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Brewery Igniter offers brewhouses for lease

Fenton powered business model cuts startup costs

The floorplan of adjacent brewhouses set up by HG Fenton for its inaugural Brewery Igniter property.
The floorplan of adjacent brewhouses set up by HG Fenton for its inaugural Brewery Igniter property.

Given the number of craft beer companies launched in San Diego over the past couple of years, starting a brewery almost seems easy. Of course, it's not, and given the capital investment required to purchase brewing systems, one has to wonder how many of the dozens of breweries projected to open in the next year or two will ever come to be.

Modern Times reportedly raised $1.25 million to launch with a 30-barrel brewhouse, and while not every brewery attempts to start with that much capacity or design flair, it does offer a glimpse at the prohibitive financing of this particular business.

HG Fenton, a 109-year-old local property developer and management company, has launched a model aimed at bypassing startup costs altogether. Called Brewery Igniter, the premise is simple: Fenton builds out one of its properties with a complete brewing system, then leases it to new or growing breweries, effectively amortizing the start-up costs so that a business can begin earning money on a 12-month-lease contract rather than work to climb out from under a massive business loan.

"Unfortunately, this idea came out of the failure of a tenant who was starting the business in a conventional way," says Bill Hooper, a commercial portfolio manager for Fenton, suggesting the tenant defaulted on the lease under the weight of startup costs. According to Hooper, "Somebody said, well why don't we do that for them?" adding with a laugh, "I'd probably be a horrible brewer, but I'm pretty good at building out space."

Space, yes. But brewing equipment? For that, Fenton managers turned to local experts. "We actually partnered with Premier Stainless on the project," says Fenton commercial property manager Jacqueline Olivier, referring to the Escondido brewing equipment manufacturer. "We worked closely with them to decide what would be the best equipment and how to set it up." They also enlisted Hauck Architecture, a craft beer specialist that's worked with dozens of breweries, including Council, Benchmark, and Fall brewing companies.

The result is a pair of seven-barrel brewhouses at 9030 Kenamar Drive in Miramar, close to Ballast Point and Duck Foot Brewing, itself an HG Fenton tenant. The identically structured 1625-square-foot brewing facilities include brew tanks, fermenters, brite tanks, keg washers, and cold boxes, plus restrooms, office space, and tasting rooms.

"It's not shared space," Hooper points out, "It's 100 percent occupied and operated by the tenant. They would get their own ABC licensing. We're not a partner with it, we're leasing the space."

Olivier adds, "All the tenant would need to bring would be any décor they wanted that would meet their brand image."

Demand has been high. Hooper says 15 groups have shown interest. Pacific Beach brewer Amplified Aleworks recently announced plans to expand into one of the twin brewhouses, and startup Pure Project Brewing Co. will take the other. Based on this response, Brewery Igniter already has plans to build out a trio of ten-barrel brewhouses in another booming beer neighborhood: just off 30th Street on El Cajon Boulevard in North Park.

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The floorplan of adjacent brewhouses set up by HG Fenton for its inaugural Brewery Igniter property.
The floorplan of adjacent brewhouses set up by HG Fenton for its inaugural Brewery Igniter property.

Given the number of craft beer companies launched in San Diego over the past couple of years, starting a brewery almost seems easy. Of course, it's not, and given the capital investment required to purchase brewing systems, one has to wonder how many of the dozens of breweries projected to open in the next year or two will ever come to be.

Modern Times reportedly raised $1.25 million to launch with a 30-barrel brewhouse, and while not every brewery attempts to start with that much capacity or design flair, it does offer a glimpse at the prohibitive financing of this particular business.

HG Fenton, a 109-year-old local property developer and management company, has launched a model aimed at bypassing startup costs altogether. Called Brewery Igniter, the premise is simple: Fenton builds out one of its properties with a complete brewing system, then leases it to new or growing breweries, effectively amortizing the start-up costs so that a business can begin earning money on a 12-month-lease contract rather than work to climb out from under a massive business loan.

"Unfortunately, this idea came out of the failure of a tenant who was starting the business in a conventional way," says Bill Hooper, a commercial portfolio manager for Fenton, suggesting the tenant defaulted on the lease under the weight of startup costs. According to Hooper, "Somebody said, well why don't we do that for them?" adding with a laugh, "I'd probably be a horrible brewer, but I'm pretty good at building out space."

Space, yes. But brewing equipment? For that, Fenton managers turned to local experts. "We actually partnered with Premier Stainless on the project," says Fenton commercial property manager Jacqueline Olivier, referring to the Escondido brewing equipment manufacturer. "We worked closely with them to decide what would be the best equipment and how to set it up." They also enlisted Hauck Architecture, a craft beer specialist that's worked with dozens of breweries, including Council, Benchmark, and Fall brewing companies.

The result is a pair of seven-barrel brewhouses at 9030 Kenamar Drive in Miramar, close to Ballast Point and Duck Foot Brewing, itself an HG Fenton tenant. The identically structured 1625-square-foot brewing facilities include brew tanks, fermenters, brite tanks, keg washers, and cold boxes, plus restrooms, office space, and tasting rooms.

"It's not shared space," Hooper points out, "It's 100 percent occupied and operated by the tenant. They would get their own ABC licensing. We're not a partner with it, we're leasing the space."

Olivier adds, "All the tenant would need to bring would be any décor they wanted that would meet their brand image."

Demand has been high. Hooper says 15 groups have shown interest. Pacific Beach brewer Amplified Aleworks recently announced plans to expand into one of the twin brewhouses, and startup Pure Project Brewing Co. will take the other. Based on this response, Brewery Igniter already has plans to build out a trio of ten-barrel brewhouses in another booming beer neighborhood: just off 30th Street on El Cajon Boulevard in North Park.

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This idea would be great in Temecula too!

Aug. 10, 2015

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