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Cannabis Tenants Moving Into Shopping Center Properties

The New Growing Trend in Shopping Centers

Photo Courtesy of Kristina Blokhin.

While the cannabis market has grown rapidly, tenants and landlords still need to proceed carefully in order to secure the opportunities that this market can provide. Even though more than 70% of consumers use physical dispensaries as their main cannabis source, there are still many evaluations for tenants in this space regarding state-by-state legal restrictions and regulatory processes for licenses to name a few.

The opportunity that this sector provides shopping centers as a tenant base that could potentially pay strong rents is apparent with U.S. sales of cannabis, both recreational and medical, projected to grow to $25-$30 billion by 2023. Some shopping center owners who have captured cannabis related tenants already have opted for percentage rent clauses to help mitigate some of the financial challenges and capitalize on rising sales revenues for the concepts. Shopping center owners, however, need to consider how they can capitalize on the growing trend, while protecting themselves from the negative impacts of a business that is not quite widely accepted. In the short term, shopping center owners who are considering a tenant mix inclusive of a cannabis tenant may look to incorporate certain strategic management decisions. Posting additional security on site can help avoid unwanted guest traffic, while maintaining a clean, sleek, and experiential tenant base can help remove the negative stigma that the industry has gathered by maintaining a professional and modern ambiance.

For more information discussing the emerging cannabis trend in detail, click the link below.

Source: 2020 ICSC.

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