March 29, 2019
By: Matt M. Johnson
Bicycle races conducted in front of a crowd sipping boozy drinks. A brewery with its own dog park. Until recently, such activities likely weren’t the first thing industrial building owners in the Twin Cities imagined happening on their properties.
Breweries, cideries, wineries and distilleries seem to be opening with every new season in the Twin Cities. Many have found their homes in neighborhood industrial buildings or are making industrial parks destinations for people seeking a good drink and a good time.
The latest batch includes Royal Foundry Craft Spirts, a British-themed cocktail room that opened in December in a 59-year-old warehouse at 241 Fremont Ave. N. in Minneapolis, and a yet-unnamed brewery that will occupy 9,000 square feet of space in a former World War II armaments plant in Fridley’s massive Northern Stacks industrial park.
Royal Foundry plans to open a 70 meter “cycle speedway” track outside its building this summer as a draw for both liquor aficionados and bike racers. Next door in the same building, brewery La Dona Cerveceria has opened a downsized soccer pitch for three-on-three games.
These establishments have opened in a part of the Harrison neighborhood best known as the site of the city’s vehicle impound lot. Andy McLain, one of the distillery’s founders, decided the Fremont Avenue building fit the business’ needs, particularly after the Van White Memorial Boulevard bridge opened a few years ago to connect the neighborhood with quick routes to downtown Minneapolis, the Uptown neighborhood and Intestate 394.
“I’d always thought this part of town was going to be a good place to do something,” McLain said in a recent interview.
The 25,000-square-foot building Royal Foundry moved into also has the outdoor space the distillery needed for the bicycle track, which will be the first clay-surface, traditional English cycle speedway in the U.S., McLain said.
“We needed a place with enough room to do it, and an owner that would allow that instead of parking,” he said. “We’d be the first to do a proper cycle speedway track.”
The attraction between craft beverage makers and industrial buildings is rooted both in the production needs of the crafters and the desire for landlords to bring successful, long-term tenants into comparatively small spaces, said Tom Hudock, founder of Minneapolis-based craft beverage real estate brokerage and consulting firm Craft Buildings. Hudock, who is also a brewery business consultant, started Craft Buildings this month to connect brewers with properties that best fit their space and location requirements.
Most of the time, his clients wind up gravitating toward industrial space.
“They’re definitely set up for the equipment,” he said. “And a lot of those light industrial buildings also have great support or ownership.”
The 335.6 million-square-foot Twin Cities industrial inventory has the tightest vacancy rate among non-residential commercial markets. That vacancy rate is 4.4 percent, according to the Minneapolis office of CBRE.
Not every industrial property is a good fit for craft beverage makers and the tap rooms, tasting rooms and cocktail rooms, said Paul Hyde, president of Minneapolis-based Hyde Development. Hyde and Golden Valley-based M.A. Mortenson are jointly developing the 1.8 million-square-foot Northern Stacks. Completed buildings in the project are more than 90 percent leased by manufacturers, warehousers and distributors.
But a 13,000-square-foot building left over from the former gun turret manufacturing plant that once occupied it presented a challenge for the developers because it was decades old and far smaller than other huge buildings they built or renovated on the property. They considered leasing it to a smaller industrial user or renovating it into creative office space.
After thinking about different potential uses for a few months, the partners hit on seeking out a brewery for the smokestack-topped building, known as The Boiler Room. The brewery would be a tenant that would also serve an amenity for Northern Stacks, Hyde said in an interview.
“Frankly we wouldn’t have done it 10 years ago,” he said. “There are thousands of people working on this 122-acre site five days a week. We wanted to take advantage of that gravity and try to build a neighborhood.”
The four partners who will open the brewery later this year believe the location is will draw a crowd, even though it lacks the walkability of Royal Foundry or the craft establishments that have opened in recent years in Minneapolis’ North Loop and in St. Paul. Northern Stacks’ location in the southeast quadrant of interstates 94 and 694 and almost kitty corner from a new Top Golf facility will make the brewery a convenient destination, said brewery partner Andy Risvold.
The Boiler Room comes with a big parking lot, something Risvold said is rare for many urban brewery locations. There is also room for a dog park the partners plan to build, and potential expansion space for the brewery. They have a 10-year lease for 9,000 square feet of space in The Boiler Room, but may need to lease more of it later.
The raw space inside The Boiler Room at Northern Stacks in Fridley will show through after buildout as a brewery, complete with old brick walls. (Submitted photo)
“That place offers things a lot of other spaces we were looking at don’t,” Risvold said in an interview. “And being that close to 94-694 intersection, we’re able to draw from so many angles in the Twin Cities.”
The partners are planning an $880,000 buildout that will showcase aging brick walls in the 80-year-old building, he said.
Craft beverage makers are turning out to be solid bets as tenants, said Craft Buildings’ Hudock. Most sign long-term leases, stretching five to 10 years, he said.
Hudock is currently searching for space in Columbia Heights for a new brewery, Kultur Werks Brewing, and a distillery space in Duluth for a whiskey maker. The demand from these sorts of users remains high and will be steady “until the consumer says. ‘I’ve had enough,’” he said.
Hudock doesn’t see that time coming soon. Craft beverage makers are the new neighborhood gathering spot, he said.
“If everyone continues to embrace this local tavern idea, we will continue to see the growth outside the major rings of the city,” he said.
Courtesy of Finance & Commerce