Minnesota Street Project: collector storage profits pay for cheap San Francisco studios

San Francisco's rents had squeezed artists and galleries out of spaces some had rented for decades, and Deborah Rappaport said the Bay Area was in 'real and serious danger of losing a large part of its cultural capital'. She and her husband, venture capitalist Andy Rappaport, are philanthropists, but they did not want to solve the problem with donations.

Their vehicle was a self-sustaining business: the Minnesota Street Project, built in old warehouses in the Dogpatch neighbourhood. As collectors themselves, they realised they could sell other collectors a high-end, personalised storage and service programme — and use all profits from that 'luxury line' to keep rents low for the 'discount line': 32 permanent artists, dozens of visiting artists, 10 art galleries and an arts education nonprofit.

Two quieter choices cut the cost base further. The buildings were in an area zoned for light industry, so art businesses qualified while apartment and office conversions mostly did not — meaning the project was not competing against buyers who wanted to re-entitle the spaces for residential or office use. And because artists could share a wood shop, kiln, printing lab, canvas-stretching space, kitchens, restrooms and a packing-and-shipping room, the studios themselves could be smaller.

The complex was set to open in June 2016, and companies could rent studios to place an employee among artists — with Adobe as the first corporate tenant.

Run the luxury line and the discount line as one business: collector services fund cheap artist studios, no donations needed.

Collectors pay generously for personalised storage and service, and the founders are collectors themselves, so the luxury offer is credible to its customers.

The subsidy comes from profits, not donations, so it lasts as long as the business does instead of depending on continued giving.

Light-industrial zoning removed the deepest-pocketed bidders — housing and office developers — from the warehouses the project wanted.

Sharing expensive, rarely-used equipment means each studio needs less floor area, which further lowers the rent artists must cover.

Where philanthropy fights a cost war it cannot win, sell a premium service to the same community's wealthy customers and cross-subsidise — 'this is our luxury line, and it supports the discount line.'

The complex opened in June 2016 housing 32 permanent artists, dozens of visiting artists, 10 galleries and an arts education nonprofit, with Adobe signed as the first corporate tenant. Whether collector-storage profits would carry the artists' rents long term was still unproven at opening; the article gave no later figures.