Pot may lift warehouse demand

Denver seeing price pressure on grow spaces

Adam Gifford, co-owner of Acceptus Group, looks over plants that growing under efficient fluorescent lighting at his grow facility in Durango in December. Growers could put pressure on Durango’s limited warehouse space. Enlargephoto

JERRY McBRIDE/Durango Herald file photo

Adam Gifford, co-owner of Acceptus Group, looks over plants that growing under efficient fluorescent lighting at his grow facility in Durango in December. Growers could put pressure on Durango’s limited warehouse space.

With recreational marijuana expected to be allowed in Durango and La Plata County by July, the area could face strong demand for warehouse space, a phenomenon that’s already affecting the Denver area.

La Plata County has five marijuana growing facilities in unincorporated areas of the county, Planning Director Damian Peduto said.

There’s one grower within Durango city limits, near the Durango Tech Center, that was grandfathered in when the city banned further grow operations.

County officials expect to see more applications for marijuana grow facilities this summer.

“I anticipate we’ll be getting some new applications after our regulations are adopted,” Peduto said.

That could put pressure on warehouse space, driving up prices. La Plata County – with its unforgiving topography and thousands of acres of federal land – also has little land available for building warehouses.

“My sense is there’s not a lot of warehouse space available,” said Roger Zalneraitis, executive director of the La Plata Economic Development Alliance.

Little construction of warehouses has occurred in recent years. Tighter lending standards have contributed to the slow pace, Zalneraitis said.

“Lending – and this isn’t a knock on the local banks, this is happening nationally – for speculative space has been virtually impossible,” he said.

In Denver, explosive growth in the marijuana industry has led to strong demand for warehouse space. Growers are paying $18 per square foot in some instances, and the industrial vacancy rate has fallen to 3.1 percent – the lowest in decades, The Denver Post reported.

Durango’s experience may vary, Zalneraitis said. Demand to grow pot may be lower, given Durango’s much smaller population. Also, Durango’s draft ordinances on allowing marijuana retailers are much stricter than Denver’s.

Durango also has more rural land that could lend itself to other grow facilities besides warehouses, Zalneraitis said. Already, one local grower, Indoor Horticulture Centers at 2694 County Road 222, uses six renovated shipping containers and a greenhouse. The county’s other growers use warehouses.

“Part of me thinks we may have more options for marijuana growers than in a major metro area,” Zalneraitis said.

Most valuable, he said, is flexible warehouse space that can be used for office and industrial use.

Zalneraitis expressed concern that demand for warehouse space could push up prices for other industries that use warehouses, particularly construction companies, which are expecting a busy summer.

“I’m hoping it doesn’t quadruple our rent prices, because that would cripple our construction industry,” Zalneraitis said.

cslothower@durangoherald.com