Cannabis Companies – Better to Lease Than to Buy

Industry’s legitimacy gives landlords more confidence in these high-cashflow businesses

From “Cannabis Companies Say It’s Better to Lease Than to Buy” – GlobeSt.

Larry Much, executive vice president, Industrial Services, NAI Hiffman/Hiffman National, just secured a Franklin Park, Ill.-based facility for craft grower Cannect Wellness, which has begun the buildout.

He tells GlobeSt.com, “The market is still growing for warehousing (craft grow facility) to dispensary (more retail) properties and land, although land is becoming more of a zoning and use issue,” Much said.

NAR added that commercial practitioners are also finding increased demand for warehouses, land, and storefronts for marijuana businesses.

“In states where only prescription use is legal, 23% had seen an increased demand in storefronts, 14% in warehouses and 7% in land,” according to the report.

In states where prescription and recreational use is legal, 25% to 29% of members had seen an increased demand in warehouses, 18% in storefronts, and 13% to 15% in land, the report showed.

“While legal in many states, cannabis is still taboo for a lot of investors, forcing many cannabis businesses to purchase assets,” Much said.

“At the same time, it also has been difficult for users to get traditional financing even with stellar credit as many lenders can’t finance these types of properties; some need to lease.

“Buildout costs for producers are significant. This makes it difficult for the user to move, which could benefit landlords. In some cases, the entitlement also may make it tough to move.

“While I have heard some landlords inserting smoking clauses, I haven’t seen it personally. But I think it is wise for landlords to protect themselves with such clauses to prevent problems and spell out ramifications. For example, a landlord might say to a user because of smoking in the office we now have to redo the office at your cost.”

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About Hiffman National: 

Hiffman National is one of the US’s largest independent commercial real estate property management firms, providing institutional and private clients exceptional customized solutions for property management, project management, property accounting, lease administration, marketing, and research. The firm’s comprehensive property management platform and attentive approach to service contribute to successful life-long relationships and client satisfaction. As a nationally bestowed Top Workplace, and recognized CRE award winner, Hiffman National is headquartered in suburban Chicago, with more than 250 employees nationally and an additional six hub locations and 25 satellite offices across North America.

About NAI Hiffman:  

NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is an award winning company headquartered in suburban Chicago, with more than 250 employees strategically located throughout North America.