TORONTO - Two cities in Western Canada have been named the next commercial real estate "hot spots" for the cannabis market, according to a report.
Real estate firm RE/Max Commercial says that Kelowna, B.C., and Edmonton are both expected to see positive commercial growth in the coming months as a result of cannabis legalization.
Prices for commercial real estate in the southern B.C. city are anticipated to see an uptick, as approval for cannabis retail licences will be "extremely competitive" amid high demand once the substance becomes available.
Kelowna, which is located in the Okanagan Valley, has already identified more than 900 potential zoned sites for dispensaries.
Lease rates for industrial spaces in the area are also expected to rise as marijuana companies vie for more space to house their operations, says the annual Commercial Investor report.
This increase comes after Kelowna's real estate market saw an eight per cent decrease in total sales value for its commercial property year over year.
Meanwhile, it is anticipated that vacancy rates will continue to drop and lease rates will rise moderately for the remainder of the year in Edmonton thanks to the arrival of Aurora Cannabis.
New construction, particularly in the Leduc and Nisku areas of the city, has been burgeoning amid the addition of a 74,322 square metre (800,000 square foot) medical marijuana production facility and a 37,161 square metre (400,000 square foot) auto parts and distribution warehouse from Ford Canada.
"Cannabis is adding an additional demand segment to the overall market, for industrial or retail," said Elton Ash, regional executive vice-president at RE/MAX of Western Canada on Wednesday.
"It's good news from a landlord perspective."