REAL ESTATE & DEVELOPMENT: Developers see opportunities with incoming marijuana companies

BY Sunday, August 18, 2019 09:55pm

For a decade, mixed-used and industrial property developments have fueled West Michigan’s building boom. Now, we may be seeing the dawn of a cannabis construction era.

Marijuana businesses with roots in West Michigan are beginning to seek construction services as they are approved for licenses by municipalities. 

John Wheeler, director of business development, Orion Construction Co. Inc. COURTESY PHOTO

That is especially true in Grand Rapids, where 11 marijuana facilities have been approved so far. Forty-nine more applications will be considered, though that number will decrease when applications are kicked out of the lottery process for being too close to approved sites.

Still, inquiries have ramped up for firms to work with medical marijuana companies. 

John Wheeler, director of business development at Grand Rapids-based general contracting firm Orion Construction Co. Inc., said the firm is in negotiations for general contracting services on five different locations with three medical marijuana companies that have been given approval by the city of Grand Rapids. One is a grower, and the others are provisioning centers. 

“This is a highly regulated industry, and they really understand the laws, the way the operations have to go,” Wheeler said of Orion’s prospective clients. “It’s not like a fly-by-night outfit coming into town and saying, ‘Hey, we’re going to try this.’ 

“All of these clients have facilities in other locations and other states. They’re expanding into the program here in Michigan.” 

Wheeler sees an abundance of work in the pipeline being that other cities in Michigan have allowed marijuana businesses. He suspects grow facilities will be big for construction firms because, depending on square footage, they can be between $4 million and $20 million projects.

“If you become an expert in any one industry, you get the call from other competitors that want fast construction, good delivery systems, who get along well with city officials,” Wheeler said.

Not everyone is jumping in to the cannabis business opportunity. 

Grand Rapids-based commercial brokerage NAI Wisinski of West Michigan experienced a flurry of activity last year, when medical marijuana companies were looking for properties in allowed zone districts of the city, and multiple calls per day until recently. NAI Wisinski has opted not to represent buyers in the marijuana industry. 

“There’s a lot of unknowns in the industry, and I think you’re seeing that across all lines of business, not just in real estate,” said Brad Bruinsma, general manager of NAI Wisinski. “There’s liability concerns, there’s other concerns that are out there.

“We’re just approaching it very cautiously with a preference to stay away from the buyer rep and tenant rep side.”

NAI Wisinski does represent building owners, and will provide guidance to those clients if they have an opportunity to sell or lease their property to someone in the marijuana industry.

When activity was ramped up with people buying and selling property, a large number of properties went under contract at elevated values, Bruinsma said, but “very few, if any of those, got to the finish line.” 

Bruinsma said the company could change its practices if marijuana became legal federally.

“We will continue to have those discussions, but we’re always taking into account the ethical concerns of it,” he said. “We are certainly open to working with our building owner clients who may be selling or leasing to businesses in that industry. It’s going to be interesting to see how this plays out over the next couple of years, and what impact it has on the commercial real estate market.”
Wheeler said Orion mulled over the same issues, but decided to work with the marijuana companies because it is legal in Grand Rapids and Michigan. He anticipates firms will continue having discussions about it and decide for themselves. 

Orion will also continue its zero-tolerance drug policy for its workers for safety reasons.

“We can’t change our delivery system and our company and our culture, but we’re providing a service to an industry that’s legal and a source of creating more jobs in our community,” Wheeler said. 

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