Gage Cannabis’ Ferndale property for sale, but dispensary will stay put

This story was republished with permission from Crain’s Detroit and written by Dustin Walsh.

The property housing Gage Cannabis’ flagship store in Ferndale, Michigan, is for sale.

The more than 46,000-square-foot building on 1.52 acres at 1523 Academy Drive St. is on the market for $7.06 million, according to marketing from the property brokers Chicago-based Northmarq.

The sale of the property does not impact Gage’s operations there as its lease will remain intact, Keith Stauffer, CFO of TerrAscend Corp. (OTC: TSNDF), the Canadian owners of Gage, told Crain’s in an email.

The property has a triple net lease, which means Gage would remain responsible for the property taxes, insurance and maintenance of the building, according to a property advertisement. The rent on the lease also increases 2.33% annually.

BJ Feller, managing director and senior vice president of Northmarq, said the property is being marketed as an investment as Gage’s lease is secured.

“Frankly many investors are viewing the (cannabis) real estate as more secure than traditional retailers, and also offering above market capitalization rates and returns,” Feller wrote in an email.

Northmarq is also marketing the Gage properties in Kalamazoo, branded as Cookies, and Traverse City, as well as two properties containing Lume Cannabis Co. dispensaries in Holly and Birch Run.

Gage’s Battle Creek location is also on the market.

The Battle Creek location is listed for $1.7 million, the Traverse City location for $2.55 million and Kalamazoo location for $2.9 million.

The Ferndale and Kalamazoo properties are owned by Troy-based Spartan Partners Properties. The Traverse City property is owned by Strategic Koach Properties LLC and the Battle Creek property is owned by an entity called Battle Creek Downtown Central LLC, according to CoStar Group Inc., a Washington, D.C.-based real estate information service.

None of those entities were immediately available to respond to requests for information.

Weed has been a hot real estate commodity for years. Investing in the property allows investors to play in the marijuana market without having to walk the line of federal drug regulations — marijuana is still a Schedule I narcotic in the purview of the federal government.

The hotness of the market, however, is extremely segmented. How high the real estate prices go is largely based on how saturated the local municipality is with competition.

A meager 2,400-square-foot building in Pontiac, which still hasn’t got its recreational-use market off the ground, was for sale for $3.5 million in 2022 ahead of Pontiac opening up its market to recreational weed.

Battle Creek is heavily saturated with dispensaries, which may dictate the $1.7 million price tag, compared to the more sparely populated Traverse City market, which is dictating $2.55 million for a similar building.

The state’s overall marijuana market, though, has yet to peak. Last year, operators sold $3.06 billion of product, compared with $2.3 billion in 2022.

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