How a Cannabis-Only Business Park Hopes to Redefine Mendota
Article by Karen Jordan editor at CoStar
August 09, 2018
Historically a hotbed of agriculture, the central California city of Mendota calls itself the “Cantaloupe Center of the World.” But Canna-Hub, a real estate development and property management firm for the cannabis industry, is aiming to introduce a new identity.
The Roseville, CA-based company broke ground at the end of last month on a roughly 16-acre campus that aims to be among the biggest cannabis-only business parks statewide.
In fact, it may be the very first of its kind in the state.
Neither the California Bureau of Cannabis Control nor the California Department of Public Health keep records that could confirm, but McGraw believes that the Mendota campus would be California’s first cannabis-only business park.
Developers plan to have an array of different businesses that conduct indoor cultivation, distribution, manufacturing, third-party testing labs, transport, tissue culture and various license types except for outdoor growing and dispensary, according to McGraw.
The choice of Mendota, between Monterey and the 5 Freeway on one side and Fresno on the other, was an easy one, McGraw explained.
“We don’t just pick a city and kind of force our way in,” he said. “What we do is find cities that want to work with us and are willing to be progressive and business-minded when they write their ordinances.”
The city of Mendota adopted an ordinance last year that created a Commercial Cannabis Overlay District, which allows for the cultivation, lab testing and distribution of cannabis in a “certain swath of properties in our industrial area,” noted Matt Flood, economic development manager and city clerk for the City of Mendota.
“Mendota as a city, and a city council, is very supportive of what we’re doing,” McGraw said.
The approval of the project was birthed out of necessity, according to Cristian Gonzalez, interim city manager and current public works and planning director for the City of Mendota.
“Our general fund is suffering, and this seemed like an opportunity to not only receive some much needed revenue, but also to provide an opportunity to the local work force to diversify,” he said. “Ninety to 95 percent of jobs in Mendota are agricultural jobs, which continue to drop due to water issues and the fact that most farms [are becoming] mechanized, replacing people with machines.”
With the legalization of cannabis statewide being so new, having gone into effect on Jan. 1 of this year, Mendota has not seen a business park like this one before, according to Flood. However, the city, which has a population of roughly 11,830, hopes to benefit from it.
“The impact we hope it has primarily relates to economics: job creation and increased tax revenue,” Flood said via email.
That does not take Jimmy Gee, executive vice president of San Diego-based commercial investment real estate company Cire Partners, by surprise.
“It seems like a lot of these small towns are really embracing this kind of revolution,” said Gee, who brokered a couple of commercial real estate deals in Mendota last year. “Since it’s legal in California, they want to take advantage of it and increase their tax bases.”
Canna-Hub purchased the property, with a 107,000-square-foot, 48-year-old industrial building on it, last month for around $3.5 million, or about $33 per square foot, according to CoStar data.
The company expects to complete the business park over three phases that combined could yield in excess of 300 jobs, according to McGraw
Phase one consists of retrofitting a former cantaloupe packing facility at 1269 Marie St. Three cannabis operators have already begun their build-outs, McGraw said. He expects to have seven to nine operators as part of that phase.
Canna-Hub aims to expand significantly in the future with plans to go from 16 acres to 32 acres when all three phases of the project are completed. McGraw said the phases should total about 600,000 square feet when fully built.
“The market is so large, California is really the only state that a large-scale campus style development like ours really works,” he said. “But we do other smaller-scale projects in other states.”
McGraw, who has experience working on cannabis campuses in Illinois where he lived before moving to California, said his company is underway with another cannabis business park in Williams, CA, outside of Sacramento in the northern part of the state, and plans to expand into Canada in the near future.
With further growth on its mind, Canna-Hub is also contemplating a public offering next year, McGraw said. While his company is only two years old, McGraw said he has more than 20 years of experience in real estate and six years of experience in the cannabis industry, which should help ensure the success of his Mendota project.
“We have a pretty significant leg up in our level of sophistication and track record and history of doing this,” McGraw said. “It’s a winning combination for us.”