Cannabis Industry Could Drive Warehouse Sector in California

Article by TG Branfalt Jr., Ganjapreneur

Legal cannabis growers in California will likely drive up warehouse rates and be a boon for some publicly traded industrial warehouse companies with significant exposure in California who are willing to do business with the sector, according to a Reuters report. Fund managers and analysts predict that the warehouse sector as a whole could benefit even for companies that don’t deal directly with cannabis industry.

Michael Underhill, a portfolio manager at RidgeWorth Capital, said that cannabis companies are expected to pay more-than-market prices for older facilities, which will drive up rent prices in a market that is already tight. Operators of more modern facilities will likely be able to charge higher rents as space consolidates.

“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,” Underhill said in the report.

A spokesman for Rexford Industrial Realty Inc., a publicly traded real estate trust, indicated that the “new demand is expected to be a benefit” but said the company would not lease space to cannabis businesses.

Read full article here.

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