Commercial real estate brokers are getting ready to inhale deeply.
Cannabis retailers preparing to open up shop once Canada’s legal pot market becomes official this summer are starting fierce bidding wars across the country in order to snag ideal spots for customers to pop by and grab their stash, according to Canadian Press.
As a result, JLL brokers’ phones have been “ringing off the hook,” according to research manager Gaurav Mathur. During an industry conference on Tuesday, Mathur said he expects commercial real estate prices will rise once legalization is official, though the high will likely vary across the country: the federal government is leaving it up to Canada’s 10 provinces and three territories to determine how marijuana will be distributed, and vastly different approaches are emerging in the run-up to legalization.
While some provinces, like Ontario, intend to keep dispensaries under government control, others are letting the free market run wild such as in Alberta, where the retail market is “absolute insanity” due to the influx of private pot retailers competing for prime space, according to Mark Goliger, CEO of National Access Cannabis.
“They’re just going in there and throwing lots of money and being aggressive with landlords, and its creating an out of balance scenario,” he told CP, noting that he’d come upon some bidding wars where parties on the other side of the table were offering to pay double the asking price for square footage. “Everybody is trying to get retail locations.”
While some retailers are “spiking the market with overly aggressive terms,” Goliger told CP he’d inked a deal with a coffee shop chain, Second Cup, to convert some locations into dispensaries.
In Alberta, the province expects to hand out 250 licenses to private companies to distribute marijuana in the first year of legalization with the stipulation that no entity can hold more than 15 percent of the market.
JLL estimates Canada’s budding pot industry will need to expand to five times its current level to 8 million square feet of industrial space by 2020, including distribution and logistics centers. [CP] — Erin Hudson