They’re one of the oldest and most successful real estate companies in San Diego, and they’ve developed an innovative program to encourage growth in our craft beer industry.
H.G. Fenton Company, which celebrated its 110-year anniversary this year, is a big player in local commercial real estate, and it turns out they’re cultivating a specialty in brewery spaces. Fenton owns the Ballast Point Miramar building in addition to the commercial spaces that house Duck Foot Brewing, Pure Project, and Amplified Ales. They are also well known for their large residential developments, such as the one currently underway in Little Italy. A few years ago, the company began a somewhat unique initiative: They decided to take an active role in supporting new or small breweries by offering them an arrangement designed to help them grow.
I sat down recently with Jacqueline Olivier, real estate manager for H.G. Fenton, to get the full story on how the program—called Brewery Igniter—began and how it works. Olivier explained that Igniter was developed after a number of their new brewery tenants failed because they ran out of capital. “They weren’t even able to open their doors,” she says. “So we decided that, since we build things all the time, why don’t we just go ahead and build some breweries. We know how to build space.” Olivier also says that the idea of being a resource to both the San Diego business community and the craft beer industry was another appealing aspect of their concept, which was launched in 2015.
“We decided that, since we build things all the time, why don’t we just go ahead and build some breweries. We know how to build space.”
When they first started planning the initiative, Fenton identified Miramar as the area in which they wanted to house their first locations. When space became available (it just so happened it was a property that basically backs up to a view of the Ballast Point patio), Fenton decided the location had two perfect units in which to test its fledgling program. Those spots eventually became Pure Project and Amplified Ales Miramar.
Brewery Igniter is not a business incubator per se, but it is especially designed to help brewers who have yet to go commercial navigate the many obstacles to getting a commercial brewery underway. “There are always things that happen during construction that people don’t account for when they do their construction budget,” says Olivier. “For example, in Miramar, we had a flood and all our sewer drains got clogged. All the water backed up into the trenches inside the spaces and we had to have it pumped. We also had to dig out the dirt and put sand in. It was costly. And it’s the kind of thing that people who are building their own brewery wouldn’t necessarily think to have a contingency for.” If a few things of that nature happen during construction, a start-up brewery can use up so much of its budget that they can’t finish the project and actually open their doors.
Most new breweries also have to choreograph the complicated processes of building, receiving and installing equipment, and finalizing licensing so all permits and approvals coincide efficiently with the beginning of the lease payment period. One of the biggest nightmares for any new business is the thought of having rent due on a location that is not even open. “There’s often a lot of lag time between when you start construction and when you actually get your TTB and ABC applications approved,” Olivier says. “ABC, for example, likes to do an inspection once your equipment is at least eighty percent complete. So it all has to be hooked up. And then you have to wait another two months after that before you can actually open.” Igniter makes all that lag time part of the standard process—one where the brewer is not on the hook for delays or timing that don’t sync up with the beginning of the lease payment period.
Another huge benefit of the Igniter program is that it drastically reduces the amount of up-front capital needed to start a business. H.G. Fenton not only owns the spaces, it pays for the construction, the equipment, and assumes the significant risk that goes along with investing money at the earliest stages. This arrangement means, compared to conventional leases, the barrier to entry for aspiring commercial brewers is significantly lower.
H.G. Fenton’s Brewery Igniter Program Supports Small Breweries
Eppig Brewing will be the first of three breweries to open in the new CRAFT space in North Park. | Photo: Bruce Glassman
Eppig Brewing will be the first of three breweries to open in the new CRAFT space in North Park. | Photo: Bruce Glassman
So, you might be wondering: With Fenton fronting all the capital to get a space built and the doors open, what do the brewers actually have to pay for? Turns out, it’s very simple and straightforward: Brewers pay rent on the space, and that rent includes a calculation for the cost of construction and renting the brand-new brewery equipment.
Fenton’s ultimate goal is to create spaces where new businesses come in, they grow, and then they move on to a larger space. According to Olivier, there’s no specific timeline that has to be followed for growth (breweries only sign one-year leases, which are renewable), and the program is still new enough that they haven’t been faced with a brewery that has outgrown its original space—though they do anticipate that eventuality. “As that starts to happen,” Olivier says, “we’ll figure out what our next steps are, but for right now, there’s so much demand for the program that we’re just trying to get some more built.”
A number of projects are currently underway. Before the end of the year, a trio of Igniter-backed breweries will open in North Park in a space called CRAFT, housed side-by-side in a facility on the corner of Ohio and El Cajon Boulevard (3052 El Cajon Blvd.). This will be the home of Eppig Brewing (opening first, with soft opens already happening), Pariah Brewing Company, and San Diego Brewing Company, which will use the new location to double its production and bring its brews directly to the North Park community for the first time.
H.G. Fenton’s Brewery Igniter Program Supports Small Breweries
San Diego Brewing Company co-founder Lee Doxtader is flanked by brewers Jarrod Davis (left) and Jeff Drum (right) in their new space. | Photo: Bruce Glassman
San Diego Brewing Company co-founder Lee Doxtader is flanked by brewers Jarrod Davis (left) and Jeff Drum (right) in their new space. | Photo: Bruce Glassman
“We’ve been waiting a long time to increase our production,” says Lee Doxtader, co-founder of San Diego Brewing Company, “and this allows us to grow to a level where we can do distribution and packaging and be on par with the other small-to-medium guys in town.” Development is also currently underway in Carlsbad (at Carlsbad Corporate Center on El Camino Real), for a space that will house two new breweries side-by-side, one of which will be Rouleur Brewing Company (the second has not yet publicly announced). Olivier says H.G. Fenton is looking at doing some additional spaces next year as well, though they haven’t yet figured out which areas they want to consider.
Olivier, who administers Igniter, explains that there’s really no formal application process for the program. “What I like to look at is, do you have a business plan? That helps me determine how serious a person is. And we also look at the financials, because you have to have enough money to pay your rent.” Olivier is quick to add, however, that the financials they require for Igniter are “nowhere near” the level of detail they require for other tenants for whom they would be doing these kinds of build-outs and improvements.
Overseeing the Igniter program is an added responsibility at work for Olivier, who also manages a bunch of other projects for H.G. Fenton. Even though it constitutes a significant amount of extra work for her, she does find that running the program is personally gratifying. “It’s fun, and it’s totally different,” she says. “There’s no one else in San Diego that does this. It’s very cool to be a part of something that no one else is doing, and it’s also really satisfying to see these people, who have wanted to do this for so long, finally have the opportunity to do what they’ve dreamed of. Pure Project is about to celebrate its first anniversary, and it’s so exciting for me to see how well they’ve done. They just won a medal at the Great American Beer Festival! It’s so exciting to see our breweries succeed.”
H.G. Fenton’s Brewery Igniter Program Supports Small Breweries
Three separate suites, side by side, will house the newest projects fueled by Brewery Igniter. | Photo: Bruce Glassman
