Richmond mayor: Warehouse rent spike attributed to illegal pot growers

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Richmond mayor: Warehouse rent spike attributed to illegal marijuana cultivation
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In a post in his e-forum newsletter Wednesday (posted in full below), Richmond Mayor Tom Butt said a sharp spike in rental rates for city warehouses has been widely attributed to “illegal marijuana cultivation.”

The mayor also claimed the city has a “laissez faire” approach to the problem, implying that they’re failing to crack down on growers without permits.

Butt is definitely not against the cultivation of marijuana. In fact, he was the main driver behind Richmond council’s vote last year to lift a ban on commercial cannabis cultivation and manufacturing operations in the city.

The problem, he has argued, is that growers lacking permits are getting away with not paying the required fees to the city. Also, the under-the-radar operations pose health and safety concerns.

Butt didn’t spend much time on the topic in his latest e-forum post. In the newsletter, the mayor regularly reports on trends in the city’s warehouse, manufacturing and real estate markets.

By Mayor Tom Butt

The cost to rent warehouse space has risen 50-percent in the last nine months, something many attribute to illegal marijuana cultivation in laissez faire Richmond, driving out legitimate and traditional warehouse users. Vacancies are at 2.2-percent, essentially a closed market.

Manufacturing space is also almost non-existent at 2.7-percent vacancy and a 30-percent rise in the last six months.

There is currently low demand and still plenty of office space with 17-percent vacancy and a slightly downward trend of rental rates to about $2.30/SF. We need to find a way to make Richmond more attractive for office users.

In order for Richmond to grow manufacturing and warehouse/distribution jobs, someone has to build new space, but there is very little activity. The real estate market is similar, with quite a few new developments being entitled in the last couple of years but almost nothing actually being built. Some attribute this to concern about rent control and just cause putting a damper on the market.

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