In the mid-2000s, Jeff Heck and some friends from his Bible study class started getting together Monday nights to try their hands at brewing their own beer.

By 2011, Heck had turned a hobby that brought 20-plus friends together to sip homemade beer in his backyard into a full-blown business. Today, Heck's Monday Night Brewing is among more than 5,200 craft breweries in operation in the United States.

Bisnow

Monday Night Brewing CEO Jeff Heck standing against a wall of ties.

To say there has been a craft beer explosion in the United States during the 2000s would be an understatement. In the past 10 years, craft breweries leased some 55.6M SF in both retail and industrial properties in the U.S., according to a recent Cushman & Wakefield report.

While craft breweries do occupy retail space, more than 80% of that growth is concentrated in the industrial space, where upward of 45M SF has been brewed by craft beer makers, according to the report. To put it plainly: The number of active craft breweries has tripled in a decade, from 1,409 breweries in 2006 to 5,234 last year, according to data compiled by the Brewers Association.

Courtesy: Cushman & Wakefield from Brewers Association data

Growth of U.S. breweries from 2006 until 2016

That means from 2012 to 2014, some 1.3 new breweries opened in the U.S. per day. By 2015, that rate jumped to 2.3 breweries per day.

Players active in the field range from home-brew enthusiasts turned thriving businessmen, to big-beer and venture capital entities entering the fray by buying out independent brewers or competing with their own craft brands, C&W officials state in the report.

“We've seen just an enormous [amount of] growth and huge success across the board. It's been very difficult to find a brewery that hasn't been successful, which is incredible over a 10-year run,” CBRE Senior Vice President Jeremy Ballenger said.

Courtesy: Mary Lanier

Sierra Nevada Brewing Co.'s Mills River, N.C., brewery.

Ballenger, who has been in the industry for 16 years both as a developer and an industrial broker, said the brewery industry is an incredible real estate driver and niche, particularly in the Denver area.

This is not a surprise given that Colorado has 348 active breweries, the second most behind California, according to the website Datafiniti. That comes out to 6.3 breweries per 100,000 residents in Colorado.

Just this past week, Ballenger brokered the sale of 1898 Flatiron Court, a 41K SF flex industrial building in Boulder to Upslope Brewing Co. for $7M. Upslope, which was already operating out of more than 60% of the facility for its beer-making operations, purchased the building from an institutional investor, Ballenger said

Not bad for a brewery that started in 2008.

“It's really grown from someone's backyard to brewing tens of thousands of barrels a year,” he said.

The Cool Factor

While microbreweries and craft beer makers have been around the U.S. for centuries, the industry did not really skyrocket until the early 2000s, when it began to have both local and regional prominence. Cushman & Wakefield states that the foodie culture is partly to credit for the craze.

But so are generational preferences. According to a 2015 U.S. Yankelovich Monitors survey, about 41% of weekly beer drinkers are millennials. These drinkers tend to be college educated, and of the 40% that are, more than 30% hold graduate degrees, according to C&W. The report said millennials are fascinated by food sourcing and are drawn to establishments with locally harvested food and beverages.

"Millennial foodies today don’t just want to know the farm that this food came from; they want to know the chicken’s name,” the C&W report reads.

Real Estate Needs

Unlike other niche industry growth in the U.S., the craft brew industry is largely focused on reusing older retail and industrial space for its growth. And often not just any properties, but rehabilitation of urban properties such as former automotive repair shops, abandoned mills and historic churches, according to the Cushman & Wakefield report.

This has often made breweries integral to their neighborhoods, even if at times outside the urban core.

“I think they want to be in neighborhoods. The most successful breweries have been neighborhood meeting spots. I think that's how a lot of this is building out right now,” Ballenger said.

Bisnow

Monday Night Brewing CEO Jeff Heck pouring a pint from his Midtown Atlanta brewery.

For Monday Night Brewery in Midtown Atlanta, it got its start at a retrofitted older industrial property that features a 4K SF taproom, decorated with hundreds of neckties. In that respect, Heck said Monday Night has become a public gathering place for people in the area. And that has fed its marketing efforts.

“The reality is for us our taproom is our single most important marketing opportunity,” Heck said. “It's the thing that really allows us to be differentiated … [allowing] people to experience our brand up close.”

Coming To A Head?

Courtesy: Cushman & Wakefield

Estimated net absorption by breweries in the U.S. since 2007

Though the industry is still booming, the growth of breweries' expansion has slowed in the U.S. in recent months. While there is room to grow across the nation, C&W predicts some shakeout in individual markets over the next 12 to 18 months.

“To use a popular baseball analogy, growth in the craft brewing trend is in the fourth or fifth inning," Cushman & Wakefield officials stated in the report.

But even as overall beer barrel production remained flat in 2016, the craft segment of the population saw production rise more than 6%, according to the Brewers Association.

“However, we certainly do not see the trend ending soon. Neither do we see it reversing itself, even in those metropolitan areas where competition is fiercest," Cushman & Wakefield officials stated in the report.