Cannabis companies are expected to lead demand for commercial real estate in Western Canada, particularly Kelowna and Edmonton, following marijuana legalization, according to a new report.
The Western Canadian cities are already seeing a significant amount of interest in retail spaces and production facilities, RE/MAX’s Commercial Investor Report 2018 states.
Kelowna posted an eight per cent decrease in commercial sales total sales value year-over-year. That decrease isn’t expected to last, as the city has identified over 900 potential dispensary locations to be approved for licenses post-legalization. Retail prices are expected to rise as cannabis companies compete for space.
“The upcoming legalization of cannabis is continuing to have a major impact on the commercial real estate market this year,” said Elton Ash, regional executive vice-president, RE/MAX of Western Canada. “In Kelowna and Edmonton, the cannabis industry is slowly absorbing the existing industrial spaces and development lands, which has contributed to the rise in lease rates for those areas.”
A 800,000-square-foot facility in under construction by Aurora Cannabis in Greater Edmonton’s Leduc County has already contributed to a positive growth in commercial sales in the city. Sales are up 50 per cent since 2016, totaling $1 billion. Industrial vacancy lowered to five per cent during the second quarter of 2018. Retail and office sales in the region have also began to pick up as legalization nears, with more than $500 million worth of completed transactions slated for the third quarter of 2018.