If Colorado, Denver specifically, is so stricken for warehouse space, this may be exactly the next boom to real estate Omaha is looking for. With the railroad and trucking hubs already established in Nebraska, the extra distance to the West Coast is not that great compared to the warehouse costs. -- Jerry Slusky
Warehouse Space in Denver Being Consumed by Marijuana Producers
Now that marijuana for recreational use has been legalized
in the state of Colorado,
producers are quickly snatching up warehouse
space in the Denver area, making it more difficult for business owners
to find warehouse space. For example, Steve Badgley, chief executive of
Colorado Specialties Corp., a construction-supply business, has been
searching for larger warehouse space for more than a year but has been
unsuccessful.
In 2012, Colorado and the state of
Washington legalized the recreational use of marijuana. Shortly after
the law passed, growers and distributors began taking over all available
warehouse space throughout the Denver area. Because Denver is the hub
used by companies that move goods between the West Coast and the
Midwest, this has created a nightmare for other business owners.
Expanding Industry
The marijuana industry
is expanding fast. Last year alone, legal sales for both recreational
and medical marijuana use were nearly $700 million. According to
Colorado’s Marijuana Enforcement Division, during that same time, retail
consumption for people with active licenses to grow marijuana jumped to
397, up from 204.
For business owners in Denver, this
is a huge challenge. To grow, package, and store marijuana, producers
require a significant amount of space, leaving few options for other
businesses. Within the past 18 months, one-third of all warehouse space
in Colorado has been gobbled up by growers and distributors.
Not
only is the lack of warehouse space an issue for large corporations, it
has hit small business owners hard. Badgley’s 7,500-square-foot
showroom and warehouse is crammed. In fact, the number of bathroom
fixtures, as well as other materials, is so great that getting around is
almost impossible. To operate his business, three times the current
space is needed. However, few choices coupled with high cost create a
big problem.
Large industrial supply chains are also
feeling the crunch. Because there is little available space, the cost
for logistics and transportation providers is higher. Just last year,
rents for warehouse space in Colorado climbed 10 percent. The cost to
purchase space doubled to $80 per square foot.
Lack of Warehouse Inventory
Tom
Glaspern, managing director for SEKO Logistics in Denver, said that
almost all warehouses between 8,000 and 20,000 square feet are used to
farm marijuana. Although 22 states and the District of Columbia
legalized medical marijuana use in 2000, it was only after recreational
use marijuana was legalized in Denver that the investment in industry
gained serious speed.
The problem in Denver is the lack of industrial space
outside the area, and because no there are no border states where
recreational use marijuana is legalized, the majority of growing,
processing, and consumption stays within Colorado. Generally, warehouses
of 80,000 square feet or less are the target of marijuana growers, the
same warehouses used by modest manufacturing companies.