Craft Beer Taps Commercial Real Estate
Move over, cupcakes and cronuts. The hottest trend in refreshments isn’t a sweet, but craft brews and microbreweries that are opening doors in cities and suburbs across the U.S.
Growth in craft beer has skyrocketed: The American craft beer market is $19.6 billion – that’s up 22 percent in sales, say the Brewers Association. And with nearly 3,500 craft breweries in operation across the U.S. – comprising brewpubs, microbreweries and regional craft breweries – the demand isn’t slowing down. CraftBeer.com offers these impressive statistics about the trade:
- Craft brewers sold an estimated 212,159,327 barrels of beer in 2014.
- Retail dollar value from craft brewers in 2014 was estimated at $19.6 billion, up from $14.3 billion in 2013.
- Craft brewers currently provide an estimated 424,000 jobs in the U.S., including serving staff in brewpubs.
Here’s where you come in: When brewers outgrow their basements and garages, their next space is commercial real estate.
Small brewers may start in a “brewery incubator,” which All About Beer magazine says is a new model that allows homebrewers to develop experience and ultimately launch their own breweries. New York State’s first craft beer incubator could be on the way thanks to the Town of Babylon Industrial Development Agency. The agency plans to spend $12 million to buy, revitalize and equip a former missile component facility with hefty back tax and environmental cleanup bills, replacing the existing 25,000 square-foot industrial building with a structure that would house up to 10 brewers, offer tasting rooms and a shared production space with equipment for small to midsized operations.
Next step: expanded production in larger spaces. Craft Brewing Business says, “There are renewed opportunities for old factories and large abandoned spaces with high ceilings to reinvent themselves. Places with open floor plans can provide the perfect setting to easily install brewing, fermenting and packaging equipment.”
Colliers just released a U.S. Research Spotlight Report on the craft beer phenomenon, noting that the vast majority will be located in industrial space whether in a multi-tenant industrial complex or a larger single-tenant industrial building while the remaining breweries will operate in a retail restaurant location.
Colliers says it examined the craft beer boom in 29 markets across the country, measuring the amount of space utilized by the three segments of breweries identified in the report:
- Brewpubs: Typically located in a retail restaurant location that allows for a limited amount of beer manufacturing on-site.
- Microbreweries: Typically located within a small single-tenant industrial building or multi-tenant industrial complex.
- Regional breweries: Typically located in larger single-tenant industrial warehouse buildings due to the increased size requirement for their operation.
Their findings? Chicago is the country’s craft beer capital, with an estimated footprint of 1.6 million square feet of total craft brewery space, followed by Philadelphia (1.5 million square feet); Portland, Oregon (1.4 million square feet); San Diego (1.1 million square feet); and Denver (1.0 million square feet). Charlotte, North Carolina, had the largest year-over-year growth rate from 2013 to 2014 at 77 percent.
Colliers says the biggest impact will come as regional breweries expand operations and need space to fulfill product demand. Recently, regional breweries Sierra Nevada, Lagunitas Brewing Company and New Belgium Brewing Company opened a combined 733,000 square feet in three markets.
Craft breweries usually occupy industrial space, due in parts to lower rental costs, access to heavy-duty water and power utilities, and the character brick walls and exposed ceilings yield. Some vintage industrial space reuse may draw tax incentives through revitalization efforts, says the Colliers report, and new corner brewpubs bring new life – and new spending – to retail centers.
Beyond industrial sites, craft breweries are popping up in most unexpected places. Thrillist assembled an impressive collection of “16 Breweries in Awesomely Bizarre Places,” including a former Wonder Bread bakery, a jail, an elementary school, and a working hazelnut farm.
Bottoms up to craft breweries everywhere. Have you redeveloped space for a brewery, or are you actively leasing space to one? Tell Market Share readers all about it.
Kathryn Hamilton, CAE, is Vice President for Marketing and Communications at NAIOP Corporate.
Greetings! My husband and I own 7 acres of Riverfront Property along the Monongahela River in the small town of Monongahela (birthplace of Joe Montana) with 24,000 SF of industrial warehouse space and 1300 SF of office space. My father-in-law built the concrete manufacturing plant in 1950s making hollow core concrete planks for large commercial structures and discontinued work there in 2007. The company which still operates today in another state of the art facility down river & is called Pittsburgh Flexicore, Inc. a family owned business that has been operating for nearly 100 years. We have become interested in the bringing a brewery to town — with the recent $3 million dollar renovation to the Monongahela Aquatorium & Park (outdoor auditorium on the river) and the ideal location right on the river — it’s a win win opportunity here in the ‘rust belt’ for economic development just 18 miles south of the city of Pittsburgh! I’d like to discuss the possibilities and welcome a tour. I own a unique vacation house rental nearby called “The Good Ol’ Days House” for those who want to come out for a tour. Thank you for taking the time to read this. Have a nice day!