American Brewery Building

Photo courtesty of Baltimore Heritage

Several years ago, my colleague Jeff Sholian and I began our foray into the real estate needs of Oregon’s craft brewing scene, with the goal of helping Oregon’s brewers develop and implement commercial real estate strategies. Along the way, we’ve seen breweries succeed and struggle. We’ve assembled some lessons learned along the way in the hopes it will remove one roadblock for new brewers.

  • On Portland Commercial Real Estate: Finding the ‘right’ space for lease or purchase is challenging in Portland for all industries right now, particularly for those seeking office or warehouse space in close-in neighborhoods. As creative firms compete for the same spaces as breweries, there are fewer options available. Find a broker that specializes in the particular submarket or product type in which you’re interested. They’re likely to have the best information on available properties in addition to those that may not be publically marketed. Many brewers seek older warehouses with ‘character’, but these properties in bustling neighborhoods are more expensive and harder to come by. Newer industrial buildings are often located in less desirable locations, though they often offer better values and modern conveniences, parking and increased ceiling clear heights, to name a few. While we spend most of our time in Portland, similar issues arise in Bend, up and down the Willamette Valley, and perhaps everywhere except Enterprise and Baker City. It important to remember that certain zonings and occupancy codes are more flexible than others.
  • On Success and Location: Making great beer is a vital first step, and creating a fun atmosphere in which to drink this good beer is very helpful. If you’re making great beer, even in a challenging location, you can still succeed. If you’re making mediocre beer in a tough location, the odds are stacked against you. Many suburban submarkets are starving for good brewpubs, and while they may already have taprooms and growler fill stations, many lack the gritty production environment production which the public craves. Examine your branding and product to help locate your ideal target market. If you want to have a busy tap room, find a location on a major thoroughfare for evening traffic. If you want to focus in production, head out to more industrial settings where space is cheaper.
  • On Time: Starting, expanding, or relocating a brewery always takes longer than you think, so give yourself twice as much time as you think you’ll need, especially in a competitive real estate market. There are lots of hoops to jump through along the way and there will be many different people involved in the process. Stay positive and motivated, assemble a team of professionals, then let your team work for you. Do some digging on your particular city codes and laws pertaining to breweries, and find a few local brewers to interview, most are willing to give you a few minutes of their time.

A Few Thoughts on Starting a Brewery:

  • Thinking about entering the exciting world of brewing? Create a business plan and a budget, this is a business after all. If this is not your strength, hire a professional to help you. If you’ll need additional capital to get started, be assured that investors or 3rd party lenders will scrutinize your financial plan and budget, so make sure they’re as accurate as possible.
  • On Building Your Team: Assemble a team of ABC’s (do this sooner than later):
    • Attorney
    • Accountant
    • Architect
    • Broker
    • Banker
    • Contractor
  • Not included in the ABC group above, but vital to the process, are equipment providers, branding and PR wizards, distributors, insurance specialists, canning and bottling experts, label makers, promotional and merchandise companies, etc. Come to a BING meeting and get connected!
  • Startup brewers need to think bigger. Shorting yourself on space is the biggest mistake that we see. The initial cost to upgrade a new location with trench drains, additional power, larger water supply, etc., is tremendous, and these upgrades occur before installation of the first piece of brewing equipment. Don’t box yourself in!

John C. Lee is a licensed commercial real estate broker with JLL in Portland, OR.  He works with a variety of clients ranging from software developers to government entities. In 2013, John and Jeff Sholian started a niche business for the craft beverage industry called Bottlecap Brokers.  He is an avid home brewer and a winner of the 2013 Widmer Collaborator Award.

 

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