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Continued: In US cities, craft brews create thriving small business hubs, but revival can have a price

  • Article by: TALI ARBEL , AP Business Writer
  • Last update: July 4, 2013 - 8:35 AM

However, the building's manager, Fred Sanders, says the lease was just renewed last year for five more years, and he hasn't had any conversations with Kelso about the future.

Even if the brewery owners don't have confirmation that they'll be forced to move, history shows they have reason to be concerned. Winifred Curran, a geography professor at DePaul University in Chicago, studies how gentrification changes cities. She wrote her graduate-school dissertation on how gentrification in Brooklyn's Williamsburg neighborhood affected small manufacturers. Small businesses struggled to stay put while developers converted factories and warehouses into lucrative lofts and swarms of wealthy new residents drove up prices, she says. She warns that the appeal of revitalized neighborhoods can decimate small businesses, both old and new.

"You can try to use the establishment of manufacturing businesses to be the wedge that allows gentrification to happen, but then you need to protect those businesses," Curran says. Otherwise "the market creates this demand for industrial space and then kills the goose that laid the golden egg."

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. 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.

On the country's other coast, the tech boom has made one brewpub's growth plans more complicated. The 21st Amendment brewery, in San Francisco, is two blocks from the Giants' baseball stadium, which opened in 2000 and, along with the bustling technology sector, transformed the city's SoMa neighborhood from abandoned warehouses to hot spot. Now the company wants to build an 80,000-square-foot brewery — but that's not possible in SoMa.

"The manufacturing element of the business has been priced out," says 21st Amendment's founder, Nico Freccia. The company has opened offices in the East Bay, and he's scouting space there for the brewery, hoping to "help anchor the revitalization" of an Oakland neighborhood.

Similar dreams are fueling a new beer company in New York. Bronx Brewery is setting up shop in the Mott Haven section, next to a lumberyard, a manufacturer and the plant that prints the New York Post.

"We really want to be in the Bronx, be a part of a south Bronx community that's growing like crazy," says Chris Gallant, co-founder of the brewery, which will have a space for visitors. "We hope to get as many people there as possible — it'll definitely serve as marketing," he says.

About 29 percent of Bronx residents live in poverty, compared with 15 percent for all of New York state, according to Census data.

"I think that entire area is going to increase in value," Gallant says. "That's great for the south Bronx. But it could put us in a tough spot 10 years from now."

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