Growth of craft breweries impacts real estate in Philadelphia region

December 3, 2015

Philadelphia, PAColliers International has released a national market study, “Craft Beer Pours into Commercial Real Estate,” exploring craft beer’s booming market share and the industry’s impact on cities across the United States. Craft breweries are changing the beer market in the U.S., an evolving economic model that is resulting in broader growth and benefiting a greater number of metros, rather than the limited number of markets where the large traditional major breweries are based. Out of 29 markets surveyed, 14.9 million s/f of space is occupied by craft breweries. Chicago, IL leads the pack with 1.6 million s/f, Philadelphia came in 2nd  with 1.5 msf, and Columbia, SC ranked last with a total of 33,000 s/f.  


 A total of 1,457 breweries were surveyed across the 29 markets. In terms of the number of breweries, Portland, OR has the most at 196 total breweries followed by Chicago, IL (144); Seattle, WA (119); Philadelphia, PA (116); and Denver, CO (114).  


“If recent trends play out, the future is bright for craft beer and the craft brewery market. In the markets we surveyed, there are more than 400 breweries in the planning stages,” said Rose Penny, research director for Colliers International. “If all open as planned, it is estimated an additional 3.1 million s/f of craft brewery inventory will be occupied, based on typical brewery sizes, boosting the already burgeoning craft beer industry.” The Philadelphia area encompasses all of Eastern Pennsylvania, Southern New Jersey and Delaware. The region is home to small start-ups brewing in barns to nationally recognized brands such as Dogfish Head, Flying Fish, Yards and the venerable Yuengling.  

 
Key takeaways from this report, for which A.J. Paniagua, Colliers U.S. Research Analyst, gathered data across 29 markets with growing craft beer industries, include: 


•The addition of new microbreweries and brewpubs will add modest amounts of square footage to each market, but the real impact will be felt through expansion plans of existing microbreweries as they begin to transition into regional brewery operations. 
    o A number of breweries have recently expanded their operations by opening large facilities across state lines, which will enable them to get their product quickly to an increased number of markets across the country. 
    o Most notably, California’s Sierra Nevada Brewing Company recently opened a 300,000-square-foot facility in Mills River, NC, and Lagunitas Brewing Company opened a new 300,000 s/f facility in Chicago.
• Craft breweries are reimagining real estate and revitalizing neighborhoods. 
    o Craft breweries typically operate in industrial space, as it has the infrastructure in place with access to water, sewer and the power capacity necessary to run a full-scale brewery manufacturing operation. 
    o Through the repurposing of space, it is not uncommon for a brewery to set up operations in an antiquated industrial building because these opportunities are usually cheap to acquire or lease, bring a sense of character to the brewery and have the potential to offer tax incentives through revitalization efforts depending on programs in local jurisdictions.
• In Colliers’ survey, an estimated 40% of all establishments are located within multi-tenant space with 60% in single-tenant buildings. 
    o The same survey also revealed that the more mature the local industry, the more likely top craft breweries will make use of retail-industrial space. 
    o Of markets in the growth phase, an average of 2.3 of the top 3 craft breweries reported use of retail-industrial space, compared to 2.5 those in the mature growth and stabilization/maturity phases. 
Colliers International Group Inc. is a global leader in commercial real estate services with more than 16,300 professionals operating from 502 offices in 67 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. 

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