By Colliers International
South Carolina’s brewery scene is growing and isn’t likely to lose momentum any time soon. Approximately 36.6 percent of the total square footage currently occupied by breweries and brewpubs has opened since 2013. Today’s total inventory is estimated to be over 200,000 square feet with 40 locations open throughout the state of South Carolina. Traditionally, breweries look for industrial space, and brewpubs typically occupy retail space.
On average, microbreweries in South Carolina each occupy approximately 7,500 square feet of industrial space. Given the size of South Carolina’s industrial market of roughly 334 million square feet, brewers have a nominal effect on the industrial market’s vacancy rate. More than three million square feet of industrial space must be absorbed to result in a one-percentage point drop in vacancy. That is equivalent to 427 breweries, more than 10 times the number currently open throughout the state.
The industrial space that breweries are interested in is normally smaller, older space that offers lower rental rates. Such space is typically vacant as it is less desirable to traditional warehouse users. Although the overall health of the market is not dependent on brewers, they will play a role in absorbing smaller blocks of space that would otherwise remain vacant.
Similar to the impact on industrial real estate, the effect of breweries on the retail market is minimal. Like restaurants and retailers, brewpubs are attracted to visibility and traffic counts, occupying shop space in both downtown and suburban locations. While the presence of brewpubs may not affect vacancy at the statewide level, it may positively influence vacancy rates within a submarket. On average, brewpubs occupy 8,000 square feet, slightly larger than the average footprint of microbreweries in South Carolina.
With the rise of craft beer, craft beer retail markets are springing up throughout South Carolina. The retailers occupy retail space and sell draft craft beer as well as bottled and canned beer. Some markets even allow consumption on site. The markets usually offer a wide variety of beer including locally brewed beer. The Casual Pint, based in Knoxville, Tenn., is opening at 1818 Augusta Road in Greenville early summer 2016.
While the impact on the retail real estate market remains limited, as more locations open, the positive effect on commercial real estate markets is expected to increase.
Breweries are repurposing the space and creating unique experiences for their consumers. As breweries continue to gain popularity, their ambiance will be just as important in attracting consumers as their beer taste and quality.
The Hunter-Gatherer Brewery and Ale House is one of such breweries looking for creative space. The brewery plans to open its second Columbia location at the Curtiss-Wright Hangar at Owens Field. The new brewery will feature a taproom, a 527-gallon brewhouse, a bottling and kegging line and an observation deck overlooking the airport.
Charleston’s breweries are thriving off both a strong tourism industry and growing residential population. Palmetto Brewing Company, located along the Upper Peninsula, is a favorite among locals and tourists alike. The brewery features an open floor plan and hosts live bands outside on its loading dock.
Another local favorite is Holy City Brewing. The brewery offers food and sits in a former warehouse. Holy City has an open floor plan with exposed brewing equipment allowing customers to view the brewing process while enjoying their craft beer.
The Upstate is home to various breweries. Brewery 85, Quest Brewing Co., Swamp Rabbit Brewery and RJ Rockers Brewing Company are among the popular brewers. Swamp Rabbit Brewery is located on Main Street in Travelers Rest. RJ Rockers Brewing Company has been open in Spartanburg since 1997. Initially opened as brewpub, RJ Rockers now anchors the West End of downtown Spartanburg.
The future of craft beer in South Carolina
The craft beer craze is here to stay. Softening legislation is helping entrepreneurs venture into the growing sector. Brewpubs, which currently cannot distribute beer for sale off-site, are reporting that they would benefit from a change to the law. Additional sales are needed to help smaller startups and brewpubs grow by generating increased revenue. As the brewing sector grows, there will be a greater impact on commercial real estate markets, which will be reflected in declining vacancy rates for smaller, older industrial properties as well as declines in retail vacancy rates at the submarket level.
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