Acquisition of Artist Space
Is This Building Right for Artists? Close Open
Find a building that is “easy” to convert to your artistic needs, meaning one that does not require major remedial work before being retrofitted for your creative practice.
If you are looking at potential buildings without professional advice, follow this checklist to avoid unwelcome surprises later on.
Layout for Your Use: Would the floor plan work for creating studio and/or living spaces? Does each floor have two legal means of egress and paths for hallways?
Sprinklers: Check building code in your town or ask a code consultant to learn if sprinklers are required? If they are and there are preexisting ones, do they work? If they need to be installed, can that be done easily? Do the current ones need to be replaced?
Mechanical Systems: Will the heating and electrical systems meet your needs? Can you control the heating system efficiently?
21-E is the section in Mass Law governing environmental clean-up. A Phase One 21-E Test involves an environmental engineer walk through and a public records audit for reports of underground tanks or spills in the building and within a radius of the building. Most projects also require a Phase Two examination, which involves testing samples from a site. Without at least a Phase One test, it is risky to spend much, if any, money on professional design or legal services. In other words, do not proceed to the design or legal phase of project development until the prospective space has passed Phase One of the 21-E Test conducted by a certified environmental engineer. Structural: Though you need an expert for the final word on structural problems, keep an eye out for signs of larger problems, like sagging or bouncing floors, major masonry cracks, puddles on wood floors, or obvious foundation settlement.
Roof: How old is the roof? Has it been maintained or is it leaking badly? Replacing a roof membrane is routine but replacing a rotted roof structure is a major construction project.
Windows: Do the windows need to be replaced? Are there enough for your needs? Cutting new window openings can be simple or complicated and might be prohibited on lot-lines.
Freight Elevators: Do they work? If the elevator does not meet code and have a current use certificate (usually posted in the elevator cab), it might be prohibitively expensive to upgrade.
Basement: Look for a water-level line (like the ring around a bathtub) that indicates basement flooding.
Parking: Is there enough parking for your purposes? Does it meet zoning code?
Historic Districts: In every district, building rehabilitation must pass various design reviews. These reviews are for the good of the building and district but might exceed the budget of an arts project. Ask a public planning official about these reviews if the seller does not know them thoroughly.
Zoning: It is foolish to proceed beyond a simple walk through without knowing what uses for the space the zoning code permits. Review the permitted uses as outlined by the official documents and proceed accordingly.
Ownership Structures Close Open
The following forms of legal ownership are used in the creation of artist space.
Cooperatives: In a cooperative, the real estate is owned by a corporation, the shares of which are held by the individual building owners in proportion to how much space they occupy. Each owner also has a lease granting undisputed legal right to occupy his/her space. Co-ops pre-date condominiums and have several advantages:
The entire property can have one “blanket” mortgage (shared by the unit owners), a series of smaller mortgages, or a combination of both.
The overall financial strength of the borrowing group can be greater and thus carry members with uncertain incomes or lower net-worth. Some of the most dedicated and enthusiastic group members might fall into this category.
Unlike internal changes to condominiums, which must be publicly recorded, changes in unit boundaries in co-ops do not need to be recorded in public documents.
Co-ops are inherently more flexible than condos and thus easier to operate as mixed-use (live/work) buildings.
Co-op members set their own rules about who can purchase shares (a unit), making it easy to require that all residents be artists.
Limited Equity Co-ops: “Limited equity” refers to the mechanism used to keep a project affordable by placing a cap on the resale price of the studios. For example, at the 249 A Street Artist Co-op in Boston, the resale price is limited to a 10% per year return on one’s cash (equity) down payment and capital improvements. Though this prevents early “windfalls,” long-time owners find that the 10% allowable increase eventually brings them close to the unrestricted market. Limited equity and restrictions on resale to artists limit the choice of lenders, since many banks and mortgage companies have standard debt products only.
Condominiums: Condominiums differ from co-ops in that each condo owner holds a deed to the unit and obtains an individual mortgage to purchase the unit if necessary. In this approach, each owner is responsible for mortgage payments and property taxes associated with the individual units. Unit owners form a condo association and elect trustees and/or hire a management company. The trustees or company are responsible for the management of the building, including oversight of common areas and structural elements. Unit owners typically pay a “condo fee” to maintain these common spaces. Mortgages to individual owners are usually conventional, 15- or 30-year, variable or fixed-rate mortgages. Condo associations seldom have legal rights to restrict the sale of units to non-artists, although such restrictions do exist in certain cases.
Limited Partnerships and Limited Liability Corporations (LLCs): Limited Partnerships are structured such that a group owns percentage shares of the “LP.” In certain cases, artists develop buildings and enter into a legal agreement with investors who invest in the project in exchange for the right to use the depreciation of the property as a tax shelter. This business-form of ownership is not well-suited for most owner-occupied residential projects for varying reasons including relinquishing managerial rights.
Because limited partnerships and their treatment by the IRS are extremely complex, have an experienced real estate attorney and accountant advise you should you decide to pursue an LP or LLC.
Limited liability corporations (LLCs) are another form of ownership. The primary reason LLCs are popular is that members of an LLC are not personally liable for debts or liabilities of the LLC beyond the investment they made in the project. In most respects, however, LLCs and Limited Partnerships serve the same purposes and function similarly.
Rental Properties: Rental properties are typically owned by partnerships and LLCs. Sometimes artists form a partnership to develop and own a studio building. Artists rent space to themselves (the rent comes back to them) and to tenants outside the partnership. Rental residential projects are rarely developed by artists but sometimes built as part of larger residential or mixed-use projects.
Purchasing a Property Close Open
The Letter of Intent: One of the first steps in the development process is preparing an offer to the seller, often called a “Letter of Intent to Purchase.”
First off, set a maximum price you and your group are willing pay. Before making an offer, consult with an experienced real estate lawyer to understand the implications of making an offer and develop a negotiating strategy. Cost is not the only consideration. Other important key factors to consider early on are:
time to inspect the site,
amount of a deposit necessary take the property off the market,
expected closing date, and
changes in zoning that must be obtained before you buy the property.
Making an offer is like a poker game: you and the seller don’t know each other’s hands, and you don’t know who’s bluffing. You can increase your bargaining position by having a general understanding of the market for similar properties. Find out how long the property has been on the market. Ask the broker about the timing and amount of offers that have already been made.
If the broker replies with a counteroffer, you know there’s maneuvering room. If your offer is flatly refused on the basis of price, decide whether to offer more. Sometimes the actual cash price is less critical to the seller than his/her assessment of your ability to close the deal.
Purchase and Sale Agreements (P&S): Closely following the Letter of Intent, the P&S is a formal agreement between you and the seller about how all parties will complete the transaction. The P&S details important conditions affecting the sale. Is there still an environmental investigation or clean-up needed? Under what conditions would the seller return your deposit? Important language governs these issues; get it right to protect your interests. The P&S also includes a timeline leading up to the purchase, which might look something like this:
Structural analysis: 1 month
Environmental analysis: 3 months
Zoning variance applications: 2 months
Zoning variance: 6 months
Preliminary financing commitment: 3 months
Firm financing commitment: 7 months
Closing: 10 months
Each step will require that you have cash on hand. The deeper you get into the process the more money you will spend in the pre-development/feasibility phase. Focus your cash on the steps that are most crucial to project feasibility. For example, hold off on getting detailed architectural drawings done until your variance (request to deviate from current zoning requirements) and financing have been approved. The same goes for detailed legal work. If you are planning to purchase the building from a private owner, you will need a cash deposit. Try to minimize the amount of the deposit in order to maximize the cash you will have for other pre-development costs.
Renting for a Group of Artists Close Open
Renting a studio space most often involves leasing a floor or portion of a floor in a commercial or industrial building. Leasing more space than you can use for your own studio means that you might need to rent or “sublet” the remainder of the space. If you are ambitious and don’t want to move into an established studio building, you might consider renting a larger industrial or commercial space. Here are some options for renting space:
Assemble a group of artists before looking for a building and establish a cooperative and sharing agreement for renting the space.
Find a space and get a group together before signing the lease.
Sign the lease on your own and assemble a group afterwards.
Sign the lease and sublet to other artists who would pay more than their share of the pro rata costs. This setup entails subletting for a profit to compensate yourself for the risks you have undertaken (
Options 1 and 2 entail the least risk, but you might not have time to gather a group before signing a lease, as in option 3. In this case, you should evaluate the risks and the feasibility of subletting space to others. Landlords usually try to get at least two signatures on a lease. The last option (4) is
NOT recommended because it inevitably leads to resentment, misunderstandings, and a lack of cooperation that might threaten your status as a leaseholder.
Most commercial landlords prefer to lease entire floors rather than subdivide a floor and handle multiple leases. While a floor lease might give you more space than you need or can afford, it also gives you more bargaining power with the landlord.
Floor Co-op Agreements: The importance of written agreements cannot be overemphasized when setting up a floor of artist studios. These agreements can prevent future problems. Without a written agreement, your tenancy could be jeopardized by personality conflicts. Your claim to your space is best protected with a written agreement that defines and makes enforceable what you have discussed with your co-tenants and landlord.
Many artists find co-operatives to be supportive and creative environments to work and develop their art. Setting up a floor co-operative, with several separate studios or one large studio, has been a popular and successful model. Everyone has an equal say and therefore an equal stake in important decisions. A co-operative agreement binds everyone to equal responsibility and liability with the lease.
By forming a co-operative, you can share not only floor space and utilities but also equipment and materials. Co-operative purchasing can make materials less costly and might be the only way to have access to expensive tools such as a kiln or band saw.
Remember that each group’s arrangement will differ depending on the needs of individual artists.
Subdividing Raw Space Close Open
Most artists welcome the opportunity to design their studio space and put a great deal of thought into the layout of the floor. Artists strive to subdivide the area to minimize unusable or unrentable space. Consider the following points when planning the buildout:
Fire Egress: Each studio needs unobstructed access to at least two means of egress, except in rare cases.
Fire Protection System: Walls must built so that they do not interfere with sprinkler heads, and all corridors must have sprinkler systems. Consider the locations of existing sprinklers before laying out new walls. Moving or adding sprinkler heads is an involved process. It is worthwhile to lay out the space with someone who knows the regulations governing sprinkler head coverage BEFORE committing to a plan.
Wall and Door Construction: Depending on the building type and other factors, you might need more or fewer fire-resistant walls and doors in the space you build out. Some buildings are based on code interpretation that allows for wood studs. Others require steel studs. Some walls can be cheap and ordinary whereas others must be fire-rated.
Access: You should have easy access to the freight elevator, which might require you to have wider corridors than you would otherwise want.
Sound Control: Consider using fiberglass or another kind of soundproofing between the studs if necessary.
Odor and Fume Control: Best controlled at the source. If you have subtenants, tell them what is and isn’t allowed. Put smelly or noxious uses near ventilation sources. Look for ways to directly exhaust odors, dust, and fumes.
Storage: Don’t underestimate your need for storage space. Visual artists typically use 15 percent of floorspace for storage; many find that they need even more. Depending on the floor plan, you might consider setting aside part of the common space as storage. Make sure that any storage you build does not interfere with a sprinkler.
Heat Circulation: When you subdivide a space, you need to consider how heat and fresh air will reach all the spaces. A common solution is for walls not to extend to the ceiling, but this solution gives the space a very “communal” feeling.
Flammable Materials Storage: Thinners and other flammable liquids should be kept in metal cabinets specifically designed for this purpose. Artists often share a single cabinet.
Building Permits and Inspections: Barring minor alterations, everything you build will require permits and inspections. The process of obtaining them does not need to be confusing or contentious, though it does involve some expense and requires the landlord’s full knowledge and cooperation. We recommend engaging a knowledgeable architect and/or code consultant to inspect the space and review your plans before you go to the building department.
Plumbing and Electrical: Always ask the landlord before planning any changes to any plumbing or electrical systems.
Zoning Close Open
Through zoning ordinances, cities and towns control the use of land. Zoning ordinances include: the allowable uses on the site (residential, office, retail, industrial, etc.), how buildings can be situated on the property (“dimensional requirements”), parking requirements, landscape and open space requirements, and numerous other regulations. Some sites have multiple zoning laws. For example, a waterfront property might have a base industrial zoning and a waterfront “zoning overlay” that permits new uses.
In addition to local zoning, the state regulates certain properties, most notably waterfront property, which generally falls under the purview of
These laws and codes are all publicly available, usually on municipal websites. We advise researching the zoning yourself to learn whether the building has restrictions for residential or workspace use. Sometimes building code will refer specifically to artist live/work space. Calling a city official in the planning department can help you figure out how the code affects a building.
That being said, any project funded with a construction loan will need a “zoning opinion” from the developer’s lawyer, which states that the project is in full compliance with local and state regulations.
Make sure you fully understand the zoning status of a property before signing a Purchase and Sale Agreement . If zoning action is needed, make that a condition of the P urchase and S ale A greement. Buying a property before it is entitled for the use you need is extremely risky.
In some communities, artist studios and residences are allowed in commercial or industrial zones, where housing is not allowed by the current zoning. Municipalities can create a special zoning “overlay” to encourage artists to use underutilized downtown or industrial districts. Somerville created an
arts overlay district in 2005.
Variances and Special Permits
If the use you want is not allowed by the code or can’t be built within the dimensional or parking requirements, you can apply for a “variance” from the zoning. Every city and town has its own rules and processes for applying for a variance. Getting a variance is a lengthy and technical process, virtually impossible to navigate without some assistance.
If a “special permit” does allow the proposed use, moving forward with the project will still require the vote of a public body, typically the Planning Board.
Obtaining any sort of zoning change, special permit, or variance will involve time and money and can take months (or years!) for approval. Getting a variance often requires community input. It is therefore essential to get community support and consider all feasible requests the community might have. Compromising early on is far more efficient than grinding your way through endless public meetings.