New Avery Brewing facility Location: 4910 N. Nautilus Court, Boulder Size: 95,922-square-foot building Features: Production facility (initial 100,000-barrel capacity), corporate offices, tasting room, 249-seat restaurant, outdoor seating to accommodate 100 people, gift shop. Hours: 10 a.m. to 2 a.m., seven days a week

Correction: This article has been updated to reflect that Colorado Business Bank contributed to a bank loan for Avery Brewing.

Three years in the making, Avery Brewing Co.’s “world-class” brewery is under construction in Boulder.

Workers on Monday broke ground on what eventually will be a nearly 96,000-square-foot brewery and restaurant at 4910 N. Nautilus Court in Boulder. The more than $27 million project — to be constructed in two phases — was designed to help Avery Brewing respond to skyrocketing demand and to establish a base where the 20-year-old craft brewery could grow well into the future.

If all goes as planned, Avery Brewing’s new facility could be operational in 12 months, said Adam Avery, who co-founded the brewery with his father in 1993.

“It’s a huge, huge relief,” Adam Avery said.

Avery has spent the past three years searching for sites, pulling together money and working to change city regulations.

Avery Brewing’s 25,000-square-foot current brewery at 5763 Arapahoe Ave. has hit capacity, Avery said. The operation that is sprawled out across several warehouse units is churning out close to 50,000 barrels of beer — roughly 1.55 million gallons — annually, but the facility and its limitations have forced the Boulder brewery to stop distribution to some markets and rein in expansion plans.

“It obviously caused a lot of pain,” he said. “We’ve been in that building at least three or four years too long.”

Avery Brewing won’t face similar constraints at the new brewery.

After a city of Boulder code change was made to allow for breweries, wineries and distilleries in industrial zones to have restaurants on-site, Avery was able to pull the trigger on the 5.6-ace property in the Gunbarrel area of Boulder.

Avery received city of Boulder approval in 2012 for the 95,922-square-foot brewery, restaurant, gift shop and tap room, but the development took longer than expected to materialize.

“We costed out the entire project, and what we initially thought we could build was outside the scope of what we could pay for,” Avery said.

The $27.4 million project will be funded by $5 million from Avery Brewing’s cash and a $22.4 million loan from Colorado Business Bank and Citywide Banks.

“I think it was really important to our people” to not take outside investment capital, Avery said. “I think people like working for us because we’re a family-owned business and we’re not a bunch of bean-counters.”

The project originally was approved to be developed in two phases, with the first phase including the bulk of the manufacturing area and 249-seat restaurant with some additional manufacturing coming in the second phase.

Phase one of the modified plans will include the brewery, production offices, four main fermentation tanks, truck docks, grain silos, a smaller restaurant space, a smaller gift shop space and the majority of landscaping and parking. Coming to fruition in the second phase will be the “front of house” portion of the project: the full restaurant, full gift shop, administration offices, remainder of the tanks and packaging expansion, according to plans approved by the city of Boulder.

The terms of the financing required the manufacturing portion of the project to be in production prior to the full restaurant portion of the property, according to the filings made with the city.

Avery estimated that the first phase could be complete in 12 months. The second phase could get under way in the following months, Avery Brewing officials said.

When the first phase of the new brewery is completed, Avery Brewing immediately will double its production capacity. And if the 5.6-acre is built to capacity, Avery Brewing could be producing 500,000 barrels on an annual basis.

By comparison, New Belgium Brewery produced nearly 765,000 barrels of beer at its Fort Collins facility in 2012.

The intent behind Avery Brewing’s new brewery is not to become a craft beer juggernaut, but to meet existing demand and to further increase the quality of beer produced, Avery said.

“This is a game-changer for us,” he said. “We make world-class beer and now we’re going to get a world-class facility.”

When the new Gunbarrel facility opens, Avery Brewing will wind down its operations off east Arapahoe Avenue. Avery hopes to sell or lease part of that facility to another craft brewery.

“I think that would be the best-case scenario for us and other small breweries; there’s so much infrastructure built in,” he said.

The arrival of Avery Brewing in Gunbarrel could help to bolster the existing craft breweries in that area of northeast Boulder, said Chris Asher, who runs Asher Brewing at 4699 Nautilus Court.

“I think it’ll be good for us in the long run. We might have a little dip in the beginning,” Asher said. “Since there is going to be more breweries in Gunbarrel, we’ll be more of a destination for people going on brew tours and bike tours. I think it’ll increase that.”

Contact Camera Business Writer Alicia Wallace at 303-473-1332, wallacea@dailycamera.com or twitter.com/dc_alicia.