As Craft Beer Development Slows, Breweries Get Artistic With Their Actual Property

Following a long stretch of booming growth, the craft beer industry is bracing for the slowest year for U.S. brewery openings in a decade in 2023.

That slowdown was marked by more than 200 brewery closings last year as the industry matured and competition intensified, and it could lead to greater emphasis on site selection as breweries look for new ways to stand out in a crowded field.

“It’s more important than ever to differentiate yourself,” Bart Watson, chief economist for the Brewers Association, said in an interview with CoStar News.

In some cases, that means going where the people are already gathering, rather than trying to create a standalone destination.

Perhaps nowhere is that more evident than a 92-mile stretch of the Midwest, where high-profile beer brands are getting creative with their real estate, setting up three of the most anticipated brewery openings in the country this year.

In Chicago, Ireland’s Guinness plans just its second U.S. brewery in one of the country’s fastest-growing neighborhoods, the Fulton Market district. Less than 2 miles north of there, Goose Island Beer is set to move from its original brewpub location in Lincoln Park to a new riverfront concert venue as part of the redevelopment of a Morton Salt warehouse.

North of Chicago, well-known Wisconsin brewer Leinenkugel is opening a new brewery within the home of the MLB’s Milwaukee Brewers.

Those three breweries, backed by major corporate owners, are making splashy moves at a time of flux in the beer industry and in commercial real estate.

There were about 600 brewery openings around the country in 2022, but also about 250 closings, according to the Brewers Association, which advocates for small and independent brewers. The Boulder, Colorado-based group predicts this year’s total number of openings will be the lowest in more than a decade.

“What we’re seeing is a maturing industry, where openings and closings are moving closer to being in balance,” Watson said. “Five years ago, we had a lot of openings and almost no closings. As we’re getting close to 10,000 breweries, we’re seeing a more mature and competitive market.”

To stand out, brewers can elevate the quality or variety of beer, their standard of service or the experience they offer, perhaps with a unique setting, Watson said. That’s where real estate comes in.

A well-established Colorado company, Longmont-based Left Hand Brewing is opening a brewery, taproom and restaurant in Denver. The space is adjacent to the Mission Ballroom concert hall, with the brewery also offering live music on its patio.

Also last year, Asheville, North Carolina-based Bhramari Brewing opened a second brewery in the state, a short walk from Bank of America Stadium in Charlotte, home to the NFL’s Carolina Panthers.

“Not everyone’s going to be able to open in the Milwaukee Brewers’ ballpark, but as things become more competitive, co-locating in entertainment venues is something that more breweries are looking to do,” Watson said. “For years, surveys have told us that the top reason people go to breweries isn’t the beer itself but the experience.”

In about a year, Inglewood, California-based Three Weavers Brewing plans to open a second brewery in town, a short walk from SoFi Stadium, home to the NFL’s Los Angeles Rams and Chargers. It also is near where the NBA’s Los Angeles Clippers plan to open the Intuit Dome for the 2024-25 season.

“They put together an international sports and entertainment complex that is just beyond, and now I’m sandwiched between the Clippers arena and SoFi Stadium,” Three Weavers Brewing founder and CEO Lynne Weaver told CoStar News. “Having a strong location is always important.”

She added that “people talk about location, location, location, and they’re correct. Also important is diversification, diversification, diversification,” she said.

The real estate expansion comes as Three Weavers adds offerings such as nonalcoholic beers and wines to keep up with evolving customer preferences, Weaver said.

Here is more information on some anticipated 2023 and early 2024 openings, in chronological order:

The longtime Wisconsin favorite plans to open a Milwaukee brewery within the Brewers’ home ballpark in time for opening day in April.

J. Leinenkugel’s Barrel Yard at American Family Field will have beers created on-site by master brewers within a full-service bar and restaurant overlooking left field, the company said in December.

Jacob Leinenkugel Brewing Co., based in Chippewa Falls, Wisconsin, is a division of Chicago-based beer giant Miller Coors.

Milwaukee’s ballpark brewery comes after Milwaukee-based Good City Brewing in early-2019 became the first tenant within an entertainment district alongside Fiserv Forum, where the NBA’s Milwaukee Bucks play.

The ballpark brewery is expected to have a three-barrel brewing system, creating some beers only available at the ballpark. There will be 48 beers on tap from the 27-foot-long bar.

The space also can be rented for special events, including on nongame days.

Guinness opened its St. James’s Gate Brewery in Dublin in 1759. The company didn’t have a U.S. brewery until opening one in 2018 near Baltimore in Halethorpe, Maryland.

When London-based parent company Diageo decided to launch a second American brewery, it settled on a site where the neighborhood itself is the attraction, rather than a sports or music venue.

Guinness is set to open a 15,000-square-foot brewery, pub and restaurant in a former railroad terminal building at 375 N. Morgan St. in Chicago, Diageo said in September 2021. Originally slated to open by this St. Patrick’s Day, the opening now has been pushed into this summer, the company said.

The site is located along the northern edge of Fulton Market, a former meatpacking district that has evolved into the fastest-growing urban office market in the country.

In addition to big office tenants such as the global headquarters of McDonald’s and Mondelez International, and the Midwest headquarters of Google, the area is home to boutique hotels, apartment towers and many of the city’s top restaurants — all of which have created heavy foot traffic in an area once known for forklifts and meatpackers’ bloody smocks.

In one ongoing deal, developer Thor Equities is in talks to pay more than $100 million for 2.7 acres not far from Guinness’ future site, CoStar News first reported. New York-based Thor is expected to pursue a mixed-use development with multiple towers on the site, the largest undeveloped parcel remaining in the area.

The Morgan Street building is owned by Chicago developer Fred Latsko, who said he eventually plans to construct a 43-story, roughly 550-unit apartment tower next to the Guinness building.

Guinness’ space is set to include a 10-barrel brewery, restaurant and outdoor patio. Guinness Draught Stout is made only in Dublin, but the Chicago facility will create small-batch and one-off beers.

Goose Island Beer Co. began its rise from a tiny company to a behemoth in 1988 when it opened a North Side Chicago brewpub at 1800 N. Clybourn Ave.

The company was gobbled up by Anheuser-Busch InBev for almost $39 million in 2011, a deal widely viewed as a pivotal moment in craft beer, leading to a series of other high-profile buyouts by beer industry giants.

In December, Goose Island unveiled plans to move from the original brewpub to a new space within the Salt Shed, a redeveloped longtime Morton Salt warehouse along the Chicago River.

By late this year, Goose Island is expected to open a new brewery in a bow truss former vehicle maintenance building just feet from the river. The space is designed to include 4,500 square feet inside and a 7,000-square-foot outdoor beer garden.

It is next to the larger warehouse that has been converted into a concert venue by Chicago developers Blue Star Properties and R2, with early musical guests including The Roots, The Flaming Lips, Fleet Foxes, Iggy Pop and Jason Isbell.

Goose Island’s new location “connects us with live music and entertainment, which has always been such a defining cultural aspect of Chicago,” Goose Island Beer President Todd Ahsmann said in a statement at the time.

The Salt Shed is at 1357 N. Elston Ave., just across the river from the man-made island from which the brewery took its name.

That location has less foot traffic than the original brewpub, but Goose Island hopes concert crowds and a beer garden along the river will offset that disadvantage.

When billionaire real estate developer and Los Angeles Rams owner Stan Kroenke set out to create the sprawling, mixed-use Hollywood Park project alongside his $5 billion SoFi Stadium, the first tenant to sign a lease with Kroenke and San Francisco-based development partner Wilson Meany was a local, woman-owned brewery that made its first beer about 3 miles away in Inglewood in 2014.

That was between the time the NBA’s Lakers and NHL’s Kings in 1999 played their last games in The Forum, a property that now will become part of the Intuit Dome complex, and the construction of SoFi Stadium.

“They really wanted some businesses that were already part of Inglewood,” Three Weavers Brewing’s Lynne Weaver said. “They wanted that authenticity.”

In a ground-lease deal, Three Weavers will create a 20,000-square-foot brewery and restaurant at 1251 S. District Ave., set to open in spring 2024, she said. It will include large amounts of outdoor seating, live music and a second-floor dining area with views of the brewing facility inside and the nearby sports venues.

In addition to the sports venues, other crowd-drawing tenants arriving nearby during a real estate boom in the area include a 65,000-square-foot Cosm immersive entertainment dome.