The act of brewing craft beer is definitely not a new trend, but it is an industry that has undergone exponential growth in the last few years. Closely linked to the evolving consumer and experience driven culture, Americans love beer and as the “foodie” phenomenon has taken off, so to has the demand for quality, innovative beers. Americans are notably more urban centric and environmentally friendly – resulting in a concern for how things are made and where raw ingredients are sourced. The premium price consumers are happy to fork out for quality is the main driving factor behind the enlarged demand for craft beer production facilities.
In 2017 there were a reported 4,269 breweries in operation across the U.S. This represents a 15% increase from the previous year and over double the number operating in 2011 – according to the Brewers Association. This figure is the highest number ever recorded in the U.S. and growth is predicted to remain strong as consumers express their need for variety and new options – resulting in a shift towards higher quality beers and types of beers compared to the industry’s standard premium offerings.
Craft breweries and the Commercial Real Estate Space
Colliers, an international real estate brokerage firm, noted that the rising popularity of the craft beer industry represents an opportunity for property owners of both warehouses and retail spaces to repurpose their buildings into brewery plants. It further represents opportunities for investors and property developers to seek out potential profitable locations to introduce a brewery to. In the commercial real estate markets the firm surveyed, plans for more than 400 brewery locations were identified – accounting for a potential 3 million square feet of new craft beer inventory.
Craft breweries are typically in operation in industrial buildings with adequate facilities such as water, sewage and power. Property developers and investors who are involved in this space are usually interested in constructing or remodelling businesses to mirror old fashioned breweries because the character and heritage associated usually ties in with the craft beer’s brand image. The addition of breweries also adds benefits to shopping centers, assisting in boosting the value of the property, and create opportunities for developers and investors to tap into this industry.
Some unique examples of brewery location redevelopments highlighted by Colliers are:
- Chicago’s Argus Brewery, a space occupying a former stable for the Schlitz Brewing horse teams and carriages
- Denver’s Station 26 – a former abandoned firehouse which was redeveloped
Apart from the obvious reasons, breweries usually represent other opportunities like serving as training grounds for aspiring brewers who are seeking opportunities to branch out into other areas throughout the region. Owner of Bakery Beer Co. James Rogalsky currently distributes his Old Bakery beers across the Illinois region, however, that was not his first choice of location. He initially looked at various sites in southern St. Louis but he discovered that the real estate investment cost was too high. While expanding his property search, Rogalsky found that property values were significantly more manageable near his hometown in Alton, Illinois.
The brewery takes up roughly 10,000 square feet with an additional 6,000 square feet for an added on restaurant and event space. In Alton. The brewery is surrounded by vacant lots, which represent significant investment opportunities along with further adding employment to an area.
There are numerous types of craft breweries, which can be seen below:
- Microbrewery – A brewery that produces fewer than 15,000 barrels of beer per year, with a minimum of 75% of its beer sold off-site. When the beer is sold directly to the consumer, it’s through carry-outs or an on-site taproom/restaurant.
- Brewpub – This is a restaurant-brewery that sells a minimum of 25% of its beer on-site, and where the beer is brewed primarily for sale in that location. It occasionally sells beer to-go or distributes off-site, law permitting.
- Contract Brewing Company – This is either a business which hires a different brewery to produce its beer or a brewery that hires another brewery to produce additional beer.
- Regional Craft Brewery – This is an independent regional brewery with a majority of volume in traditional or innovative beers.
The impact on the CRE industry relating to the craft brewery trend has impacted both the retail and industrial sectors, especially relating to redevelopment. Initial investments when opening a brewery are significant due to the necessary equipment, meaning well trafficked commercial space can become unaffordable very quickly.
New brewery development deals for second hand retail space has included traditional restaurants/bars or suburban strip malls, they have more commonly been located near freestanding urban locations, for example redevelopments of auto repair shops or historic church renovations.
Abandoned mills, out of date brewing facilities along with vacant manufacturing areas all represent the industrial side of the equation where brewers can emphasize production, whilst still including a retail element to sell their product on site.
Craft Breweries as an economic driver
The Brewers Association reported that between 2006 and 2016 the amount of craft breweries in the U.S. almost quadrupled in size to more than 5,200, along with an additional 1,500 in the pipeline.
As well as representing large investment and redevelopment opportunities, craft breweries are a key part of the communities in which they are located. They often build strong links through volunteering and social good initiatives / charity involvement with local events. Generally, revenue raised by these breweries and their affiliated businesses finds its way back into the local and state economies. The industry further provides short term impacts to communities via large capital investments, equipment purchases and the expansion of new facilities and brew pubs.
How to search for off market property opportunities with Reonomy
The key to finding true off-market gems when conducting a property search is to know the precise property characteristics that will lead you to those unlisted opportunities.
By constantly aggregating and organizing up-to-the-minute marketplace data, tools like Reonomy offer investors and developers the opportunity to research nuanced property characteristics that indicate the likelihood of a future sale or to identify properties which they would like to contact the current owner about.
Below are 3 Reonomy filters explored in detail that can help commercial real estate investors and developers uncover their next off-market opportunity.
If you’d like to skip the reading and start searching, you can trial Reonomy for free.
Filter 1: Radius Search
Reonomy allows users to search location/geography in a number of ways. One of the popular methods is to draw on the map with a radius search. This tool is used in a range of ways. For a broker, one may be looking for other properties within the area of a property they have recently listed.
Another use case is investors looking for commercial properties in the vicinity of a certain location. In the example below, the radius search is set for just over 1 mile of a Walmart Supercentre in Austin, producing 1,303 results.
By zooming further in on the map, users can start searching via parcel. For brokers that know a particular area or a street well, this saves that time spent ‘walking the block’.
In the example below, you can see the outline of each parcel via the dots. When one of the parcel’s are clicked/selected the parcel shape turns blue and brings up all the information Reonomy has on that property.
Filter 2: Land Use
It’s essential for commercial real estate brokers representing a client’s particular interests to remain aware of every qualified asset in their market. Reonomy’s land use filter enables users to be extremely specific in identifying which properties fall under various use categories within a specified geographic area, making it easy to stay on top of opportunities within an investor’s area of interest.
Users may begin by selecting one of five major land use categories: commercial, industrial, multifamily, special purpose, and vacant land. Within each of those primary categories, users can explore numerous subcategories — from light industrial spaces and retail stores to bowling alleys and boat slips.
Filter 3: Zoning
Using standard zoning codes, Reonomy users can quickly determine which properties comply with their desired zoning regulations. If someone is evaluating a potential development site, for example, the zoning encumbering a site becomes a top consideration, as such regulations are important should a developer wish to change, modify, or extend the use of the site.
It can take time and dedication to uncover the right off-market opportunity for your portfolio or client. With Reonomy, commercial real estate brokers and investors are empowered to accelerate that process and increase the scope of their research efforts. Reonomy offers CRE professionals real-time access to the data points they need to grow their network and uncover potential deals before they go to market.
Start a free trial of Reonomy National today.