andy rappaport
Financing

Helping Artists Combat the Rising Costs of Real Estate

Orangenius has partnered with [email protected] to produce the Business of Art radio series, an in-depth look at some of the business-centric issues facing artists and the art market. In this second installment, host Dan Loney investigates the challenges facing artists working in some of the world’s most costly metro areas.

Most artists want to be in a location where there is already an established art community so that they can draw attention to their work or have various locations to show it off. Doing so often means artists are compelled to live in some of the major metro areas of this country, which also means dealing with rising housing and studio costs. Is it possible for artists to find solutions for combatting costs?

Anita Durst, the founder of chashama, an organization offering affordable studio space to artists in New York, and Andy Rappaport, the co-founder of the Minnesota Street Project which offers the same in San Francisco, discuss the challenges – and possible solutions – of being an artist in a big city.

chashama and the Minnesota Street Project: Agents for Change in the Arts Community

Dan Loney: Anita, with your idea chashama, how did it get started?

Anita Durst: I worked with Reza Abdou. He was an avant-garde theater director, and he taught me about the power of creativity. And when he died of AIDS in 1997, I wanted other people to feel that power of creativity that he taught me. The way he would get theater spaces for his theater shows was, he would get people to donate space to him. And so I took that model of getting property owners to donate space and use it, instead of for my own work, but for other people’s work as well.

Dan Loney: And so these locations are in and around New York and from what I read, over in New Jersey as well? 

Anita Durst: Yes. We have about 23 locations at the moment. And they’re donated to us on a month-to-month letter of agreement. Even though some spaces we’ve had for over 12 years.

Dan Loney: So what’s the reaction of these artists when you’re able to work with them and obviously provide something that helps them out immeasurably? 

Anita: The artists are very grateful. They’re so thankful because we are able to give it to them at a very reduced rate or for free. So for a workspace it’s about a dollar a square foot. And for all our presentations, the artists get the space for free. We have about 150 shows we do a year.

Dan Loney: Andy, Minnesota Street Project. How did that get started?

Andy Rappaport: It got started as a response to the extremely rapid rise in rent and property values in San Francisco that accompanied the most recent tech boom. My wife and I are avid art collectors and have been around the art community in San Francisco for quite some time. And we were seeing our friends who are artists and gallerists or people that work and run non-profits, really rethinking whether they could afford to stay in the Bay Area. They were all contemplating leaving the Bay Area or giving up their practices or their work or what’s been keeping them going. We realized somebody needed to step in and do something.

So what we recognized is that most of the real estate that had been used by artists and arts organizations in San Francisco could be repurposed to tech offices or in some cases, housing. That was driving values up three, four, five, in some cases ten times what artists have been paying. There is industrial real estate in San Francisco that can’t be used for Class A offices and can’t, at least now, be converted into residential uses. But the problem is that those facilities are not configured to be very useful or very safe for artists and arts organizations. And so what we decided to do was acquire some of those properties and basically use our balance sheet to convert them to safe, productive, habitable workspaces and commercial gallery spaces. We then offer those spaces at rents that would allow us to break even operationally, but not make the returns that real estate developers make in the city. And that allows us to charge rents that are anywhere between 20 to 30 percent of market value.

chashama
Artist Jenny Booth’s studio at chashama’s Brooklyn Army Terminal location.

Dan Loney: And obviously in San Francisco as you eluded to that’s been one of the areas where you think of a pricey residential market, but you mentioned how the cost of real estate in the business sector in that town has skyrocketed in the last few years, as well.

Andy Rappaport: Well, that’s exactly right. And if you look at the rental market for artist studios, for example. If you think about the typical artist studio, it’s a space where one or maybe two people work and you want as much space as possible and relatively few people. Which is exactly the opposite with tech offices. Tech offices, there are a lot of very expensive people who occupy very little space. I was a tech investor for decades. And when you look at the amount of money that tech companies can afford to pay for space, given the fact that they need relatively little per high-priced employee, there’s just no way that essentially anyone but a tech company or the commercial entities that serve them can afford to compete for space.

Dan Loney: And the money- I read that the money that you do get in rent, you and your wife, who co-founded this, you’re putting it back into the art community as well?

Andy Rappaport: That’s right. One of the problems that we needed to address was not only how do we provide space that’ll work immediately for artists and arts organizations, but how can we build something that is provably sustainable so that people who are making decisions could stay in the Bay Area? Can they commit to raising their family here? Can they decide, yes, I can afford to stay here for five, ten, fifteen years and recommit to the area?

So in order to accomplish that, we had to create a model that was financially self-sustaining. So we set our operation up as a for-profit. And that for-profit has an umbrella that covers not only the subsidized rental spaces that we provide but also some positive cash flow aspects of the overall operation that bring the whole thing into financial balance. So that it’s basically a self-sustaining, self-operating, financial vehicle that can go on forever.

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Dan Loney: Anita, I find it interesting with you being in or around the New York area that, if you probably go back 20 to 30 years, the focus of probably a lot of other things business-related was right around Manhattan. And maybe not necessarily as much the other boroughs of New York or going into New Jersey. That’s not necessarily the case anymore with the growth that we’ve seen of those other locations in and around Manhattan Island.

Anita Durst: Yes. It’s quite amazing to see the growth and the changes. I mean even the spaces in Manhattan, like the meat market. The Meat Packing District was not very desirable 20 years ago and now it’s one of the higher priced neighborhoods in Manhattan. As well as Brooklyn, and the Bronx is now up and coming as well.

Supporting Artists in Managing Their Business

Dan Loney: What advice do you give to young artists as they’re starting to move forward with their process, Anita? Because it’s got to be a challenge for many of them. They’re thinking about their artwork, they’re not necessarily thinking about some of the business elements that are involved in a lot of this process. 

Anita Durst: Yes. The business aspect for the artist is what I tell them to start thinking about. Because they are not thinking about those things very much and they are focused on their creative process. For them- I believe in school they’re not taught about the business aspect of art. And so we try to give them workshops where they’re able to learn more about writing their artist’s statement and learning how to do contracts and things like that.

Dan Loney: Andy, similar to what you see out there in San Francisco?

Andy Rappaport: Well sure. Most people don’t realize that artists are running a small business. And for them to survive, they need to be supported and skilled in a very wide range of things. And so one of the things that we tried to do when we built our project, was to create a self-supporting community. We did this partly in response to a real estate related phenomenon, which is that the community was sort of atomizing all over the city. People were just grabbing space where they could find it. But one effect of that was that it was hard to find the arts in San Francisco. But another effect was that artists and the entities that support them weren’t co-habitating and weren’t able to see each other and support one another.

So one of the things that we’ve done is we’ve got 12,0000 square-feet of space over a block and a half completely occupied by people and entities who are in the arts. And what we’re finding, way beyond what we’ve ever imagined, is that they’ve really formed this kind of self-organizing community where they’re supporting one another. We have young artists who are learning from the successes and mistakes of more experienced artists in the program, and it’s been a wonderful thing to watch.

Dan Loney: Anita, have you seen that as well with what you’ve done in terms of artists communicating?

Anita Durst: Yes. When you create a space and you put a group of artists there, together, they form networks and they help each other and introduce each other to their own networks and share ideas. They’re very supportive and the community is very deep when you put a group of artists together. I have seen that happen a couple of different times in our spaces.

Art and Real Estate: A Partnership That Strengthens Both Markets

Dan Loney: Your family has quite a long tradition in the New York City real estate market. And there’s an element of your family in this project when you were getting started. Take us into that a little bit.

Anita: Yes. My family, they’re real estate developers in New York City. I would see that they would have an empty building and I would ask if I could use it. And at one point we had about six buildings on 43nd Street, which is now the Bank of America tower.  And then when we had to leave, I realized that we could go and ask for space. It is much easier than you would think to get space in New York. The spaces that come to us are mostly from word of mouth. Property owners call us and then we go and utilize these spaces. We actually have too many properties to use space at the moment.

Dan Loney: So you’ve developed almost a little community yourself with all of this?

Anita Durst: Yes. Yeah, we have an influx of spaces at the moment.

Dan Loney: When you’re signing contracts with these people that own real estate, how far out are you signing these contacts for?

Anita Durst: It’s a letter of agreement, in which we ask for three months and then we go month-to-month. So it is open-ended. And we’ve had some spaces for up to 12 years.

Dan Loney: And the response you mentioned of the property owners has been very positive in most cases. What is the reaction that you get from them most often? In terms of when you’re bringing the idea of saying, we’d like to have this space for artists to do their work.

Anita: They’re very positive. When you have an empty space, it causes a negative energy. But when you have something there, it causes a positive energy. It beautifies the neighborhood, it increases traffic, it increases economic growth within the neighborhood, and the property owner sees that.

Dan Loney: And seemingly, as you said with the numbers of property owners coming to you, there is an ability to fill up a lot of space if necessary, correct?

Anita: Yes. There is the ability to do that. We have a long list of artists and we’re starting to get a long list of properties, as well.

Dan Loney: Andy, in looking at your background, I was reading you’re a venture capitalist by profession. How much has that kind of played into developing this property, at least at the outset, and what you may want to do going forward in the future if you want to build beyond the project that you have right now?

Andy Rappaport: It gave us the means to do this in the first place. The intent through which we launched this project was really to give something back to a community that’s been very good to us, beyond any of our expectations. But the second thing is it trained me to take risks, to bet on ideas that often are not yet in the mainstream, but could be. We’ve been asked many times, “Well how come you did this? How come it was you who did this? Weren’t there other people who wanted to do similar things?”

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And you know, the interesting thing is now there are, now that we’ve shown that the model that we’ve embraced can work and that there are some terrific civic benefits to it. But when we started out it was a totally crazy idea. So if you think about what I learned as a venture capitalist, that sometimes what looks like a crazy idea today can be absolutely mainstream and embraced by everyone tomorrow. And so my training as a venture capitalist, and frankly Debora’s training as the spouse of a venture capitalist, really encouraged us to embrace risk as opposed to shy away from it. 

chashama
Linus Coraggio co-curated a group exhibit at the 461 West 126th Street gallery space in 2009. photo courtesy of chashama.

Dan Loney: So with your Minnesota Street Project, how often are you doing showings of these artists in your facility there? 

Andy Rappaport: Interesting question. So we have several different aspects to our program. One is a studios building which houses over 40 artists and is used by a number of other artists who come in and use our facilities. That building is generally closed to the public, but it’s across the street from a building that we refurbished that houses ten commercial art galleries and arts-related non-profits, and several rotating spaces. And while there’s no formal relationship between the artists in the artists’ studios and the galleries and rotating spaces in the gallery building, there’s a huge amount of cross-fertilization.

Some of the artists in the studios building are represented by the galleries in the galleries building. Some of the artists in the studios building have been curated into shows that have gone into our rotating spaces. Some of those artists have created shows that have gone into our rotating spaces. We’ve rented those rotating spaces to galleries who represent some of our other artists. And so there’s been, as I said, terrific cross-fertilization. We’re about to have the first open studios in the studios building, that’ll happen in October. And that’s something which is being done and organized completely by the artists in that building. They decided what they wanted to do, what they wanted to do it in, and how they’re going to do it.

Dan Loney: Anita, how does that play out with you in New York City?

Anita Durst: We’re about to have our open studios as well, but we’ve had many before. It’s going to be on October 15th and 16th. And the way that we’ve done it is with Open House New York. And that is something where people can go around to buildings that are usually closed in New York, and we happen to be at the Brooklyn Army Terminal, where many people came last year. We had about 1,500 hundred people who came through the studios.

Dan Loney: I find it interesting, Andy that we are at a time with some of the real estate development in this country where spaces like old navy yards may have been dormant for quite some time, but are finding great use now because of the mindset of a lot of people like yourself, like Anita, and a variety of different business elements.

Andy Rappaport: That’s right. We in San Francisco and the San Francisco city government are very well aware of this challenge. The challenge is making it sustainable. The pressure for development, especially housing development, especially class-A office development, is really extraordinary. So the challenge in San Francisco is how do we do things like we’re doing and other folks are doing and grab hold of real estate that can be repurposed while doing it in a way that’s innately sustainable. That can resist the relentless pressure for other forms of development. This is something where property owners and stakeholderslders in the city in San Francisco are working collaboratively to try to figure it out. I’m not yet 100 percent certain that it’s been figured out. What we and other are doing, we hope is a step on that path.

Dan Loney: Anita, is that similar or different to what you see in New York?

Anita: I think across the country there’s a lot of retail space that’s available in most cities and in most towns right now. And I believe that what we’re doing is we’re trying to step in and utilize those unused spaces temporarily while we’re figuring out how to get the mom-and-pop shops back into those spaces.

 

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About the author

Nicole Martinez

Nicole is the Managing Editor of Publications at Orangenius. A veteran arts and culture journalist, her work has appeared in Reuters, VICE, Hyperallergic, Univision, and more.

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