Jacob Redmond
Well-Known Member
The market for some of the least pretty, lowest cost warehouses in Tacoma is heating up.
The culprit? Marijuana production.
"You have a fairly small pie of properties that are vacant and available for production of marijuana," said Ray Schuler, a senior vice president and industrial land expert at Kidder Mathews, explaining that several surrounding cities have banned the production and sale of marijuana.
"The City of Fife doesn't want it. They said no. Unincorporated Pierce County said no. In Pierce County, the only city that has embraced (Initiative) 502 is the city of Tacoma."
The math is simple, Schuler said.
"People will go where they're wanted. It's just like if you go to someone's house and they slam the door on your face, you may not stay very long," he said.
Since 2013, Tacoma has received a total of 67 applications for marijuana business licenses, according to the city's planning department. Nine of those are for retail, while a whopping 58 of those are for producing and/or processing.
Just six of the licenses for producing or processing are in operation, though the city's planning department notes that some applications are duplicates due to change in location, type of licenses or additional applicants included on the application.
Currently, six licenses are pending for Tier 1 space, up to 1,400 square-feet. For Tier 2, between 1,400 and 7,000 square feet, 19 are pending and five are in operation. And for Tier 3, between 7,000 and 21,000 square feet, 13 are pending and one is in operation.
Schuler said the need for facilities for marijuana production could have big implications in the industrial and warehouse market. He believes that marijuana could easily occupy two percent of all Tacoma's industrial market.
"It's a significant mark. You go from under 5 percent vacant to over 5 percent vacant, or you go from under 10 to over 10, it can have a significant impact," he said.
Companies that used the low-cost warehouses traditionally for storage or for other low-priority purposes are getting pushed out, Schuler said, and forced to lease space that is more expensive. If a company is lucky enough to get that low-cost warehouse, it'll come at a cost.
"Is it having an effect? Yeah it's having an effect. Of course. Supply and demand. Here's a building," he said, zooming in on a map on his tablet. "It's a two story wood frame building. In a good market, that would rent for 20 cents a foot. The people who are in there are paying 50 cents for it. They're happy to be there only paying 50 cents. At the time they did the deal, pricing was pushing 70 to 80 cents for a crap building."
When asked if he thought the trend would result in companies packing up and leaving town, Schuler said probably not.
"They could, if there's no space left," he said. "It's that or they go out of business. But most businesses, that's not their biggest expenditure. Their biggest expenditure is people. As long as they're having enough revenue and keep expenses low enough, then they can afford to rent real estate."
Through an amendment made in January, Tacoma recently expanded the areas where marijuana production and processing can take place, including M-1 Light Industrial and CIX Commercial Industrial Mixed Use, in addition to the intensive industrial areas that were adopted under the interim regulations.
The new trend should be positive for Tacoma, Schuler said.
"It's a good thing, because if there's room for expansion, it'll cause expansion. It'll result in construction and jobs and housing for new businesses," he said.
Moreover, more marijuana facilities means more tax revenue for the city of Tacoma. The city is already on the path to close out medical marijuana dispensaries, which should increase business for I-502 retail marijuana sellers and vendors.
The state is also making a push to give local governments a bigger slice of the tax pie. On April 3, the state senate passed a bill that would change the tax structure for recreational marijuana. Of the amount that goes to the state's general fund, $6 million will be distributed among local governments. The bill is now under consideration in the House.
Schuler doesn't believe the demand for marijuana production facilities is going to go away anytime soon.
"I think you're going to see the rest of the buildings not within a thousand feet of a school, just about everything, go to weed production," he said.
News Moderator: Jacob Redmond 420 MAGAZINE ®
Full Article: New pot uses dominate Tacoma warehouse world - Business Examiner - April 2015 - Tacoma, WA
Author: Zachariah Bryan
Contact: Contact Us - Tacoma, WA
Photo Credit: Drew Perine
Website: Business Examiner - Tacoma, WA
The culprit? Marijuana production.
"You have a fairly small pie of properties that are vacant and available for production of marijuana," said Ray Schuler, a senior vice president and industrial land expert at Kidder Mathews, explaining that several surrounding cities have banned the production and sale of marijuana.
"The City of Fife doesn't want it. They said no. Unincorporated Pierce County said no. In Pierce County, the only city that has embraced (Initiative) 502 is the city of Tacoma."
The math is simple, Schuler said.
"People will go where they're wanted. It's just like if you go to someone's house and they slam the door on your face, you may not stay very long," he said.
Since 2013, Tacoma has received a total of 67 applications for marijuana business licenses, according to the city's planning department. Nine of those are for retail, while a whopping 58 of those are for producing and/or processing.
Just six of the licenses for producing or processing are in operation, though the city's planning department notes that some applications are duplicates due to change in location, type of licenses or additional applicants included on the application.
Currently, six licenses are pending for Tier 1 space, up to 1,400 square-feet. For Tier 2, between 1,400 and 7,000 square feet, 19 are pending and five are in operation. And for Tier 3, between 7,000 and 21,000 square feet, 13 are pending and one is in operation.
Schuler said the need for facilities for marijuana production could have big implications in the industrial and warehouse market. He believes that marijuana could easily occupy two percent of all Tacoma's industrial market.
"It's a significant mark. You go from under 5 percent vacant to over 5 percent vacant, or you go from under 10 to over 10, it can have a significant impact," he said.
Companies that used the low-cost warehouses traditionally for storage or for other low-priority purposes are getting pushed out, Schuler said, and forced to lease space that is more expensive. If a company is lucky enough to get that low-cost warehouse, it'll come at a cost.
"Is it having an effect? Yeah it's having an effect. Of course. Supply and demand. Here's a building," he said, zooming in on a map on his tablet. "It's a two story wood frame building. In a good market, that would rent for 20 cents a foot. The people who are in there are paying 50 cents for it. They're happy to be there only paying 50 cents. At the time they did the deal, pricing was pushing 70 to 80 cents for a crap building."
When asked if he thought the trend would result in companies packing up and leaving town, Schuler said probably not.
"They could, if there's no space left," he said. "It's that or they go out of business. But most businesses, that's not their biggest expenditure. Their biggest expenditure is people. As long as they're having enough revenue and keep expenses low enough, then they can afford to rent real estate."
Through an amendment made in January, Tacoma recently expanded the areas where marijuana production and processing can take place, including M-1 Light Industrial and CIX Commercial Industrial Mixed Use, in addition to the intensive industrial areas that were adopted under the interim regulations.
The new trend should be positive for Tacoma, Schuler said.
"It's a good thing, because if there's room for expansion, it'll cause expansion. It'll result in construction and jobs and housing for new businesses," he said.
Moreover, more marijuana facilities means more tax revenue for the city of Tacoma. The city is already on the path to close out medical marijuana dispensaries, which should increase business for I-502 retail marijuana sellers and vendors.
The state is also making a push to give local governments a bigger slice of the tax pie. On April 3, the state senate passed a bill that would change the tax structure for recreational marijuana. Of the amount that goes to the state's general fund, $6 million will be distributed among local governments. The bill is now under consideration in the House.
Schuler doesn't believe the demand for marijuana production facilities is going to go away anytime soon.
"I think you're going to see the rest of the buildings not within a thousand feet of a school, just about everything, go to weed production," he said.
News Moderator: Jacob Redmond 420 MAGAZINE ®
Full Article: New pot uses dominate Tacoma warehouse world - Business Examiner - April 2015 - Tacoma, WA
Author: Zachariah Bryan
Contact: Contact Us - Tacoma, WA
Photo Credit: Drew Perine
Website: Business Examiner - Tacoma, WA
