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Is a pot warehouse the next big real estate investment?

The state of Colorado legalized recreational marijuana back in 2012. Since then, Colorado has become somewhat of a testing ground for what it's like for a state to give its citizens relatively unfettered access to this formerly illegal intoxicating substance.

As it stands, marijuana can be grown in warehouses in industrial zones, which are mostly found around Denver's low-income areas, leading to a marked spike in real estate prices in these areas.

Real estate prices are increasing while crime is not

Many speculated that legalizing pot would result in an uptick in criminal activity. However, rather than increasing the crime rate, Denver's low-income neighborhoods have actually experienced an increase in property value. Other areas of the country with legal pot have also experienced a commercial real estate market boom in areas where typical zoning regulations don't apply. Property owners in these areas have been able to sell to business people from the marijuana industry at a significant profit. Warehouse properties, in particular, are becoming attractive as they make for excellent indoor growing facilities.

In Denver, industrial zones where marijuana cultivation can occur account for only 3.1 percent of Denver County land. Already, 4.2 million square feet of property is being used for growing operations. These properties can be found along South Santa Fe Boulevard, I-25 and I-70, and they're being rented at rates of two to three times more than comparable properties in neighboring parts of the city.

Cashing out and moving to other areas of town

The increase in home values in marijuana grow areas has led to many Denver residents deciding to cash out on their increased property values and moving to other parts of town. It's also led to business people and real estate investors speculating on the continued rise in property values in these areas.

All the advantages of living in a marijuana grow areas, however, could change in a heartbeat if city planners open up more areas to allow for marijuana real estate investment. As such, those who wish to invest in marijuana grow spaces should fully understand the zoning regulations and real estate laws that apply to these areas and the potential for these laws to change.

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