Realtec Report Q3 2019

Q3 2019

Greetings! Welcome to the second half of 2019! In this issue we're discussing the impact the legal marijuana and hemp industry has had on the Colorado real estate market and the long awaited opening of the Windsor Mill.

Colorado's Budding Real Estate Market

As of the end of the second quarter of 2019, Colorado has generated more than $1 billion in total state revenue from the legal marijuana industry. Others who have benefited from the industry are real estate investors. The price of industrial properties in the Denver Metro area tripled from December 2013 to January 2014 following the legalization of recreational marijuana in Colorado, with prices remaining high for industrial space throughout Colorado. The National Association of Realtors conducted a survey of their members to see how the legalization impacted commercial real estate. The survey reported that 34% saw an increased demand for warehouse space, 31% noticed a demand increase for retail storefronts and 18% reported an increase in demand for land.

Read more on the NAR study here

The 2018 Farm Bill

At the end of 2018, a new real estate investment opportunity arose, land for industrial hemp production. The 2018 Farm Bill legalized the production of hemp as an agricultural commodity while removing it from the list of controlled substances. Investors are flocking to Western and South Eastern Colorado to purchase land to capitalize on the new federal legalized industry. In 2018 there was 21,578 acres of hemp in Colorado, up 122% from 2017. Charlotte's Web Holdings, Inc. , a Boulder-based CBD producer, planted 862 acres of hemp across three states in 2019, of this 166 acres were in Colorado. In 2018 the company planted 300 acres across the three states, resulting in an increase of 187% in 2019. Solari Hemp , a CBD product company, plans to refit 24,300 square feet of agricultural land east of Eaton, CO, into a hemp refinery to process hemp into oils for use in its products. Now that it’s legal on the federal level, hemp products, including CBD are expected to boom and the need for real estate that can house these production facilities will also continue to increase. Elixinol, LLC , a hemp and CBD product producer, is planning a new 22,500 square foot facility in Louisville, CO, to house office, research, production, distribution and warehouse functions. The company purchased the land where their headquarters will be built for $295,000 in 2018.

Read more on the 2018 Farm Bill & hemp production here

What's Next?

What will the Colorado real estate market for the cannabis and hemp industry look like in the next few years? The demand for agricultural land and office space will continue to grow as companies increase their hemp production. The fever for retail space to house dispensaries is now beginning to subside as municipalities have adopted new regulations on the amount of dispensary licenses they will issue. The over saturation of dispensaries may cause smaller businesses to go under, putting current landlords at risk. The limited warehouse space, coupled with high demand will continue to allow landlords to raise rental rates, leaving only the bigger businesses able to pay the high rent.

New Restaurants for the Windsor Community

The Windsor Mill

A project which has faced many set-backs is aiming to finally open by the end of September, the Windsor Mill. In 2016, Blue Ocean Enterprises , a Fort Collins based real estate investor and developer, purchased the building and planned to revitalize the mill to attract businesses to the Windsor area. The project faced a major set back in 2017 when the mill was a victim of arson and the project was put on hold. After the fire, the mill had to be redesigned. Two years later and the project is near completion with two restaurants secured, Cacciatore Windsor at Heller’s Kitchen and Windsor Mill Tavern. There is a third tenant space being marketed as a brewpub, however no leases have been signed. The upper floor of the mill will be designated for offices. Blue Ocean and the Town of Windsor are optimistic the tenants will be a regional draw and bring business to the east side of town. Cacciatore Windsor at Heller’s Kitchen will serve Italian food and the Windsor Mill Tavern will be a place to enjoy quality cocktails. The Windsor Mill was originally built in 1899 which served as a flour and feed mill until 1990.