Affordable Studios for Visual Artists: Summary of Recent Research Findings 

Research undertaken by Capital Studios: London Artists’ Studios Development Programme

Two studies published by ACME Studios with the support of by Arts Council England:

• Commercial workspace provision for visual artists – a comparison with the affordable sector. February 2006
• London Digest – A survey of artists’ studio groups & organisations in London. March 2006 

Research sought to demonstrate “need for permanent affordable studio space”

Headline findings:

• Total Survey of 116 groups operating 166 properties as artists studios – primarily with fine arts focus – groups surveyed limited to those that provided at least 5 studios or offered support to at least five artists
• London Survey within national sample – 27 groups operating 72 properties so in London 2.66 properties per group on average.
• Therefore rest of the UK survey comprised 89 groups operating 94 properties – an average of 1.06 properties per group
• UK “national affordable sector studios” average 308 square feet each and rent at £5.82 a square foot – a national average studio rent of £1,793 per annum - £149.39 per mont

Defined those surveyed in London as the “London Affordables”:

• Average of 27 artists / building – almost 2,000 visual artists
• 72 buildings with average of 8,500 square foot per building – 61,200 square meters in total
• Average rental paid by artists of £7.54 a square foot
• Average London studio is 340 square foot – and annual rental is £2,500 per annum - £210 per month
• Average annual rent per building of £64,278 in London
• Total annual rent paid to affordable sector of £4.628m in London

“THE LONDON AFFORDABLES”

1.  WHAT ARE THE BUILDINGS LIKE?

How old?
Three quarters of the properties are in excess of 50 years old. Only 2 buildings less than 25 years old.

Previous uses?
Factories and warehouses (41%); light industrial (26%); retail (4%); offices (7%); agricultural (1% - but this is London!); educational (6%); religious (4%) and miscellaneous (11%)

How good?
Poor (11%), Reasonable (52%), Good (24%) and Excellent (13%)

How appropriate?
85% had required adaptations to make them fit for purpose as studio spaces. 30% were considered accessible for wheelchair users. 75% reported short-comings in security from intruders. 24% had taken some steps to comply with Disability Discrimination Act legislation

Who owns them?
11% owned by the artists groups operating them. Remainder rented from third party landlords – of those rented, 73% (47) were renting from private landlords, 17% (11) from local authorities, 5% (3) from charitable trusts, and one each from the Church Commissioners and Crown State Commissioners

Where are the buildings?
Hackney 19, Tower Hamlets 13, Lambeth 7, Southwark 6, Lewisham 5, Ealing 4, Islington 3, Hammersmith & Fulham 3, Merton 2, Kensington & Chelsea 2, Haringey 2, Sutton 1, Greenwich 1, Hounslow 1, Camden 1, Newham 1, Wandsworth 1. None in City of London, or Westminster, or Brent, or Richmond & Kew, or most of the Outer London Boroughs. 

WHAT HAVE WE GOT HERE?

A recently acquired, disparate group of older properties, many of which are both rented and shared with other occupiers and users, providing on average, 8,500 square foot of studio workspace for fine artists, at marginal locations, mainly in the “poor inner city”.

2. WHAT ARE THE ORGANISATIONS LIKE?

Controlled by?
A range of “organisations, but mainly “charitable” – 9 limited by guarantee, 4 educational charities, 4 charitable trusts, 4 industrial and provident societies, 2 “sole traders operating with a not-for-profit ethos”, 1 co-operative, and 4 unincorporated and without legal status

How long? 
Some a considerable time – first organisation set up in 1970s: one quarter established in last five years, and three quarters of total in past fifteen years – so most quite recently

How come?
Main reasons - Initiative associated with group of “art college-leavers” (33%); individual had driven the idea (15%); had to leave previous studios (40%) and had to respond to issues about building where tenants (5%)

Who with?
About half (33) live alone. About half (39) share with other tenants. When sharing it is with other cultural industries and arts related activities (24%); commercial light industrial (33%); commercial office space (19%); residential (8%); vacant (8%) and other miscellaneous uses (8%)

For how long?
Amongst those renting, 13 buildings (26%) are likely to end leases by 2008 and further 4 buildings (8%) by 2013. This compares with 21 buildings (42%) likely to renew leases by 2008 and further 13 (25%) buildings by 2013. So question-mark against future occupancy of 17 (34%) of rented affordable studio buildings in London between now and 2013 – equivalent to approximately 28% of all affordable studio spaces

Where are the buildings under threat?
Hackney 5 (14), Tower Hamlets 4 (9), Lambeth 2 (5), Southwark 2 (4), Ealing 1 (3), Hammersmith & Fulham 1 (2), Hounslow 1 (0), Camden 1 (0) – figures in brackets indicate number of “afforables” left in each Borough following closures. 

WHAT HAVE WE GOT HERE?

Artist led organisations choosing charitable vehicles to secure and rent – and only sometimes own - properties to convert to studio spaces – now faced with major issues due to lack of tenure and / or rising property values, particularly due to inner city regeneration ripples – caused in part by the presence of artists in poorer neighbourhoods. 

3. HOW WELL DO THEY OPERATE?

• Turnover amongst the artists’ studios – 7% vacant per annum
• Void studios – Reported average of 4% voids – equivalent to one studio space permanently empty in each studio building. Reasons for voids include lack of management to re-let and building improvements
• Rent arrears – An average arrears of 3.5% of turnover was reported – equivalent to just under two weeks arrears
• Waiting lists – 85% of organisations running studio buildings have a waiting list. Where a list existed 21% operated a system of allocation in order of registration; 25% interviewed; 31% sought to match practice with the space available; 15% were decided by a vote amongst the artists; and 8% by the payment of a registration fee
• Demand for spaces – Nationally 4,516 artists were registered and requesting spaces – 3,553 of these in London. The demand in London is 79% of the total – an averaged a waiting list of 132 artists for each organisation (note: in London 27 organisations managing 72 buildings for 2000) - so demand treble supply.

WHAT HAVE WE GOT HERE?

High demand for workspaces, well in excess of supply, plus low arrears, and few voids – traditionally market rents would rise on this model, appear to be being held artificially low by operators. But is this within charitable responsibilities of the operators?

4a. RENTAL COSTS. Why do artists pay what they pay?

Rent is a minority component of the total charge

Rent levels are highly variable – Location, neighbourhood, property type, size, condition of property, current use, current agreement with occupier, current and future planning approval, motivation of owner, future potential for capital gain

Typical rental charges on post-industrial building in moderate / poor condition in urban fringe location – between £1.50 and £4.00 a square foot. But much higher in other neighbourhoods and parts of cities.

“Affordable” sector post-coded as a result

WHAT HAVE WE GOT HERE?

Highly variable rent levels – determined by nature of buildings and locations, but predicted to rise as neighbourhoods gentrify.

4b. RENTAL COSTS. What do artists pay?

What are the real rental costs?
National average amongst “Affordables” is £5.82 per square foot - £7.84 in London. Payment to landlord averages £2.76 in London so balance of £5.08 for service charges.

What are the service charges involved?
Usually include business rates, building insurance, water charges, security, repairs, membership, management and cleaning. It often excluded electricity when metered – but not otherwise. Amongst “Affordables” service charges are often a bigger component of charge than rents + service charges should be transparent – and adjusted at year-end

What cost security and insurance?
High in marginal locations; often supplemented locally as well; break-ins cost money; capital improvements reduce premiums; lenders require insurance cover

What cost water charges?
Water and sewage charged for; often based on old uses; metering has potential to save monies

What costs heat and light?
Energy costs are consumption-related. Art-form and practice affects consumption – a major cost. And costs increasing. Energy efficiencies? Self-regulation – turn the lights off!

WHAT HAVE WE GOT HERE?

Service charges exceed rent components in most locations – and can be reduced by action from the operators as a consequence, but also increased due to location factors.

4c. RENTAL COSTS. The Business Rates Issue

What cost business rates? Highly variable – depends on location, condition, market rent assessment etc.

Business Rate Relief takes two forms

• Mandatory relief @ 80% for charities, and additional Discretionary Relief @ 20% at the discretion of the local authority leading to 100% Relief
• Small Business Rate Relief – 50% discount on property below £15,000 RV for occupier in one single location (or multiples) – higher figure in London @ £20,000+

Business rates calculated on Rateable Value – based on rental take and neighbourhood – and multiplier standard across England and Wales. Scotland and Northern Ireland each has parallel system. National data-base web-site. Multiplies currently are 42.6p and 43.3p in £ in England and Wales. Overall Relief is affected by three main factors – location, building condition, and size occupied

Other issues in the charges:

• Management and cleaning – highly variable. Rota or payment
• Added-value uses – how do these charges inter-relate?
• VAT can be a major issue. To register or not to register?

WHAT HAVE WE GOT HERE?

Recently introduced Small Business Rate Relief scheme offers new commercial route to reduce business rates. Provides counter to imperative to register as a charity or act as one.

5. WHAT ADDED VALUE DO THEY OFFER ARTISTS?

What security for the artists?
Business leases/tenancy agreements; licence agreements; some other – like a membership or constitution: generally there is some confusion in this area

Added value activities?
32 buildings (44%) were operated solely as studio spaces. 40 (56%) had other added value uses and purposes.

• Galleries, exhibition spaces and performance areas (27 / 37%)
• Administrative spaces for group or organisation (16 / 22%)
• Project space for tenants (13 / 18%)
• Dedicated storage space for tenants’ use (10 / 14%)
• Equipped office space for tenants’ use (6 / 8%)
• Equipped workshop for tenants’ use (5 / 7%)
• Space let to other cultural or voluntary organisations (7 / 10%)
• Living accommodation (3 / 4%)
• Space let commercially (3 / 4%)
• IT facilities (3 / 4%)
• Work and live space (3 / 4%)
• Others (5 / 7%) including kitchen (1), education space (1), International Residency Programme (1), and media resource centre (2)

6. WHAT ADDED VALUE DO THEY OFFER ARTISTS?

Other facilities provided to tenants in “London Affordables” in more detail as rent components

WHAT HAVE WE GOT HERE?

Range of added value facilities (e.g. galleries, project space, equipment) and activities (e.g. business support) designed to make the overall operation more attractive and useful for artists, the costs of which are more usually charged for in addition to the rent.

IN SUMMARY:

WHAT HAVE WE GOT HERE?

A group of artist led organisations choosing charitable vehicles to secure and rent – and only sometimes own - properties to convert to studio spaces.

Its portfolio now comprises a recently acquired, disparate group of older properties, many of which are both rented and shared with other occupiers and users, providing on average, 8,500 square foot of studio workspace for fine artists, at marginal locations, mainly in the “poor inner city”.

Service charges exceed rent components in most locations – these can be reduced by action from the operators, but also increase due to adverse location factors.

A range of added value facilities (e.g. galleries, project space, equipment) and activities (e.g. business support) are also offered. These are designed to make the overall operation more attractive and useful for artists - the costs of these are more usually charged for in addition to the rent.

A significant number of these organisations now face major issues due to lack of tenure and / or rising property values, particularly due to inner city regeneration ripples – caused in part by the presence of artists in poorer neighbourhoods.

High demand for workspaces, well in excess of supply, plus low arrears, and few voids is also a potential issue for the operators – as traditionally market rents would rise on this model, but now appear to be being held artificially low by the operators themselves. Laudable - but is this within charitable responsibilities of all the operators?

Charitable ownership has been justified through Business Rate Relief. However the recently introduced Small Business Rate Relief scheme offers a new commercial route to reduce business rates. This provides a counter to the imperative to register as a charity or act as one.