The prime real estate location of Gage Cannabis' premier outlet in Ferndale, Michigan, has been listed for sale. Occupying over 46,000 square feet on a 1.52-acre site at 1523 Academy Drive St., the property is being marketed for $7.06 million. This sale initiative, as detailed by Northmarq, a Chicago-based property brokerage firm, does not signal any operational changes for Gage Cannabis.
TerrAscend Corp., the Canadian company that owns Gage, reassured through CFO Keith Stauffer, that Gage's lease agreement would continue unaffected. The property operates under a triple net lease agreement, placing responsibility for property taxes, insurance, and maintenance on Gage Cannabis, with a 2.33% annual increase in rent.
BJ Feller, Northmarq's Managing Director and Senior Vice President, emphasized the investment appeal of the property, noting the stability of cannabis real estate compared to traditional retail sectors. This stability, coupled with higher than average capitalization rates and returns, makes such properties attractive to investors.
Northmarq's portfolio also includes other Gage properties in Kalamazoo (operating under the Cookies brand) and Traverse City, as well as Lume Cannabis Co. dispensaries located in Holly and Birch Run. Additionally, Gage's Battle Creek location is up for sale, with the Battle Creek property listed at $1.7 million, Traverse City at $2.55 million, and Kalamazoo at $2.9 million.
Ownership of these properties varies. The Ferndale and Kalamazoo sites are held by Troy-based Spartan Partners Properties, while the Traverse City property is under Strategic Koach Properties LLC, and the Battle Creek location by Battle Creek Downtown Central LLC. These entities, as reported by CoStar Group Inc., a real estate information service based in Washington, D.C., have not provided immediate comments on the listings.
The cannabis industry has been a vibrant sector in real estate for several years, offering investors an opportunity to engage in the marijuana market without direct involvement in its cultivation or sale, thereby navigating the complexities of federal drug regulations. However, the value of these real estate investments is highly dependent on local market conditions, particularly the level of competition in the area.
For example, in 2022, a modest 2,400-square-foot building in Pontiac, still awaiting its recreational marijuana market launch, was listed for $3.5 million. Contrastingly, Battle Creek's high dispensary density might explain its lower $1.7 million price point, as opposed to the less saturated Traverse City market, where property values reach $2.55 million.
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