Notes from our quest for a location

 

We are often asked these days, “how’s the brewery coming?” At this stage, the question is hard to answer because much of the focus has been on finding a property. We are actively on the hunt, but looking for a location can be frustrating, to say the least.

We aren't alone in this endeavor. Other breweries go through this, just reference Garden Path, Distillers in Chicago, and Modern Times’ in their similar experiences. Looking for an apartment in Seattle could be a full-time job and homebuyers are reporting crazy stories daily.  Unfortunately, knowing we’re not in this alone just doesn’t make the process feel any better. We all know it’s a tight marketplace, but answering exactly why often seems mysterious. In our case, we hit on a few key challenges related to our property search that are worth sharing.

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Low Inventory

There’s just not a lot of buildings changing hands right now and we aren’t seeing new buildings being built that could support a brewery, so inventory is basically tight. We connect with our broker weekly, and sadly there’s not a lot to talk about. In the last year, there have been fewer than a dozen suitably sized buildings that have come on the lease market within a three-mile radius of where we are looking. That’s not very good odds.

Among those buildings that do come on the market, very few can support the functions of a brewery. We are looking for a larger space than most.  A space that can house both the production facility and a tasting room. At a minimum, that means we need proper ceiling height to hold fermenters, a foundation that can hold the weight, enough utilities to produce beer, and proper egress exits for our tasting room. We’ve looked at buildings that fit most of the above requirements but then fail on one element such as a floor that can support the weight. As a startup, it’s out of the question for us to retrofit a building if it doesn’t meet this basic filter.

 

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Are we a production brewery or a brewpub?

I ran into a broker last week and he asked if we were looking for a retail location for a brewpub or an industrial space for a production brewery. The problem is the answer isn’t a simple, “yes” or a “no”, it’s a hybrid of two and this doesn’t often fit into the neatly checked boxes of industrial or retail for most landlords. We aim to operate in this hybrid or in-between space and because of zoning and building codes, very few properties check both boxes.

 

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Zoning and Building Codes

Of the buildings that meet the overarching qualifications, we then have to do our due diligence with the City of Seattle building and zoning codes.  A significant amount of upfront effort goes into helping us avoid any costly permit related surprises that might come after we’ve committed to a lease. With the help of our architect, we run feasibility reports, search building codes and determine if it’s a worthwhile building to pursue.  What does the zoning say about us having a manufacturing facility or a business that sells alcohol? Does the building code allow a tasting room (assembly space requirements, egress options, occupancy load, sprinklers, etc)? If we need to do a change of use, will that could qualify as a substantial alteration, setting off a chain reaction of seismic and energy code upgrades? These are all questions we need to answer before we can move confidently forward with the right property.

Although obstacles such as building upgrades and zoning changes can be overcome, they can quickly add hundreds of thousands of dollars to our start-up costs. For example, zoning changes are a big deal and they can take up to a year to process. We believe that the money we’d spend on rent as we wait out a zoning change would be better spent on oak fermentation vessels.

 

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We are a startup

The fact is, despite the low inventory and strict code requirements, there are buildings that do fit the bill, which brings us to the last hurdle. We are a pre-revenue startup. We don’t have a track record, millions in liquid cash or five years of revenue behind us. When a landlord evaluates an offer from Fair Isle and compares it with an established company, we are often put on the bottom of the pile and others are given priority. To overcome this, our strategy has been to connect with landlords that are excited about what we are doing.

 

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Compromise

There will always be compromises in picking a location. However, taking cues from other industries,  we know that location is key and it’s one of the biggest decisions a company will make. So while we evaluate every property, look for ways we can make it work and compromise where we must, we patiently stand firm and don’t let our eagerness to open our doors cloud our judgment and force us into a hasty decision.

Twice, we’ve come inches away from signing a lease. On one occasion the landlord ultimately chose to split the space up into multiple tenants.  Another property proved financially infeasible with the building upgrades that would have been required. In the meantime, we keep our heads down, look at every property we can, study ways to make it work and remind ourselves of all the accomplishments we’ve made these past twelve months.

Just a year ago we announced Fair Isle Brewing, our partnership with Jester King and our first collaboration beer, Fair Voyage. It was a huge success and catalyst for us at Fair Isle. Since then we've participated at the Masonry and KEXP Farmhouse Fest, attended CBC in Washington DC, flew to the Shelton Brothers’ Festival in Atlanta, received some amazing press, started our Salon series and most recently collaborated with our friends at Three Magnets Brewing Co in Olympia, WA.

 

- Andrew Pogue | Co-Founder of Fair Isle Brewing

 
Andrew Pogue