Cannabis continues to make its mark in the commercial real estate sector, a local broker said at a conference Wednesday.
“While we may or may not agree with the moral aspects of it, or even the medical aspects of it, it is a viable industry and it’s having a profound impact on our market, especially in the Class C and D properties where a lot of these for years of years have been in a state of obsolescence,” said Dave Looney of Legacy Commercial Property Advisors.
“You see a lot of demand in those areas, partly because it may end up being the only option for a lot of these businesses.”
Looney delivered the industrial market update at Tulsa Trends 2019 at Southern Hills Country Club. The conference was presented by the Oklahoma chapter of NAIOP, the Commercial Real Estate Development Association.
NAIOP is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate with more than 15,000 members in North America.
Looney spoke on a panel Wednesday with Grant Stewart (retail) of Wiggin Properties, Lisa Brandes (office) of McGraw Commercial Properties and Steven Watts (multifamily), CEO of Rose Rock Development Partners.
In June 2018 Oklahoma voters approved State Question 788, which legalized marijuana for any medical use on a doctor’s recommendation. More than 200,000 patients have been licensed by the Oklahoma Medical Marijuana Authority, and about 7,000 business licenses have been granted.
“It is amazing just the amount of activity,” Looney said. “It’s going to continue to do that for a while.
“Most of these needs have been on the leasing side, primarily because of the upfront cost for setting up these operations in these facilities.”
Looney said it will be interesting to watch in 2020 if the medical marijuana business becomes saturated.
“But for the time being, cannabis is going to continue to have positive impact on vacancies and rental rates, and at some point it may have some point may have some impact on construction.”
Watts, who delivered the multifamily update, has a pair of projects downtown. People recently began moving into the 65-unit Adams Apartments, and his company also is working on a conversion of the Reunion Building into apartments and retail.
“Tulsa, as a whole, is not a ultra-dynamic, multifamily market, but we are, like the rest of the nation, experiencing growth,” he said.
Watts praised the George Kaiser Family Foundation’s Tulsa Remote program, which offers workers $10,000 to move to the city. The program approved 100 visitors in its first year and recently announced it would increase that number to 250 in year two.
“That’s huge,” said Watts, comparing the influx over 10 years to the arrival of a company bringing thousands of workers. “That’s going to impact the multifamily segment quite a bit, especially in downtown because that’s kind of where they are pushing.”