelles points out that some Denver neighborhoods saw average  warehouse lease rates increase more than 50 percent from 2010 to 2015. Pot has been a boom for Denver retail real estate market as well.  “There are five times as many retail pot stores as stand-alone Starbucks shops,” Gelles wrote.  

“This is a new segment of the industrial real estate market that is being created in front of our eyes,” George M. Stone, a longtime real estate executive now focused on the pot business told Gelles. “It’s a huge industry and only getting bigger.”

Gelles mentioned “a 127,000-square-foot facility — a space more than twice as large as the White House — outside New York City. The building can handle both a large-scale growing operation and facilities to refine marijuana buds into edible products.”

I hear rumors of a 400,000 square foot cultivation facility planned for Las Vegas.  

The new American way, get high and shop online, provides a bright future for warehousing.

 Newsletter Subscribers just wanna be Bitcoin Billionaires

Newsletter Subscribers just wanna be Bitcoin Billionaires