INVEST NOW

Specialty Real Estate: Exploring Unique Investment Opportunities

Introduction:
Specialty real estate represents a fascinating and diverse segment of the property market, offering unique investment opportunities that cater to specific needs and preferences. Unlike traditional residential or commercial properties, specialty real estate encompasses a wide range of asset classes, each with its distinctive characteristics and potential for substantial returns. Unlike more traditional real estate properties, like office buildings and multi-family housing, specialty real estate typically doesn’t fit within the more traditional real estate definitions. This paper defines and explores various types of specialty real estate, with a particular focus on the inclusion of cannabis as a rising option in the market.

Photo: Esteban López /Unsplash

Types of Specialty Real Estate

Luxury Real Estate: Luxury properties are characterized by high-end finishes, exclusive locations, and luxurious amenities. They cater to high-net-worth individuals seeking opulence, privacy, and prestige. These properties are often situated in prime locations, such as luxury penthouses in city centers or sprawling mansions in upscale neighborhoods.

Historic Properties: Historic real estate includes properties with significant cultural or architectural value. These properties can range from stately castles and centuries-old estates to heritage-listed buildings in urban areas. Investors in historic properties often look to preserve and restore unique historical features while generating revenue through tourism or events.

Recreational Real Estate: Recreational properties are developed in locations that offer recreational activities and access to natural amenities, such as lakes, mountains, or beaches. These properties include vacation homes, ski lodges, beachfront villas, and hunting cabins. They provide owners with an escape from urban life and the opportunity to capitalize on short-term rentals.

Agricultural Real Estate: This segment encompasses farmland, vineyards, orchards, and ranches. Investors in agricultural real estate often look to benefit from crop production, livestock farming, or vineyard operations. Additionally, such properties’ value can appreciate due to their limited availability and potential for diversification.

Medical Real Estate: Medical properties include hospitals, medical office buildings, and specialized clinics. Investing in medical real estate provides the potential for stable income streams due to long-term leases with healthcare providers and the constant demand for medical services.

Movie Theaters: Movie theaters have seen their share of cyclical ups and downs over the past century and were particularly hit hard during the COVID-19 pandemic. According to IBIS World, there are 2,208 movie theater businesses in the US as of 2023, creating the potential for lucrative investment returns. However, due to the nature of filmmaking, this space can be greatly impacted by the speed and quality of films being produced. It can also be disrupted by strikes from either the writers or actors within the industry.

Cannabis Real Estate: With the legalization of cannabis gaining momentum in various regions, cannabis real estate has emerged as a distinctive and potentially lucrative sector. It encompasses properties used for cultivating, processing, and distributing cannabis products. This specialized niche presents unique challenges and opportunities for investors looking to capitalize on the growing cannabis industry. Benzinga recently reported the estimated total addressable market of cannabis real estate of $50-$70 billion.

Cannabis Real Estate as an Investment Option
The flourishing cannabis industry is transforming the real estate landscape, creating an exciting opportunity for investors to enter a promising market. As more countries and states legalize cannabis for medicinal and recreational use, the demand for cannabis-related properties has skyrocketed. However, due to the regulatory oversight of cannabis, zoning and permitting can be a challenge.

Cultivation Facilities: Cannabis cultivation facilities, commonly known as grow houses or indoor farms, require specialized infrastructure to ensure optimal plant growth conditions. These properties often feature advanced lighting, climate control systems, and security measures to comply with regulatory requirements.

Processing and Manufacturing Facilities: Properties dedicated to cannabis processing and manufacturing involve the extraction, refinement, and production of various cannabis-derived products. These facilities must adhere to stringent safety and quality standards, making them attractive investments for those willing to navigate the regulatory landscape.

Retail Dispensaries: As the face of the cannabis industry, retail dispensaries serve as crucial touchpoints between consumers and cannabis products. Prime locations with convenient access and ample parking are highly sought after for establishing successful dispensaries.

Warehousing and Distribution Centers: The distribution of cannabis products requires efficient logistics, making warehouses and distribution centers integral to the supply chain. These properties are well-suited for investors looking for stable, long-term leases with cannabis companies.

Conclusion
Specialty real estate encompasses various niche investment options catering to unique markets and interests. From luxury properties to cannabis real estate, each segment offers distinct advantages and challenges for investors to navigate. Cannabis real estate stands out as a rapidly growing sector, providing opportunities for those willing to navigate the evolving regulatory environment. As with any investment, due diligence, understanding of the local market, and risk management are essential for making informed decisions in the world of specialty real estate, opening doors to potentially rewarding ventures.

Sources

Movie Theaters in the US – Number of Businesses 2005–2029:
https://www.ibisworld.com/industry-statistics/number-of-businesses/movie-theaters-united-states/#:~:text=There%20are%202%2C208%20Movie%20Theaters,over%20the%20past%205%20years%3F

The Cannabis Real Estate Boom: Sustainable Growth Or Bubble?
https://www.benzinga.com/markets/cannabis/23/03/31500321/the-cannabis-real-estate-boom-sustainable-growth-or-bubble

Download PDF document
© 2023 MJ Real Estate Investment Trust. All rights Reserved
Privacy Policy | Terms of Use
Contact Us
Private Placement Risk

Private placements are speculative investments in which an investor could potentially lose the entire investment. The risks associated with a private placement are stated in its private placement memorandum (“PPM”). Investors considering investing in a private placement should fully review the PPM, and if appropriate, consult a legal or financial professional prior to making an investment decision.

Cannabis Legal Disclosure
The possession, use, cultivation, manufacturing, sale, transfer and dispensing of cannabis is illegal under The United Stated Federal Law (see: Controlled Substances Act of 21 U.S.A. 801). The cannabis industry is conducted in states that have passed legislation that has either decriminalized, legalized the use of medical marijuana, and/or legalized the use of recreational marijuana. The possession, use, cultivation, manufacturing, sale, transfer and dispensing of cannabis is governed by state law and from state to state. Companies that engage in the cannabis industry and individuals investing in the cannabis industry could be subject to federal criminal prosecution, civil fines and/or penalties.