Making an Offer and Finding the Right Brewing Space

Well its official, we have made an offer on a space in East Vancouver.  This will be our 5th property that we have made an offer on, and I hope that its 5th time lucky.  My friends who know me well, and have been kept abreast of the past 3 or 4 years of this process, are the ones who encouraged me to start this blog, as there always seemed to be so many ups and so many downs throughout the process.  None more than finding a space to call home!

In my opinion, the biggest and most important decision a brewery can make is the space you lease.  Sure other decisions are important:  Like, the name of your brewery, the beers you make, the employees you hire, the way you disperse your cash, and the image you present to the marketplace.  But what I have learned is the space you are going to be married to, for better and for worse, is the most important decision you can make.

For starters, finding a good space for brewing is difficult as the list of requirements is long, making an ideal space unique.  You benefit from having high ceilings (18 feet is ideal), a good water supply, good floors for taking the load of full fermenters, about 400 amp/3 phase power, and solid overhead loading doors.  If the list were limited to just these items, the search would be difficult in itself.

But lets not forget some of the other key items in a warehouse that are important in starting a brewery.  In Vancouver, M2 Zoning is the only commercial zone where brewing is an outright use.  All the other zones (for instance I1 and I2) are conditional use, which means you need to apply for a Development permit from the City of Vancouver.  This costs about $5,000 and takes anywhere from 8 to 16 weeks.  I heard Brassneck took 16 weeks, and I have heard rumours that Bomber brewing got their DP in 8 weeks.  Most importantly, you can’t apply for a development permit until you have a signed lease on a space.  That means you have to take a giant leap of faith you will get a development permit.  Why you ask?  Well inEast Vancouver good quality commercial real estate is so hot, and you likely won’t deal with a landlord who will let you have getting a development permit as a subject of the offer.

The list doesn’t end there …. Another key component is the size.  Small breweries need at least 2,000 square feet, and the size can go all the way up from there, depending on how ambitious the brewery is for sales.  I think a space of about 6,000 square feet seems good for starters, but it comes down to how much beer do you think you will sell?  Will you follow the path of Storm Brewing, and have sales that are modest, and keep the operation small?  Or do you plan on having higher sales, like Parallel 49 Brewing, thus requiring more space for production?  Like everything, there is a direct correlation between the size of the space you lease, and the risk an owner takes.

With the new Tied-House rules in the City of Vancouver, another huge aspect is the Tasting Room and Retail Area within the brewery.  It is hard to explain to people how oppressive the bureaucracy is when starting a brewery, and the ability to have a tasting room on site is huge bonus. It not only allows for a tangible connection with consumers to gauge their opinion and interact with, but it also helps to add a few dollars in sales to the bottom line of a brewery.  As such, the location of your warehouse, along with the design, aesthetic and interactivity with the brewery is huge.

The last big point that comes to mind is scalability of the space.  It costs about $500,000 to retrofit a space for brewing.  In other words, this whack of cash goes to upgrading power, floors, water, pipping, cooler/cold room, installation of brewhouse, offices, tasting room, grain handling, etc, etc, etc.  You essentially never get this money back, as its an investment you make in the landlords building.  Hence, its important that you find a space that works now, but also for 5 and 10 years down the road, as you need to avoid having to move spaces because you have outgrown your current facility.  This is of course a good problem to have, but at the same time, its important to be mindful of this fact.

There are obviously other factors like the quality of the landlord, the neighbourhood you locate in, the look and feel of the space, and the lease rate you pay.  All of these items go into making a space for brewing difficult.  However, if patience and an ability to pounce on the right space when it comes available are kept at the front of everything, it is possible …. just ask 33 Acres and Brassneck who both did very well with their spaces.

I hope today is the first day in securing the right space for my brewery.

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