San Diego has a huge craft beer tenant base. Last year Ballast Point wanted to raise $100mil in an IPO. Constellation bought them for a staggering $1bil. Stone Brewing is in San Diego. We have a secondary suburban area called San Marcos/Escondido off Hwy 78. This is craft beer row...the hotels are full of out of towners visiting all the craft beer joints.
I interviewed with a firm last year that I know pretty well. They only do SD deals. They're heavy on multi tenant industrial. We had an interesting discussion about the pending bubble in craft beer and its effects on vacancy. Because they have several notable, and probably too big to fail craft beer tenants, they're ok. Let me tell you this, I have no clue how many craft breweries are leasing locally. It's a lot. Industrial for production and tasting, and retail to get into new markets. Any shift in the economy down here and some folks are going to get hurt.
Even now I see small craft beer hipster joints closing.
Anyone out there leasing space to these guys? Your thoughts?
I would vote no because I would be worried about the exit. Some institional owners might be turned off by it which would be enough for me to say no (not to mention the credit which is probably weak at best).
Yeah exit would be a problem. Will for sure be an issue for institutional guys. Any not so stellar credit tenant its always going to be risky. If true "Craft" beer meant they produce less than XXX barrels a year plus they are a relatively new company..bottom line is that their financials won't be helping them out in any kind of underwriting. Unless as you mentioned they have been consumed by a larger company with better credit and financials who could bear some kind of storm, they should always be underwritten as a riskier tenant. Maybe part of a portolio sale on exit. Even if they leave, the heavy TI involved in restoring the vacancy will hurt future underwriting for next tenant..but then again these are not true industrial tenants or buildings. They are office or retail heavy transitional flexy/retail industrial buildings
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