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Houston's Craft Beer Industry Soaks Up Space After Texas Law Changes

City Brewers Boost Texas to Third-Biggest Craft Beer Selling State
August 31, 2018
Saint Arnold Brewing Co. recently opened up a beer garden and restaurant next to the brewery at 2000 Lyons Avenue in Houston.
Credit: OJB Landscape Architecture.

Houston’s growing craft beer industry has become a national leader, thanks to changes to state laws that brewed up a surge in demand for commercial real estate in the nation's fourth-biggest city.

Since 2013, a combined 344,487 square feet of industrial space in the city was absorbed by 41 breweries in just five years, according to data from NAI Partners, a commercial real estate services firm. Houston’s 52 breweries now account for 506,295 square feet.

Breweries like Buffalo Bayou Brewing, Eighth Wonder and Spindle Tap Brewing are helping to shape the Houston beer scene. They’re still trying to catch up to Houston’s largest and oldest craft brewery, Saint Arnold Brewing Co., which recently completed an expansive beer garden offering views of downtown Houston.

In June 2013, the Texas Legislature passed Senate Bills 515, 516, 517, 518 and 639, effectively allowing breweries to improve their bottom lines. Producers today can more easily operate taprooms and brewpubs, while selling their beer to go directly to consumers instead of having to rely solely on the three-tier distribution system.

Houston is riding a craft beer wave sweeping across the nation. An estimated 6,500 craft breweries were open in the U.S. as of mid-2018, more than triple the number at the start of the decade, according to the Brewers Association, a trade group for smaller producers.

With more than 187,000 barrels brewed last year, the equivalent of 26.3 million bottles, central Texas was the prominent production hub of Texas craft beer. The Dallas-Fort Worth and Houston metropolitan areas act as secondary hubs that helped the state's craft breweries generate $5.3 billion in 2017, the third-highest in the U.S., according to the Brewers Association. California had the highest output at $8.2 billion, followed by Pennsylvania at $6.3 billion.

Texas is the eighth-biggest state in craft beer produced annually, with 1.2 million barrels in 2017, according to Brewers Association data. That's not far out of the top three, with Colorado's 1.5 million barrels placing third, edged out by California's 3.3 million at No. 2 and Pennsylvania grabbing the U.S. craft beer production title at 3.7 million barrels.

The biggest Texas brewer is the K. Spoetzl Brewery in Shiner, Texas, a producer that accounted for 70 percent of Texas' 1.2 million barrels of beer last year.

Given its size, Texas still has one of the lowest breweries per capita in the nation, currently ranking 46th per the Brewers Association’s most recent data, and so there is little concern about a bubble. If anything, says NAI Partners, it indicates that Texas brewers may have room to grow.

Kyle Hagerty, Houston Reporter  CoStar Group   
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