In urban revival beer creates small business hubs
By TALI ARBEL
The Associated Press | July 05,2013
A draft beer rests on the counter in the Beer Hall at the Harpoon Brewery in the Seaport District of Boston. Harpoon expanded to Vermont in 2000 and also has a brewery in Windsor.
NEW YORK — To see how a small business can transform a neighborhood, just follow the barrels.
About 30 years ago, beer lovers wanting to create their own drinks started taking over abandoned old buildings in rundown city districts, refitted them with tanks, kettles and casks, and started churning out beer. The byproduct was a boom in craft beer drinkers: Barrels shipped have more than doubled in the past decade, according to trade publication Beer Marketer’s Insights. Craft beer now makes up nearly 7 percent of the slow-growing U.S. beer market.
But beer drinkers weren’t the only beneficiaries. The arrival of a craft brewery was also often one of the first signs that a neighborhood was changing. From New England to the West Coast, new businesses bubbled up around breweries, drawing young people and creating a vibrant community where families could plant roots and small businesses could thrive.
Brewers typically pay workers more than service businesses like restaurants or shops do. That’s good for local economies.
But for some, the bubbles are bursting. In Brooklyn, N.Y., breweries are feeling the heat from rising real estate costs.
When Brooklyn Brewery opened in the Williamsburg section of the borough in 1996, its neighbors were mostly deserted warehouses and factories. Today, Brooklyn Brewery is surrounded by modern apartment buildings, trendy bars, shops and restaurants. There’s still some graffiti, but that hasn’t deterred the influx of new residents willing to spend a lot of money to live there. In the past decade, home values in the Brewery’s neighborhood have more than doubled — up 145 percent, according to real estate appraiser Miller Samuel.
Rising prices might force Brooklyn Brewery to exit the trendy scene it jump-started. It has two buildings in Williamsburg, the brewery and a building across the street where it stores and ages its beer. Leases are up in 2025, and Brooklyn Brewery’s co-founder and president, Steve Hindy, is already worried that the company will get kicked out of its warehouse. Once an iron foundry, the building, built in 1896, has been bought by developers who Hindy says won’t renew the lease. He suspects that they want to convert the space into apartments.
The landlord, Solomon Jacobs, says he doesn’t yet know what’s going to happen with the lease.
But Hindy is already scouting other, cheaper neighborhoods in Brooklyn.
“We sowed the seeds of our own demise here,” Hindy says.
Outside of New York, costs are lower, and many brewery owners in other cities say they haven’t felt similar pressures from developers. But New York flashes a warning sign for what can happen when neighborhoods become popular.
One brewery, in Boston, is relatively protected. Harpoon Brewery opened on the South Boston waterfront in 1986, when it was surrounded by auto body shops and little else. Now the brewery draws more than 85,000 people a year from tours and tastings.
It’s growth forced Harpoon to expand in 2000 when it bought a brewery in Windsor, Vt., to expand its production.
These days, the city is focused on redeveloping the area. New apartment and office buildings, restaurants and a convention center sit nearby.
Harpoon recently negotiated a 50-year lease with the city. The rent will rise over time, but generally, long leases provide protection from spikes that can happen when an area becomes so popular that property values skyrocket.