The Clinton Herald, Clinton, Iowa

AP story section

July 5, 2013

Beer creates small business hubs

NEW YORK  — To see how a small business can transform a neighborhood, just follow the barrels.

About 30 years ago, beer lovers wanting to create their own drinks started taking over abandoned old buildings in rundown city districts, refitted them with tanks, kettles and casks, and started churning out beer. The byproduct was a boom in craft beer drinkers: Barrels shipped have more than doubled in the past decade, according to trade publication Beer Marketer’s Insights. Craft beer now makes up nearly 7 percent of the slow-growing U.S. beer market.

But beer drinkers weren’t the only beneficiaries. The arrival of a craft brewery was also often one of the first signs that a neighborhood was changing. From New England to the West Coast, new businesses bubbled up around breweries, drawing young people and creating a vibrant community where families could plant roots and small businesses could thrive.

It happened in Cleveland. Once an industrial powerhouse, the Rust Belt city has been losing residents since the 1950s. Manufacturing jobs disappeared. The city nearly went bankrupt in 1978.

Marred by abandoned buildings and boarded-up stores after several hard decades, the downtown Ohio City neighborhood, just west of the Cuyahoga River, which divides Cleveland, was “perceived as dangerous and blighted” into the 1980s, says Eric Wobser. He works for Ohio City Inc., a nonprofit that promotes residential and commercial development while trying to preserve the neighborhood’s older buildings.

Enter Great Lakes Brewing, which opened in 1988. Over the years, it’s built a brewery and a brewpub from structures that once housed a feed store, a saloon and a livery stable.

“We resurrected all of them,” says Pat Conway, who founded Great Lakes with his brother, Daniel. “We’ve beautified the neighborhood, provided a stunning restoration.”

Other breweries and businesses — a pasta maker, a bike shop, a tortilla factory, as well as restaurants and bars — followed. Newcomers are flocking to the neighborhood, even though Cleveland’s overall population is still declining. The city repaved the quiet street next to the brewery, Market Ave., with cobblestones, and poured millions into renovating the West Side Market, whose origins date back to the 19th century. Today, more than 100 vendors sell produce, meat, cheese and other foods there.

What’s going on in Cleveland is happening across the country. Trendy small businesses like breweries and younger residents have been returning to downtown neighborhoods in many cities across the U.S. The biggest cities are growing faster than the suburbs around them, according to Census data.

Another benefit of the brewery boom: Manufacturers like brewers typically pay workers more than service businesses like restaurants or shops do. That’s good for local economies.

But for some, the bubbles are bursting. In Brooklyn, N.Y., breweries are feeling the heat from rising real estate costs.

When Brooklyn Brewery opened in the Williamsburg section of the borough in 1996, its neighbors were mostly deserted warehouses and factories. Today, Brooklyn Brewery is surrounded by modern apartment buildings, trendy bars, shops and restaurants. There’s still some graffiti, but that hasn’t deterred the influx of new residents willing to spend a lot of money to live there. In the past decade, home values in the Brewery’s neighborhood have more than doubled — up 145 percent, according to real estate appraiser Miller Samuel.

Rising prices might force Brooklyn Brewery to exit the trendy scene it jump-started. It has two buildings in Williamsburg, the brewery and a building across the street where it stores and ages its beer. Leases are up in 2025, and Brooklyn Brewery’s co-founder and president, Steve Hindy, is already worried that the company will get kicked out of its warehouse. Once an iron foundry, the building, built in 1896, has been bought by developers who Hindy says won’t renew the lease. He suspects that they want to convert the space into apartments.

Outside of New York, costs are lower, and many brewery owners in other cities say they haven’t felt similar pressures from developers. But New York flashes a warning sign for what can happen when neighborhoods become popular.

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