Navigating property management has become a pivotal challenge for many owners, especially as some breweries grapple with skyrocketing rents, rezoning issues, and limited space for expansion. The key can lie in strategic planning, building strong landlord relationships, and, when possible, securing ownership.
As the industry continues to grow, navigating these property challenges will remain a critical factor in ensuring long-term success and sustainability.
Chris Bell of Call to Arms shared his thoughts in 2024 about the challenges that the Denver brewery has had. Bell wrote about small breweries’ financial struggles, focusing on rent under triple net leases (NNNs). Rising property taxes, insurance premiums, and maintenance costs — driven by increasing property values — are creating unsustainable expenses. Despite these challenges, he remains optimistic, emphasizing the craft beer industry’s resilience and the need for community support and innovative solutions. Read it here.
In Brooklyn, Tyler March, co-founder and head of operations at Wild East Brewing, underscores the dual nature of these challenges.
“Rent prices are always an issue in New York City, whether you’re a business or resident,” he said.
A current rezoning of their area has sparked an influx of new residential developments, which March hopes will boost foot traffic. However, he notes the looming concern of lease renewal rates becoming unaffordable.
“We’re only a little over halfway through our lease, so it’s not an immediate concern, but it’s there on the horizon,” he said.
For breweries in rapidly developing urban areas, displacement and change are an all-too-common reality. Honolulu Beerworks, for example, is facing the need to relocate operations entirely.
“Our block is being torn down and new buildings are going up,” Charmayne Malloy told Brewer. Once a warehouse district, their area is now transforming into a retail and urban living hub, forcing a shift in strategy.
Denver Beer Company CEO Rob MacEachern echoed that challenge with urban environments. As breweries mature, he said, they often require larger spaces for expanded food offerings and customer experiences. However, these needs clash with the limited property availability and soaring costs in dense areas.
“The value of the area surrounding these breweries has also increased, making it difficult to renegotiate leases or expand within the same neighborhood,” he said.
In some cases, owning property has proven to be a viable solution.
Wesley Keegan, founder of TailGate Brewery in Nashville, said it’s important for real estate ownership when possible.
“Our model going forward these past few years is that we only want to own,” he said.
While not feasible in the early years of the business, TailGate now owns about half of its taprooms and ensures favorable lease terms for the rest.
“Commercial leases these days put 100% of all costs on the tenant, so why wouldn’t we buy if we can,” he said.
Jerry Siote, co-owner and director of brewhouse operations at Lone Tree Brewing Company, highlights the broader implications of property management in the brewing industry.
“Breweries have large upfront requirements that don’t always realize the return on investment that founders originally projected,” he said.
He stresses the need for balance, noting that while real estate can often be speculative, it remains an essential element of a brewery’s success.
Other breweries have strategically locked in long-term leases to safeguard against unpredictable market shifts. At Badger State Brewing, co-founder Andrew Fabry said it was a key value to include a 50-year lease for the Wisconsin brewery’s property, which was secured a decade ago.
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“Our landlord has been thrilled with how we have become a cornerstone for additional development in our neighborhood and area,” Fabry said.
Still, property challenges extend beyond lease terms and rent. Denver’s Wynkoop Brewing operates out of a historic building over a century old, a unique location that comes with its own hurdles.
“Any significant changes or upgrades require not only significant funding but also the approval of additional state and local agencies due to our historic landmark registration,” Brewer Kat Hess said.
She advises other breweries to consider expansion and upgrade options when opening in historic or city spaces.
Breweries in less densely populated regions face their own difficulties.
For Castle Danger Brewery in Two Harbors, Minnesota, space limitations are a growing concern.
“We’re brainstorming on increasing taproom capacity and making the most of our limited space, especially outdoors during the busy season,” the team of Andrea Arabanos, Max Pittman, and Tina Hegg Raway explained in an email.
Despite these constraints, they recognize the benefits of their location, which has played a vital role in revitalizing the downtown area.
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