Marijuana growers are pushing up the price of industrial properties in some areas as more states legalize cannabis consumption for recreational and medical use.

Rents on warehouses used by marijuana farmers also are higher than average warehouse leases in the same area.

So far, 29 states and Washington, D.C., have legalized marijuana for medical use and eight of those states also approved it for recreational use. While some institutional investors are not specifically aiming to invest in marijuana-related real estate because cannabis remains illegal under federal law, it still is affecting their real estate portfolios.

Higher industrial prices are good for warehouses that investors already own. But those higher prices also could make new warehouse purchases more expensive when they are competing with cannabis growers for the properties.

Institutional investors' total exposure to the industrial sector is inching up. According to Pensions & Investments' 2017 real estate manager survey, 13.6% of the total assets ​ managed by the top 50 U.S. institutional real estate managers was invested in industrial property as of June 30 vs. 12.8% a year earlier and 12.2% as of June 30, 2015.

Sales prices and rents on industrial properties in many states, including cannabis-friendly states California, Colorado and Maryland, are rising.

"Prices of small-to-medium-sized warehouses in the Sacramento region have increased between 30% to 40%" year over year, said Mike Zimmerman, Sacramento, Calif.-based senior vice president with commercial real estate manager and broker Jones Lang LaSalle Inc. who focuses on the industrial sector. "The driver is marijuana."

And Mr. Zimmerman expects prices to continue to increase. There's "no reason to suspect the trend will taper off anytime soon given that (marijuana use) was just legalized in California Jan. 1 and the market (statewide) is expected to grow throughout 2018," he said.

Sacramento also is benefiting from the cannabis-fueled warehouse prices because some neighboring communities including Calaveras, El Dorado and Placer counties have barred marijuana growers.

In Colorado, marijuana has been legal since 2012. Marijuana-occupied properties in Denver sold for an average premium of 20% in 2016 and a 25% premium over lower quality — Class B and C — warehouses in the same year, according to CBRE Group Inc. data.

Industrial properties in areas where marijuana cultivation is legal also are renting for higher prices. In Denver, for example, a sample of 25 leases signed between 2014 and 2016 revealed an average effective warehouse lease rate two to three times higher than the average warehouse lease rate, according to CBRE.

Warehouses continue to be the most popular place to grow marijuana, the report noted. Some 63.4% of the space used by marijuana growers is in warehouse space, 25.5% is in manufacturing space and 8.5% is in flexible or research and development space, the report stated.