HOLYOKE — In 2020, packaging manufacturer Sonoco Products Co. sold its Holyoke plant to marijuana manufacturer Pleasantrees for $3 million. In March, Pleasantrees sold the property at 111 Mosher St. to real-estate investors for $5 million.
“They never built it out,” said Kevin Jennings, president of Jennings Real Estate Services.
Jennings helped broker both sales and now represents the new owners — New York investors — as they attempt to lease 113,700 square feet of manufacturing or warehousing space, some of it with 22-foot ceilings.
“We’re seeing a contraction in the cannabis industry for sure,” he said. “Holyoke was ground zero. They were the most progressive out of the gate.”
Rebecca Rivera, real estate broker with B & B Real Estate in Holyoke, said a few years ago that a renter could expect to pay $18 a square foot. Today, it’s going for closer to $7.
And Rivera said her phone is ringing today with investors looking to convert space for residential use, not cannabis.
Jennings said what he’s seeing is a lot of buildings snatched up in the early days of cannabis expansion coming back on the market. “Which is a good thing,” he said.
Holyoke courted cannabis growers and retailers in the early days of the state’s legalized industry. The Paper City — jokingly referred to as “Rolling Paper City” — touted cheap hydropower, large empty mill buildings ready for conversion, available workers and a progressive city government willing to embrace cannabis growers and streamline permitting rules.
But now, the buzz is fading thanks to neighboring states allowing legalized marijuana industries of their own and stiff competition from the illicit market.
Prices are falling. An ounce of flower is selling for $171 this month, according to the state Cannabis Control Commission. That’s down from more than $400 as recently as early 2021.
Pleasantrees closed its Easthampton retail location in February.
That leaves Holyoke, and its real estate market, trying to figure out what comes after the “green” gold rush.
Aaron M. Vega, Holyoke director of planning and economic development, estimates there are 20 properties across Holyoke that were purchased or leased by the cannabis industry but are now unused. The city issued 36 special permits and, now, only 10 companies — retailers, growers and manufacturers — are in business today.
So what’s happening at those properties?
“Not much,” said Vega, a former state representative.
The list includes 100 Water St., the closed Hampden Papers complex which Hampden Papers sold to Green Thumb Industries for $4.55 million in 2021. Green Thumb never expanded its operations. Following plumbing electrical and structural repairs outlined in city building permits, the five building mill complex totaling 326,664 square feet has been on the market for nine months with an asking price of $4.9 million.
Green Thumb maintains its manufacturing and cultivation business at 28 Appleton St.
Also in 2021, a New York investor bought the former Holyoke Machine Co. building on Main Street for $1 million and the city has been told the plan is to use it for cannabis cultivation.
At the time, the seller’s real estate gent said, “(Marijuana) cultivation ultimately drove the purchase price.”
Last week, Vega said the new owners of Holyoke Machine Co., 514 Main St. are now marketing the property for other uses. Holyoke Machine, founded in 1863, specialized in equipment for paper mills. Earlier in its life, it made water wheels and its foundry cast doors for the U.S. Capitol building. It closed in 2017.
In 2021, cannabis interests bought the old Edaron plant at 333 Canal St. for $1.5 million. Edaron was a maker of puzzles and games.
A search of available industrial properties in Holyoke also shows other industrial properties advertised for marijuana growers:
- 195 Appleton St. is listed for sale with a price of $2.7 million.
- 109 Lyman St. is posted for sale at $895,000.
- 475 Canal St. is listed as 10,000 square feet available for lease.
The inventory will only grow because Trulieve is pulling out of Massachusetts and will sell off its indoor growing facility at 56 Canal St.
It is a massive block-long former paper mill Trulieve bought from Conklin Office Furniture for $3.2 million in 2019.
Trulieve invested about $30 million on renovations and repairs, installing specialized equipment and creating a 60,000-square-foot grow room one employee said was big enough to supply smokers across the whole of the Northeast.
But is there a market for the space if no other grower wants to step in?
Jennings, the real estate guy, said yes: There is interest from warehouse operators and a shortage of renovated, turnkey space. And the cannabis companies invested in much-needed repairs.
But an industrialist is skeptical.
“They’ve got so much money in these buildings,” said John Hazen, president of Hazen Paper Co. “Based on everything I know, it’s all priced way above market.”
So it won’t sell.
“Unless they are willing to take a loss,” Hazen said.
Vega said this sort of marijuana gentrification makes things difficult for the city.
“So these small manufacturing companies can’t afford that,” he said. “It’s not viable for a small manufacturing company.”
One possibility, and one of his fears, is that marijuana manufacturers, like the papermakers before them, will abandon the properties due to a changing economy and the city will end up taking them for back taxes and then be in charge of getting them redeveloped.
Hazen, whose family-owned company specializes in coatings allowing for 3D imagery including the holographic covers of Super Bowl programs, said he tried to lease space at Hampden Papers in 2020 after that business sold its product lines and closed.
It would have given him a leg up, he said, because he knew Hampden Papers had a piece of equipment, a sheeter, that he knew it would sell at auction. His idea was to lease the space, buy the machine and then put it to use.
“We could have saved the business,” Hazen said.
Moving paper converting equipment, even across town, and reassembling it is often prohibitively expensive.
Hazen said his company has plans now for a new building adjacent to its plant, on property it purchased that was once part of University Products.
Vega said that even with recent bad news, Holyoke was right to go after the cannabis industry.
Holyoke Mayor Joshua Garcia estimates $590,000 next year in cannabis retail tax. And the city has collected $3.75 million in cannabis impact fees since 2019.
To get a host community agreement or a special permit, applications have to be current on taxes. Cannabis applicants have paid more than $152,000 in back taxes on properties since 2019, including $25,000 owed on 333 Canal St. The biggest total was $77,000 that was owed on the still-vacant 16 Commercial St.
Vega also points to rising assessed values. He said the industry also invested in structural repairs, leaving — in Boy Scout fashion — places better than they found them.
Even after Trulieve leaves at the end of the year, there will still be a cannabis industry in Holyoke. There will be two existing manufacturers and cultivators including GTI and Mill Town at 1 Cabot St., and the city will have four retailers and one lab.
“If we didn’t have an open door policy,” Vega said. “We would have nothing.”
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