With the passage Measure L, Grover Beach's marijuana tax, there has triggered a wave of interest into Grover Beach's Industrial zones. Optimism among cannabis cultivators and manufacturers has driven price points for warehouse space up two and three times what they were selling for just a year earlier. The same has happened for lease rates where the average lease rate was $1.00/sf gross in 2016, lease rates for cannabis businesses are $2.00-$3.00/sf NNN. This has caused a flurry of both positive and negative effects which we will most likely not see the full outcome of until the market settles, potentially in 2018 when the state of California's Prop 64 goes into full effect.
The positive effects are the increase in property values. Grover Beach has long been an area in which you could purchase property for less than surrounding communities, especially in the industrial zones. There is a lot of vacant land which will be purchased and developed, some of which has been on the market for over 15 years! Prior to the passage of Measure L it was cheaper to buy an old beat up warehouse and remodel then it was to build new. Now the tables have turned and it will drive new construction. This in turn will drive up residential and commercial property values up as well, especially since the city will see an increase in revenue which will help with infrastructure costs, such as repaving streets, street lights and security cameras throughout the city.
The negative effects are the displacement of local businesses and the increase in property values/lease rates. Many businesses will be priced out of the area or leases not renewed to make way for higher paying tenants (i.e. cannabis businesses). If you've had the chance to sit through one of the city council meetings you will see firsthand who is being effected by this new ordinance. You also see the property owners who have had their properties for 40 years, be able to list and sell their properties for impressive sale amounts and then retire.
Anytime a new market emerges there are winners and losers....everytime. This is the capitalistic economy we live in. We can only hope there are more winners than losers during the course of this new economy and I hope the City of Grover Beach is able to create an economically viable community.
Should you have any questions or concerns regarding Real Estate for commercial cannabis, feel free to call, text or email me.