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Focus: Commercial Real Estate – Frothy Market for Breweries

April 24, 2015 : Boston Business Journal, by Catherine Carlock

As the popularity of craft beer flows throughout the commonwealth, small-scale breweries are increasingly on the hunt for space to expand. Expansion prerequisites include space for restaurants and taprooms, often bringing new life to vacant industrial properties and injecting commercial activity in former manufacturing strongholds in desperate need of an economic boost.

The craft beer market is a $19.6 billion market nationwide, and Massachusetts craft breweries generate $925.7 million in economic activity — everything from payrolls to property taxes to related spending — according to the most recent figures available from national craft brewing industry group the Brewers Association. That ranks Massachusetts 14th among U.S. states in terms of economic activity generated from its craft-brewing community.

So it's no surprise that the number of craft breweries in the Bay State has risen from about 45 in 2012 to about 60 today. Another 47 breweries are in the planning stages, according to the Brewers Association.

Just in the past few months, breweries including Jack’s Abby Brewing in Framingham, Newburyport Brewing Co. in Newburyport and Battle Road Brewing Co. in Maynard have announced plans to take on new space and ramp-up production.

“The craft brewing segment has been growing dramatically,” said Ken Goode, vice president of business development at state finance and development agencyMassDevelopment. “These companies are manufacturers, and whenever a manufacturing company expands, it certainly creates jobs and new economic activity.”

MassDevelopment this month issued $476,000 in loans and loan guarantees to Newburyport Brewing Co. for the all-can and keg brewery to expand its production and export capacity; last March, the agency loaned $700,000 to Night Shift Brewing for the Everett-based microbrewery to expand from 3,000 square feet to a 16,000-square-foot facility with a taproom. MassDevelopment is currently working on financing another brewery project in Salem, Goode said.

“I think people want to be in places that have some sense of history,” he said. “These particular businesses — their needs for equipment and outfitting kind of complement the buildings in a nice way. It’s really a nice match. … It adds a cache to both the building for the other tenants and to the company itself, which is trying to put a certain image forward and bring people to it.”

The town of Framingham had an economic boost in mind when it recently voted to approve a tax-increment financing plan for the expansion of Jack’s Abby Brewing. The expansion will see the brewery move from a 15,000-square-foot site at 81 Morton St. to a 67,000-square-foot site at 100 Clinton St. The new facility will include a restaurant and taproom.

The 100 Clinton St. site is located in a manufacturing complex on the eastern edge of the town’s center that was formerly occupied by labeling and packaging product manufacturer Avery Dennison. The site has been more or less dormant since the early 1990s.

“With the Jack’s Abby decision, we’ve been able to put back into productive use of one building that’s been essentially unoccupied,” said Art Robert, director of community and economic development for the town of Framingham. “Manufacturing is critical for any type of retail economy, because manufacturing generates the highest value-added kind of activity.”

Communities with manufacturing legacies often have the kind of existing infrastructure breweries are seeking. That includes the bones of the buildings themselves, which can lend a certain character and feel to a brewery, but also the water, sewer and power capacity that would ideally service a full-scale manufacturing operation, Robert said.

“In addition to the positive economic impacts and use of existing infrastructure, they’re adding something that’s of interest, and something that can add to a community,” Robert said.

© Copyright 2015 Boston Business Journal.