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Tuesday, Dec 6, 2022

Craft Beer’s Footprint Makes It A Player in the Property Market

Craft beer pairs quite well with commercial real estate, especially if you have an industrial property you’d like to sell or lease out.

That’s among the conclusions of a new national report by brokerage firm Cushman & Wakefield, outlining the dynamic impact that small and medium-sized beer-makers are still having on demand for commercial space — even as growth in the craft segment continues to slow.

Cushman researchers in San Diego — Jolanta Campion and Jack Hughson — report that the local craft brewing industry accounts for 1.1 million square feet of space countywide. The heaviest footprints are in North County and the Miramar area of central San Diego — also known locally as “Beeramar,” the home base of Ballast Point Brewing Co. and several smaller companies.

While not the only contributors, craft brewers have helped to tighten up the local region’s industrial vacancy rate (currently 4.2 percent) and its retail vacancy rate (now 3.9 percent). Steady demand for brewers’ products — and the tasting rooms and brewpubs to showcase them — is being stoked by San Diego County’s high proportion of 35-and-under millennial consumers, who make up 27.3 percent of the region’s population (the highest percentage among major U.S. cities).

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Add in the influence of the San Diego region’s still-growing “foodie” culture, with new locally-focused, chef-driven restaurants opening every few weeks, and craft beer still has strong momentum despite nationwide deceleration in its sales growth.

Craft beer is also a big local tourist draw; the trip-booking site Travelocity this year ranked San Diego at No. 8 among the nation’s top major-metro beer destinations.

The Cushman report does cite some challenges locally for the industry. A recent industry survey raised issues including the limited availability of real estate — which makes spaces in the right places more expensive to lease or purchase — along with capital access, distribution and water management matters.

According to the Colorado-based Brewers Association trade group, the number of active craft brewers in the U.S. has more than tripled over the past 10 years, from 1,409 in 2006 to 5,234 in 2016. San Diego County now has more than 100 brewers operating at more than 140 licensed brewing locations, with more sites in planning.

Nationwide, Cushman & Wakefield notes that craft brewers since 2007 have taken up more than 55.6 million square feet of space — 81.4 percent of which is industrial, with 18.6 percent of it classified as retail.

Brewers locally and nationally have closed up shop and sold off their equipment, and more will do so in coming years. But brokers anticipate that the pace of the industry shakeout will remain gradual for the time being, thanks primarily to the size of most of the players. Another factor is that craft beer expansion tends to be slow and localized, with a neighborhood focus that seeks out otherwise untapped (and not-yet-saturated) markets.


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