The Steel Yard, an industrial arts nonprofit that in the past five years has created a place for learning, launching businesses and creating work for artists, is experiencing a commercial evolution in its development.
Milhaus LLC, a commercial real estate partnership between Steel Yard co-founders and artists Clay Rockefeller and Nick Bauta, hopes this spring to start construction of a building that will house seven commercial, industrial spaces – ranging from 700 to 2,000-plus square feet – on the corner of Sims and Kinsley avenues in the Valley neighborhood of Providence.
The goal is “to basically continue in the same vein of development that we’ve been going in,” said Rockefeller, who partnered in purchasing the former Providence Steel & Iron site for $1.4 million in 2002. “The general approach in dealing with the site as a whole … has been basically to look at it as an ecosystem and see what benefits from being around each other.”
While the Steel Yard is an unusual project, it is not the only one of its kind in the state finding success in creating collaborative hotbeds of artist-owned spaces. Pawtucket has The Grant, which opened a year ago at 250 Main St. and has tenants for 17 of 19 available spaces.
But as hot as the concept is in Rhode Island, other major U.S. cities are not so easily making a go of it. Boston and Chicago, for instance, have seen limited development in this area, due in part to the high cost of real estate, said Julie Burros, director of cultural planning for the city of Chicago.
The new development plan for the Steel Yard co-founders includes space for a restaurant or café/bar because it’s “something that’s very familiar for people to interact with,” Rockefeller said. “It’s like a point of entry. … They can come in and learn about what else is going on. … That’s one area I really see the for-profit [Milhaus] and nonprofit [Steel Yard] interacting on.”
Last June, the Steel Yard signed a note for $1.5 million to take ownership of two acres of the three-acre site, thus allowing the nonprofit to gain access to $400,000 in U.S. Environmental Protection Agency brownfield grants for remediation.
The nonprofit has since unveiled a $5 million capital campaign to raise money for remediation, purchase of the site and development of about 7,000 square feet of new artist studios for rent, said Drake Patten, executive director of the Steel Yard. In addition, plans include expanding space for community classes and hourly and daily studio rentals.
Milhaus owns the remaining acre of the site, where the new commercial industrial spaces and café are being planned.
Rockefeller said he knows there is demand in the market for the commercial industrial space, which he hopes will attract creative businesses that complement and benefit from being near the Steel Yard.
“It’s my belief that this is the type of project that the [historic-preservation] tax credits should be making viable,” he said, adding that Milhaus will be using the state’s historic tax credits to develop the site. “Everything else to date has been so heavily weighted toward residential use … this [project] is really geared toward trying to keep our community dynamic and having diverse usage in an area.”
Both Patten and Rockefeller envision a place where future tenants of the commercial space could interact with students and artists working at the Steel Yard.
Milhaus did get tax stabilization from the city, he said, which means some portion of the commercial spaces will be leased at a lower rate than the highest rental per square foot, he said. And eventually Milhaus would like to turn the spaces into commercial condos for purchase.
The Grant, in downtown Pawtucket, was born after two entrepreneurs – J. Hogue, a graphic designer, and Mike Lozano, an architect and planner – purchased and developed the former W.T. Grant department store established in 1906.
And like the Steel Yard co-founders, they moved forward without being sure of the development’s profitability.
The Grant’s tenants include architects, graphic designers, Web designers, poster designers and silkscreen printers, a gallery, a BMX bike and skate shop, an advertising firm, retail stores and a café.
“This is in between an incubator and Class A office space,” said Hogue, owner of Highchair Designhaus, a print- and Web-design firm.
Hogue and Lozano were able to keep rents affordable for tenants, Hogue said, because of the low acquisition cost of $430,000 for the building.
“We really worked the numbers,” he said. “We haven’t made a dime yet.”
But the investment was worth it for the developers because they wanted to create a community of creative small businesses that could share ideas, resources and knowledge without being in direct competition with each other, he said. And for the tenants, that business/development model is working.
“It’s like a success factory in here,” said John Speck, tenant and owner of Real Advertising, a full-service ad agency.
Speck said his earnings jumped last year after moving into The Grant. Frank J. Murphy, a tenant and owner of Frank J. Murphy Architect Inc., also said he has picked up more business since moving into The Grant. So has Highchair designhaus.
They all benefit from the traffic of people who come in, Speck said, either to visit the café or one of the other businesses. They also benefit from each other’s expertise.
Rockefeller said he looks to projects like The Grant as a source of inspiration and reasons to continue on with the Milhaus project at the Steel Yard.
“They created something that really serves the market,” he said.
Chicago has “seen a variation” on the theme of artists developing creative spaces, said Burros, the director of cultural planning, “but not in a big way.”
She said some arts organizations and developers have purchased buildings for artist live/work space but with limited commercial space.
In Boston, most artists are renting, rather than buying work spaces for development, said Jason Schupbach, director of ArtistLink, a service-oriented organization housed by the Massachusetts Cultural Council for Boston.
Schupbach said Providence’s cheaper real estate market is what attracted a slew of artists to move from Boston in the 1990s. He said he has toured the Steel Yard and Firehouse No. 13, an experimental artist-owned, arts-focused, mixed-use development in Providence.
“Those are not easy places to replicate in Boston,” he said. “The basic land cost is too expensive.” •
