How Developers Can Tap into the Atlanta Brewing Boom

February 26, 2018

Something’s brewing in Atlanta. And it tastes like opportunity for real estate developers as much as for craft beer lovers.

Fueled by a string of recent state and local law changes, the Atlanta brewing boom is poised to fire up the local commercial real estate market and crack open new business opportunities.

Like brewers, developers can take advantage of these opportunities by understanding regulatory changes, as well as the tax credits and incentives that may be available.

Changes Brewing in Georgia

Craft breweries are booming nationally. In Georgia alone, they contributed almost $1.6 billion to the economy in 2016. The Atlanta brewing boom is poised to gain even greater momentum.

In December 2017, Atlanta allowed smaller breweries (10,000 barrels or less a year) in areas zoned for commercial or mixed use. Breweries in Atlanta were previously allowed in only industrial areas.

This could mean more neighborhood-focused breweries, especially in popular tourist areas, according to the Atlanta Business Chronicle. Breweries may also show up near mixed-use projects like Ponce City Market or Atlantic Station.

In September 2017, Georgia lawmakers began letting breweries and distilleries sell directly to customers. Before, if you wanted to drink beer at a brewery, you had to buy admission to a tour that included “free tastings.”

Each brewery now may sell 3,000 barrels directly to consumers each year. There’s no daily limit, and each purchaser may buy up to a case per visit.

New Businesses Opening

The effects are already being seen.

In January, New Realm Brewing opened its first production facility. It’s on Atlanta’s BeltLine in a 20,000-square-foot space that features a brewhouse, restaurant and rooftop patio. Owners say it wouldn’t have happened without the changes in the law.

“We were able to classify as a brewery and have a full-service restaurant, special event spaces and a beer garden. Under the previous laws, we could not have done both,” says Carey Falcone, co-founder and CEO. “The taproom sales allow us to generate additional revenue that we will use to increase production, buy expansion tanks and increase our staffing levels.”

The New Realm facility seats 400 guests and can produce 20,000 barrels at full production, with the capability to keg, bottle and can.

On tap this year is GRITS Brewery, whose co-owner Jamie Hillegass hailed the changes in the law and the growth potential in Georgia.

“They allow for breweries to start smaller and connect with customers with more intention,” says Hillegass.

Hillegass says GRITS will have strong community ties, a laid-back and family-friendly atmosphere, and a selection of high-quality beers.

“We love the local brewery vibe they have in Denver and Asheville, where you can go to your neighborhood brewery and meet up with friends,” Hillegass says.

Why Developers Should Raise a Glass

The state and local law changes present significant opportunities for brewers, as well as industrial spaces and business. What do brewers need to know?

Real estate services firm Cushman & Wakefield recommends prospective brewers:

Enter the market with a solid concept to ensure capital and space.
Understand how local regulations impact the business plan, and have the necessary clauses written into the lease.
Invest in innovative design to stand out: spaces for live music, film screenings and backyard-style games.
Seek partnerships with restaurateurs, including food truck operators.

Researching Brews

It’s also important to be aware of any tax credits and incentives. In the early stages, federal and state Research and Development (R&D) Tax Credits can be paramount for breweries, resulting in significant financial savings.

Breweries can get a tax credit just for developing new brews – the specialty of craft breweries. Most breweries are also startup companies, which means they can use the credit against federal payroll withholdings. And companies don’t have to be profitable to use the credit.

To qualify to use the credit against a portion of FICA, a business must have gross receipts of less than $5 million and have five or fewer years of gross receipts. An eligible small business with qualifying research expenses – such as the development of new or improved hopping techniques or yeast strains – can choose to apply up to $250,000 of its research credit against its payroll tax liability.

Many states also have lucrative R&D tax credit incentives. For Georgia, these companies can use their R&D credits against state payroll tax withholding.