Prospective pot pedlars jostling for space
Many landlords are reluctant to allow shops on property or refuse, say realtors
Several months ago, Calgary realtor Blair Mastin said he was handling so many calls from potential cannabis retailers seeking store space, he felt under siege.
“There was a time for four or five months I got 15 to 20 calls a day,” said Mastin, who now specializes on the commercial cannabis file with Re/Max Complete Commercial.
“It got to the point I wouldn’t pick up the phone unless I knew the number.”
That pace has since slackened, said Mastin, but the rush for retail space in Calgary in anticipation of the drug’s expected legalization this summer remains “a frenzy,” say realtors and their clients.
One potential client, he said, turned to him to wrangle an advantage over competitors in an unexpected way.
“He offered to give me a referral for every address I send him,” said Mastin, who’s chosen to take on three cannabis clients for now.
“These guys are grabbing at everything they can possibly lay their hands on.”
The fight over commercial space with a three per cent vacancy rate in Calgary has led to furious bidding wars, with some wannabe bud merchants offering to pay many times over regular market value.
Those include hefty, non-refundable deposits on space with no guarantee of civic approval, say those in the business.
“Extraordinary things are being done to get into cannabis retail,” said Nathan Mison of Edmontonbased company Fire and Flower, which is seeking seven Calgary locations.
“I’ve seen examples of three times the market value — it’s a furor.”
Mison said his company has chosen not to run up bidding, instead seeking landlords it can sway by building confidence in their business model and ethics.
Committing too much to an application that could well be rejected by provincial or municipal authorities is incredibly risky, he said.
“The financial assumptions you’re making might be very different in six months,” said Mison.
The province said it will provide a maximum of 250 cannabis retail licences, with no single retailer allowed to own more than 37 stores, or 15 per cent.
More than 250 would-be sellers have applied to do business in Calgary alone.
Many landlords are either reluctant to allow such shops on their property or outright refuse, say realtors.
Others choose a safer route by opting for larger, more-established operators over those they consider less-certain newcomers, say realtors and retail franchisors, such as Darren Bondar of Calgary’s Spiritleaf.
“Local retailers are being shut out by the larger players who are being opportunistic, who don’t care about the local community,” said Bondar, whose company is hoping for 17 Calgary shops.
Some of his franchisees, he said, have been discouraged by that tendency and the high cost of bidding wars.
“We’ve had a good degree of success but some franchisees are frustrated,” he said, adding how authorities select some applicants over others amid 300-metre exclusion zones between stores is cause for considerable anxiety.
“There was already a very tight vacancy rate and it’s become a chess game, a challenging real estate game.”
In some cases, multiple applicants have laid claim to a single strategic site, said Re/Max’s Mastin. “It’s only going to slow down the process,” he sad.
Fellow realtor Darryl Terrio said there’ll likely be a mix of bigger retailers and smaller, more community-centred ones.
“You’ll have your main brand and mom and pop stores,” said Terrio of Re/Max Complete Commercial.
“Leases are being done in indoor malls and power centres ... as long as it fits the retail and demographics, they’ll put it in there.”
There was already a very tight vacancy rate and it’s become a chess game, a challenging real estate game.