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Tips for Investors Entering the Cannabis Real Estate Market

With 10 states plus the District of Columbia legalizing cannabis for recreational use and medical marijuana legal in another 23 states across the national and Philadelphia commercial real estate markets, cannabis sales are projected to grow from $10.8 billion today to about $100 billion over the next five years, according to the National Institute for Cannabis Investors.

As a result, investors in cannabis-related industrial real estate can expect exceptional returns on investment (ROI) throughout the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space. In a 2018 survey by Denver-based PropTech developer Apto, 76 percent of commercial real estate brokers handling cannabis deals in all states where the drug is legal in some form reported cannabis deals pricing above market.

This National Real Estate Investor report involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

Cannabis property deals may be more lucrative than other industrial transactions, but they are also more complicated, according to survey respondents. When asked to compare the difficulty of cannabis transactions involving U.S. and Philadelphia commercial real estate listings with traditional industrial deals, they answered with an average of eight on a scale of one to 10, with 10 being “most difficult.” Even so, 85 percent of brokers surveyed said they are willing to do more cannabis deals.

Investors willing to take a property through local licensing and entitlement processes for national and Philadelphia commercial real estate properties prior to leasing space or putting it on the block will realize the greatest boon in value, however, because there are limited number in any location, according to Rick Frimmer, managing director and head of the national cannabis advisory group at EisnerAmper, an accounting and advisory firm based in New York City.

Cannabis real estate values are likely to continue rising due to the supply-demand imbalance, says Clint Callan, a San Francisco Bay Area-based partner at the national law firm of Duane Morris LLP. “With cannabis, there are only so many spaces and opportunities available, which runs up the price,” he adds.

When asked how well the supply of industrial cannabis real estate in their market aligns with demand for space, respondents in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – answered with an average of four on a scale of one to 10, with one being “not in balance” and 10 being “in perfect balance.”

Commenting on survey results, Apto founder Tanner McGraw says that legalization of marijuana across more states is beginning to impact real estate markets, as local jurisdictions grapple with zoning and other issues that affect availability of sites. “Survey results suggest there is somewhat of a shortage of sites available, likely because allowable zoning has not caught up with demand,” he notes.

Local jurisdictions dealing with national and Philadelphia commercial real estate listings may limit zoning for cannabis uses to specific industrial areas and impose strict security, fire, and safety requirements for cannabis operations because cannabis products are at high risk for theft and manufacturing processes use chemicals to extract compounds, such as THC and CBD oil, according to Frimmer.

For more information about Philly office space, Philly retail space, and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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