Beyond the Brew: How Taproom-Driven Hospitality Is Reshaping Craft Beer Real Estate

While the craft beer industry navigates shifting consumer habits and broader headwinds in production and distribution, the taproom model has emerged as a resilient growth driver. Today, successful craft breweries operate less like traditional industrial manufacturers and more like community-focused hospitality destinations. This transition has made breweries highly sought-after anchor tenants for mixed-use developments, adaptive reuse projects, and urban revitalization efforts. Navigating the intersection of real estate development, land use, and complex liquor regulations requires specialized expertise.

Melinda Sellers, a partner at Burr & Forman and a Certified Cicerone, works directly at this crossroads. Advising developers, hospitality operators, and beverage alcohol businesses on commercial leasing, licensing, zoning, and transactional law, Sellers offers a unique dual perspective as both an expert legal counsel and a certified beer professional.

CM: How has the transition from production-led distribution to taproom-focused hospitality altered the physical footprint and location requirements breweries look for during site selection?

MS: Many craft breweries are interested in transition areas that allow for cheap square footage and large space for production, but are located in an area that is beginning to see more retail and sometimes residential activity. In addition, craft breweries are offering full scale dining services and entertainment options to drive more revenue. Adaptive reuse of former warehouses and light-industrial structures in transitioning areas common for craft breweries.

CM: Despite broader industry headwinds — declining beer volumes, shifting consumer habits — why are breweries still viewed as desirable tenants by landlords and developers?

MS: Craft breweries attract tourists and locals alike. They are often owned by residents and offer a true taste of the local culture. Developers in Southeast submarkets — the BeltLine corridor in Atlanta, South Slope in Asheville, the Gulch in Nashville — have successfully leveraged breweries as anchor tenants. In addition, the high cost of buildout for a brewery makes it more difficult for the tenant to change locations. Therefore, landlords have a more committed tenant.

CM: What key commercial lease terms—such as tenant improvement allowances, patio rights, and exclusivity clauses—are crucial for alignment between developers and brewery operators?

MS: In the current market, craft breweries need flexibility to assign and sublet the space to adjust to the market headwinds. In addition, craft brewery tenants need to have broad use rights to allow for the “add on” type uses such as events, entertainment, food service, and other income generating community functions.

CM: What are the most common zoning or land use obstacles breweries run into when opening a new location or expanding an existing one?

MS: Many zoning ordinances classify breweries as “manufacturing” or “light industrial” uses, which may be prohibited in commercial, mixed-use, or neighborhood districts — even when the actual operation is predominantly a hospitality or retail concept. Craft breweries frequently need special-use permits, conditional-use approvals, or variances, adding cost and timeline uncertainty. Changing zoning laws that cap craft brewery production in order for a brewery to qualify for a particular zoning district can force a brewery to leave a particular location.

CM: How can landlords protect themselves if expensive brewery-specific improvements have limited value to a replacement tenant?

MS: Landlords must negotiate brewery leases through the lens of a manufacturing facility landlord rather than a typical commercial tenant’s landlord. The security deposit should be based on an estimated cost to restore the premises given the significant buildout for production. The lease should specifically address whether the brewing equipment is a fixture or personal property and whether the landlord lien will have priority status.

CM: For mixed-use developments, hotels, or entertainment districts looking to feature craft beverage vendors, what are the biggest regulatory landmines regarding tied-house laws and multi-tiered liquor licenses?

MS: Many states have enacted some version of tied-house laws prohibiting (or restricting) financial arrangements between producers (breweries, distilleries), distributors, and retailers. If a developer or hotel operator holds a retail liquor license and simultaneously leases space to a brewery tenant, the lease structure itself may implicate tied-house concerns — particularly if the rent includes percentage-of-sales components, if the landlord provides below-market rent or inducements, or if the brewery’s products receive preferential placement. The requirements vary state by state and such leases require careful analysis and structuring.

CM: Looking ahead, what emerging legal, real estate, or regulatory trends do you anticipate will most significantly impact how craft beverage brands build and scale their physical footprints?

MS: Craft breweries are becoming craft beverage producers. Craft breweries are producing spirits-based beverages, non-alcoholic beverages including seltzers (malt and spirits based), RTDs, and hemp derived beverages. Facing the craft beer headwinds, craft breweries are leveraging their skills and equipment to boost sales and fill in gaps left by declining craft beer sales.