The advent of the legalized cannabis industry has driven up industrial real estate prices.


Cannabis Industry in Sonoma County, Calif. Boon for Industrial Properties

The industrial real estate market in Sonoma County, California is in a boom period thanks, in part, to the legal cannabis industry, according to a North Bay Business Journal report. Prices of industrial properties used for cannabis rose from full asking price or more in 2016, reaching 20 to 25 percent premiums above non-cannabis buildings; and that premium has risen to 50 percent so far this year.

One of the more notable transactions last year – and the largest – involved a 150,000-square-foot six-building deal to CannaCraft for nearly three times the previous price less than a year prior.

At year-end in 2016, the vacancy rate in the market was 5.8 percent which was unchanged from year-end 2015 figures; however the rate fell to 5 percent in the third-quarter of the year – representing a stable market.

Although most building owners have loans secured through a federally insured bank, the deals still come with a considerable amount of risk as cannabis remains a Schedule 1 narcotic under federal law – and the feds could seize the property if they decide to enforce those laws.

According to the report, Sonoma County is considering a proposal to move the cannabis industry indoors and away from rural-residential zones, which would only increase the demand for industrial properties located in cannabis-approved zones.

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