An aerial view of the nhc cannabis dispensary property, 495 Morro Bay Blvd. that will be sold via online auction July 24-26. Photo submitted
A rare opportunity to buy a piece of commercial real estate in the middle of Downtown Morro Bay is about to hit the auction block, and with a good tenant under lease, it could be a fantastic investment opportunity.
The building at 495 Morro Bay Blvd., which is currently the home of the Natural Healing Center or nhc cannabis dispensary, is slated to go up for Internet auction July 24 on Loop Net (see: www.loopnet.com/listing/495-morro-bay-CA/28572118).
The auction will close on the 26th and whomever puts in the highest bid — above the reserve price — can own a piece of Downtown Morro Bay’s commercial district.
Young told Estero Bay News that this is part of a larger sale of properties owned by Helios Dayspring, another Morro Bay native son who was in on the start of the local cannabis industry.
Dayspring first opened an nhc store in Grover Beach that was just the second dispensary in SLO County. He also got licenses and opened stores in Morro Bay and Lemoore and was in the process of opening another in Turlock, Calif., up in Stanislaus County (near Modesto).
He also was in the process of opening a dispensary in San Luis Obispo at 22460 Broad St., but before he got it opened, his world blew up.
Dayspring was arrested by the FBI and charged with bribing former County Supervisor, the late-Adam Hill to get cannabis licenses for grow sites.
Hill committed suicide in 2020 after his Pismo Beach home was searched by the FBI. Dayspring eventually pled guilty and served time in prison for the felony and now that he’s out on parole, wants to divest himself of the cannabis industry altogether.
Aaron Young, who is handling the sales through the firm, Big Block Realty in Santa Maria, said the Morro Bay, Lemoore and Turlock properties, are all going on the auction block the same day. The SLO property on Broad Street will be sold in August, he added.
The SLO property is problematic. Young explained that the SLO City Council changed its cannabis ordinance and that Broad Street site, which was completely remodeled and ready to open but never did, that essentially says no one can buy the property if they intend to open a dispensary in it.
“He [Dayspring] built an amazing business,” Young said. But now, “He’s trying to divest from the cannabis industry.”
As for the nhc store itself, Young said it is not part of the sale, but it has a lease and is a sold tenant.
Nhc was bought about a year ago by the publicly traded, Glass House Brands, one of the largest cannabis growers, manufacturers and retail operators in California. So the dispensary and the Morro Bay license are owned by a large firm, which Young said is how the industry is changing. “That’s been the trend,” Young said. “The smaller guys have fallen off.”
He said taxes attached to cannabis sales by both the State and cities, have made it prohibitive for small companies to get into the field. Plus cannabis is still against federal law, which further complicates the industry.
But the key to this is that nhc no matter who owns it has been very successful in Morro Bay and holds one of just two cannabis licenses in the City of Morro Bay (Perfect Union at 1000 Quintana Rd., has the other).
“It’s a unique piece of commercial property,” said Young. It’s not the first time he’s sold commercial real estate in an online auction but the first-time using Loop Net. He said using the larger auction house has allowed information about the sale to reach a much wider audience.
Having a thriving business already in tenancy makes all the difference in the world of commercial real estate investing, Young explained. That’s where a landlord makes his money. “It represents the value of the property,” Young added.
The property is described in the auction listing as “4,340 square feet of modern retail space, originally built on a .1-acre lot in 1977. The property is fully renovated with a wealth of modern features and amenities, including an attractive masonry façade, prominent signage on a tree-lined street, 12-foot high ceilings, and five on-site surface parking spaces. The notable storefront offers direct frontage to Morro Bay Boulevard, the primary commercial corridor of the city.”
The site mentions that the store is 0.3-miles from the Embarcadero and sits in a thriving business district that includes numerous eateries, shops and the Bay Theater. Young noted the relatively large size of the retail space, which for decades housed Mills Stationary and ASAP Reprographics. ASAP moved to a location on Quintana Road after Dayspring bought the property for a dispensary.
He spent about $1 million completely revamping the interior and exterior before opening in April 2021 during the height of the coronavirus pandemic. And he did a fantastic job on it, as the interior, which is divided into a CBD section and a cannabis section, resembles a high-end jewelry store.
As with most real estate properties location is everything. “A recently updated retail location with a performing tenant whose competition is heavily limited by local legislation makes Morro Bay an excellent location for new investment,” reads the description of the site on the auction website.
So far, he said, the responses from potential buyers have been good. “It’s been really good,” Young said. “There’s been healthy interest. Morro Bay has been the most desirable location so far,” he added with regards to the Lemoore and Turlock properties that are also being sold.
“People are not buying office buildings in San Francisco or Silicon Valley anymore,” he said. Many investors shying away from big cities like San Francisco, which have been losing residents and business fleeing rising crime and the degradation of their quality of life. Plus, he added, the pandemic changed a lot about how people view work, including the rise of working remotely. So, a person can work for a big city firm but live in a small town like Morro Bay.
The sale requires a prospective buyer to register and show they have the means to actually pay the bid they make. The reserve price is not being disclosed but the starting bid listed on the website is $550,000.
For comparison, a former bank site on Ocean Avenue in Downtown Cayucos sold on the first day it went on the market for well over $1 million.
“It’s [the auction] very straight forward,” Young said. “Put your best offer in and if it meets the reserve it can be yours.”
The auction opens July 24 and closes July 26.
The SLO location on Broad Street goes on sale Aug. 7, which Young explained is within the deadline to apply for a new cannabis retail license in the City of SLO. That deadline, Young said, is Aug. 15 and while the location has a sordid history with the City after all of Dayspring’s legal troubles, it may be possible to convince the City to allow a dispensary to open there, so long as Dayspring isn’t involved. After all, it’s been completely remodeled and was ready to open before the City Council revoked his cannabis license.
As for the future, Young said he sees the day coming soon for cannabis tourism. The dispensary in Lemoore has a “consumption lounge,” Young explained. The consumption lounge is a separate location from the retail sales areas where customers can go to partake of the evil weed.
Some places, like in Colorado, have a burgeoning cannabis tourism industry, with cannabis-friendly motels, and lounges to toke up or gobble down edibles for those so inclined. “Tourism,” Young said, “is the next big thing.”