Commercial real estate in Vancouver will see unprecedented demand with the legalization of recreational marijuana this summer, presenting a lucrative opportunity for Agricultural Land Reserve (ALR) owners and a money-savvy alternative for producers.
A new Colliers International report, Cannabis & ALR - Keep the Land, states recreational cannabis sales in Canada are expected to fetch up to $8.7 million in their first year and will continue to drive up demand for Vancouver industrial land.
Industrial land prices have increased as much as 208 per cent over six years in key industrial parks, such as Surrey’s 250-acre Campbell Heights North Business Park. Pricing in Campbell Heights rose from $600,000 per acre in 2011 to $1,850,000 in 2017. Vacancies remain historically low, recorded at a scant 1.9 per cent in the fourth quarter of 2017.
In contrast, Colliers believes Agricultural Land Reserve parcels offer a lower cost alternative to industrial property.
“Operational costs are substantially lower for cannabis production operations in [ALR] greenhouses when compared to that of industrial warehouses – reducing costs and benefiting the environment,” the report states.
Per-acre prices of ALR parcels are estimated at $279,022 for land between five to 10 acres, compared to $1,001,986 per acre for industrial land of the same size.
Presently, ARL only allows for medical cannabis production. However, there is the potential for permittable use to be extended to the production of recreational cannabis under Cannabis Bill C-45.
ARL owners and high-profile marijuana producers are already entering into deals for production use, ahead of an amendment to medical-only use.
“A significant number of cannabis producers, from local boutique companies through to global players, are actively reviewing the opportunity that ALR land presents as an attractive alternative to industrial facilities, and are positioning themselves to capitalize on a potential alteration to the ALC Act to allow for recreational cannabis production.”