Kroll Bond Rating Agency Releases Property Beat/Secular Trends: E-Commerce and Marijuana Light Up Warehouse Space

NEW YORK--()--Kroll Bond Rating Agency (KBRA) today released research report entitled “E-Commerce and Marijuana Light Up Warehouse Space.”

In each of the major commercial real estate property type sectors, secular trends continue to influence demand and shape performance. Two evolving trends that are impacting the warehouse segment have been e-commerce, which continues to drive the space needs associated with the movement and storage of online retail goods, and a growing marijuana industry, which is increasing demand for both old and new warehouse properties in selected markets. In the coming weeks, we’ll highlight the secular trends that are transforming the landscape for other property types.

With the emphasis on logistics and proximity to customers, retailers are now more often utilizing fulfillment centers or revamping existing distribution centers to accommodate e-commerce growth. This supply chain reconfiguration plays into the instant gratification that e-commerce shoppers want—shortening the time between the click on their computer and the knock on their door for the delivered goods.

After Colorado voters approved the use and sale of recreational marijuana in November 2012, rental increases in Denver had double digit growth in 2013, 2014 and 2015. If the rent growth that Denver experienced is any indication of what could happen in California or other states where recreational marijuana has been legalized, the impact to warehouse space fundamentals could be even greater.

KBRA does not expect to see CMBS loans collateralized by properties with tenants engaged in marijuana-related activities for as long as marijuana remains a Schedule I illegal narcotic under federal law. However, CMBS warehouse collateral that is located in markets where marijuana has been legalized should receive a positive spillover effect, as increased demand lifts market rents and property prices.

To view the report, please click here.

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical:
Larry Kay, 646-731-2452
Senior Director
lkay@kbra.com
or
Taeho Lee, 646-731-2317
Associate
tlee@kbra.com
or
Eric Thompson, 646-731-2355
Senior Managing Director
ethompson@kbra.com

Contacts

Analytical:
Larry Kay, 646-731-2452
Senior Director
lkay@kbra.com
or
Taeho Lee, 646-731-2317
Associate
tlee@kbra.com
or
Eric Thompson, 646-731-2355
Senior Managing Director
ethompson@kbra.com