Brewery Real Estate and Lease Review: Zoning, Utilities and Wastewater
A brewery is not an ordinary tenant. It uses large amounts of water and power, sends process water down the drain, needs heavy floors and drains, and often runs a taproom that draws evening and weekend crowds. That makes brewery real estate and lease review one of the central parts of evaluating an acquisition. A great brewery in a building that cannot support it, or under a lease that cannot be assigned, may not be the opportunity it appears to be.
This article is general information for buyers of existing, operating craft breweries, brewpubs and taproom breweries. It does not address building a new facility or adding space. Zoning, environmental and wastewater rules vary by locality, and buyers should rely on qualified attorneys, environmental professionals and engineers. Nothing here is legal or environmental advice.
Reviewing the Lease
- Term and renewal options: whether the remaining term supports the buyer’s plans and the loan
- Assignment: whether the landlord must consent to the sale and on what conditions
- Permitted use: whether brewing, retail sales and on-site consumption are clearly allowed
- Improvements and fixtures: who owns tanks, drains, coolers and taproom improvements at the end of the lease
- Maintenance and utilities: responsibility for roofs, floors, drains, utility upgrades and surcharges
- Restrictions: limits on hours, noise, outdoor seating, events or signage
Zoning and Use Approvals
Brewing may be treated as a manufacturing use, while a taproom may be treated as retail or a bar. Buyers should confirm that existing approvals cover how the business actually operates. Permits frequently describe the licensed premises, so site issues and licensing are connected; see our article on brewery permits and licenses.
Utilities and Wastewater
Brewery process water can carry sugars, yeast, solids and cleaning chemicals. Many localities regulate what can be discharged and may impose permits, pretreatment requirements or surcharges. Buyers should review any wastewater permits, discharge testing, notices and how spent grain and other byproducts are handled. Water supply, electrical service and gas service also affect whether the building can support current operations. Environmental and wastewater questions should be reviewed by qualified professionals.
How the Building and Equipment Fit Together
Tanks, drains, glycol lines and the brewhouse are frequently integrated into the building. Their condition and ownership should be reviewed together with the space; see our article on brewhouse and cellar equipment.
Buying the Real Estate
Sometimes the seller owns the building and offers it with the brewery. Owning can provide control over a specialized space, but it also adds cost and responsibility. Buyers can evaluate the property with an appraisal, inspection and environmental review. Depending on eligibility and lender review, options may include SBA 504 business real estate loans or conventional real estate loans. Some buyers finance the business and building together; see our article on SBA loans for craft breweries.
What Lenders Want
When the business is leased, lenders generally want a lease term that supports the loan and may ask for landlord consent or an agreement regarding access to collateral. When real estate is included, they will order appraisals and environmental reviews as their policies require. Every loan is subject to lender approval.
Questions to Ask Before Signing
- Will the landlord consent to assignment, and on what terms?
- Do zoning and use approvals match the taproom and production operations?
- Are there wastewater notices, surcharges or required upgrades?
- Who owns the tanks and improvements if the lease ends?
US Professional Funding helps buyers finance the acquisition of existing, operating craft breweries, with or without the real estate. Learn more about our craft brewery acquisition financing.
