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Marijuana Affects the Rental Market

Marijuana Affects the Rental Market

Colorado is clearly a leader in the pot market. With the legalization of Marijuana came new real estate opportunities for those in Colorado. It created a market for recreational drugs that is unique, bringing in a surge of new customers into the state. It has also created questions about how marijuana affects the rental market.

Currently, the price of pot is declining. At the same time, the market for industrial space is also declining in the Denver area because those leasing space for pot have found cheaper alternatives in other locales. Therefore, if you leased space in the Denver area for a pot warehouse and would like to move the warehouse somewhere else, the terms of your lease may make it difficult to do so.

Industrial Space

The opening of the marijuana market created a demand for industrial space to house the supply of marijuana. This led to a significant increase in rent for industrial space in an already crowded real estate market. Initially, the Denver area saw the largest increase of industrial space used for pot because of Denver’s large size, its reputation as a pot haven, and that it hosts a large airport. People were getting off the plane and heading straight to the marijuana dispensaries.

Recently, however, the industrial space market in the Denver area has cooled off. People from neighboring states like New Mexico and Kansas started pouring into Colorado for the pot experience. As a result, more dispensaries opened outside Denver. With that, more pot sellers sought industrial space outside of Denver, especially where that space is significantly cheaper. Industrial space in Pueblo can run $10 per square foot whereas industrial space in Denver can run at close to $100 per square foot. This trend caused the demand for industrial space in Denver to lag.

Marijuana Farms

Initially, marijuana farms created a greater real estate demand in the Denver area, pushing the prices of real estate higher in an already overheated Colorado real estate market. Using industrial space to grow pot by using heat lamps can get expensive. In response, growers started to spread to other areas of Colorado where the rental space and properties are cheaper.

Breaking the Lease

If you find yourself needing to break your lease so that your pot business can thrive, there are some considerations. In general, signing a lease obligates all parties to fully comply with their respective side of the deal. A bad deal or changed circumstances, by itself, usually does not allow someone to legally break the lease. However, if you are “constructively evicted” then, under Colorado law, you may be entitled to break your lease.

A constructive eviction occurs when there is a major repair problem or the facility does not meet health standards. Therefore, if your warehouse needs repairs or is not up to standards, you may be entitled to break your lease and move operations to a more cost-effective area.

Involved in real estate in Colorado? Rentals? For these or any other questions about real estate law in Colorado, contact Eric L. Nesbitt, P.C. at 303-562-1580.

Eric Nesbitt is Changing Perceptions of Minorities in Commercial Real Estate.

Eric Nesbitt is Changing Perceptions of Minorities in Commercial Real Estate.

Eric Nesbitt of the Nesbitt Commercial Group is Changing Perceptions of Minorities in Commercial Real Estate

Greenwood Village, CO – Eric Nesbitt, of the Nesbitt Commercial Group and principal brokers Alec Wynne, Paul Washington, Carmon Hicks were featured in the Colorado Real Estate Journal, Diversity Essential To Industry’s Future discussing the lack of minority representation in commercial real estate.

Although there are many changes in Colorado recently, what hasn’t changed is the lack of minority brokers in Commercial Real Estate. In Colorado, it’s partly a function of population – 21 percent of Coloradans are Latino, and only 4.5 percent are black/African-American. Even so, the percentages of minority brokers are even lower, with some large Denver brokerage firms having only one or fewer minority brokers.

“We’re very underrepresented,” said Eric Nesbitt of The Nesbitt Commercial Group: Keller Williams Realty DTC, a broker, and real estate attorney. “In my day-to-day practice, I rarely interact with minority brokers.”

One the reasons minorities may be underrepresented in commercial real estate is because it’s not a profession people know about in college unless they have family or friends in the industry, which is dominated primarily by white males.

“I think the lack of mentorship is critical,” said Nesbitt. “We all need assistance sometimes in corporate America maneuvering and navigating the right way to do things, and sometimes when you’re in a room and no one looks like you, that can be very intimidating.”

Nesbitt said he’d like to see 10 to 20 percent minority representation in some of the large brokerage firms a decade from now, while Wynne said he’d be happy if there were “at least 20” minorities in the Denver commercial real estate industry by 2027.

“Diversity of people brings diversity of thought, experiences. That just makes for a richer experience altogether,” he said. To read more about this article, click here https://crej.com/news/diversity-essential-industrys-future-insiders-say/.

About Nesbitt Group.: The Nesbitt Commercial Group is a full-service Keller Williams commercial real estate brokerage and advisory firm led by a seasoned real estate attorney, Eric L. Nesbitt, Esq. The Nesbitt Group specializes in providing creative solutions to tenants, buyers, and investors in metropolitan Denver and throughout Colorado.

7304 South Joliet Street Centennial, Colorado

7304 South Joliet Street Centennial, Colorado

INOVA Dry Creek Building

The Nesbitt Commercial Group is pleased to announce the successful tenant representation of Inocucor Corporation in the closing of its new 33,514 square foot 10 year office lease in the INOVA Flex Building at 7304 South Joliet Street in Centennial, Colorado. The premises consist of office, laboratory, and warehouse space, and will host Inocucor’s US headquarters. Inocucor is an Agri-tech company that develops specialty biological products for growers to bring more sustainable practices to the world’s farms. Inocucor expects to begin operations at this facility by the end of 2017.   Inococor’s President and CEO expressed the following comments with respect to the transaction. 

Donald R. Marvin President and Chief Executive Officer -

“After careful consideration, we selected the Nesbitt Commercial Group to represent Inocucor Corporation in our search for a U.S. based headquarters and production facility in the Denver Metro area.  Nesbitt Commercial completed a comprehensive market survey of viable building options for the company, arranged building tours in an efficient manner, and assisted in narrowing our focus to a few qualified building options.  Once we identified the INOVA building as our desired alternative, Nesbitt Commercial’s brokers negotiated aggressively with the building landlord to structure a transaction deal that was fair and equitable for both parties.  Finally, due to Eric’s background as an experienced real estate attorney, he was able to provide valuable feedback to the company and our general legal counsel on various legal and business issues that arose during the negotiation of the lease agreement.  I would highly recommend the Nesbitt Commercial Group for tenant representation services, and would not hesitate to utilize their highly professional services again.”

What Everyone Needs to Know About Landlord & Tenant Disputes Over Security Deposits

What Everyone Needs to Know About Landlord & Tenant Disputes Over Security Deposits

Whether you are a landlord or a tenant, knowing the laws regarding the withholding of security deposits is crucial when you’re involved in a landlord and tenant dispute. As a landlord, you need to know the situations in which you can legally withhold a tenant’s deposit, and as a tenant, you need to know whether your rights are being violated.

Wrongful Withholding of Security Deposits Act

Colorado’s Wrongful Withholding of Security Deposits Act is in place to protect renters from having their security deposits withheld without good cause. Failure to comply with the standards set forth by this Act can result in severe consequences for the landlord, including being required to pay the tenant up to triple the amount of the original security deposit plus legal fees.

Landlord Requirements

Under the Wrongful Withholding of Security Deposits Act, a landlord is required to return a tenant’s security deposit no later than one month after the termination of the lease. If the full deposit is not returned, the landlord must provide an itemized statement listing the deductions  and any remaining balance of the deposit that is being returned. The time period may only be extended if extra time allotted for in a clause in the original lease agreement, and in no case can the period be longer than 60 days.
 

Reasons to Withhold a Security Deposit
The law is clear when it comes to the situations in which a landlord may keep all or a portion of a tenant’s security deposit.

  • Property damage not attributed to normal wear and tear
  • Unpaid rent
  • Abandonment of the rental property
  • Tenant’s unpaid utility, repair and cleaning bills

Tenant Requirements
Tenants who have not received their security deposit and an itemized deduction statement within the appropriate time period should pursue legal action, as should any renter who has had a security deposit withheld for inappropriate reasons, such as to repair problems caused by normal wear and tear. If the landlord does not provide an itemized deduction statement, he may be required to forfeit any amount of the deposit that was withheld, even if it could have been rightfully withheld.

If a landlord withholds a security deposit in a manner that is not compliant with the Wrongful Withholding of Security Deposits Act, he may owe the tenant up to three times the amount wrongfully withheld. To begin the process, the tenant must provide notice to that landlord that be plans to pursue legal action. The notice must be provided no less than seven days prior to filing legal proceedings. The landlord then has one week to return the full amount of the security deposit to the tenant.
If the deposit is not returned in this time period, the landlord may be required by law to pay the tenant up to triple the amount wrongfully withheld as well as the tenant’s court costs and attorney’s fees. It is important to note, though, that the landlord may still seek to recover money from the tenant for damages through district or county court even after being ordered to return the security deposit for failure to comply with the Wrongful Withholding of Security Deposits Act.

Resolving Landlord/Tenant Disputes Over Security Deposits

Whether you are a landlord or a tenant, having the help of a legal professional is the best way to ensure the best possible outcome for disputes. For help resolving landlord/tenant disputes in Colorado, give The Law Offices of Eric L. Nesbitt, P.C. a call at 303-741-2354.

Q2 Office Market Update

Much like the residential market, the commercial lease and sale arena is on fire with no signs of slowing in the upcoming quarters. The stats for the sub catagories of the commercial office market are as follows:

Vacancy

The office vacancy rate in the Denver market area decreased to 10.0% at the end of the second quarter 2015. The vacancy rate was 10.3% at the end of the first quarter 2015, 10.5% at the end of the fourth quarter 2014, and 10.6% at the end of the third quarter 2014.

 

Rental Rates

The average quoted asking rental rate for available office space, all classes, was $23.81 per square foot per year at the end of the second quarter 2015 in the Denver market area. This represented a 1.4% increase in quoted rental rates from the end of the first quarter 2015, when rents were reported at $23.49 per square foot.

Inventory

Total office inventory in the Denver market area amounted to 190,482,183 square feet in 7,408 buildings as of the end of the second quarter 2015.

Sales Activity

Tallying office building sales of 15,000 square feet or larger, Denver office sales figures fell during the first quarter 2015 in terms of dollar volume compared to the fourth quarter of 2014. In the first quarter, 30 office transactions closed with a total volume of $562,287,698. The 30 buildings totaled 3,023,124 square feet and the average price per square foot equated to $186.00 per square foot. That compares to 44 transactions totaling $601,590,443 in the fourth quarter 2014. The total square footage in the fourth quarter was 4,314,955 square feet for an average price per square foot of $139.42. Total office building sales activity in 2015 was up compared to 2014. In the first three months of 2015, the market saw 30 office sales transactions with a total volume of $562,287,698. The price per square foot averaged $186.00. In the same first three months of 2014, the market posted 21 transactions with a total volume of $333,215,887. The price per square foot averaged $163.32.

Cap Rates

Cap rates have been lower in 2015, averaging 7.13% compared to the same period in 2014 when they averaged 7.19%

In summary, the commercial office real estate market is in line with the residential market holding on the steady upward trend. Values are high, vacancy is low and there are no signs of slowing. If you have questions about a specific market area please contact a member of our team for a detailed analysis.