This Company Fills Vacant Commercial Properties With Local Artists’ Studios

Though retail vacancies are finally hovering below the historic average after years of struggling, the vacancy rate for some sectors, like malls, is as high as 9% and forecast to stay there in the coming years, according to data from CoStar. And regardless of national trends, if you’re the owner of a property without a tenant, you’re losing money by the day.

Enter Andrew Martineau, a former marketing and advertising veteran with a background in shopping center development. As an arts advocate and hobby artist himself, he has a creative solution to real estate’s vacancy problem — filling unoccupied spaces with short-term artist studios.

His company Zero Empty Spaces partners with owners that have room to fill, like a ground floor retail space or a dark corner of a shopping center, and subleases it to local artists as a working studio or gallery space on a month-to-month basis for a fraction of market rent. Most artists occupy the space for about a year on average, the company co-founder said, with the goal being that the owner eventually finds a permanent tenant.

It's meant to be a win-win for everyone — the artists get more exposure in better locations for an affordable price compared to what they could rent through traditional means (often a warehouse on the outskirts of town), and property owners mitigate balance sheet losses and get more visibility on their property as a marketing tool while they’re looking for long-term tenants.

“For an artist client, this is somewhere between having your own gallery and having a working studio that’s in a commercial environment. For a property owner, it’s a strategy to generate interest and therefore get permanent leases. There’s a low barrier to entry for the artists and the property owners,” Martineau told LoopNet.

With over 30 commercial spaces activated and more than 325 artists who have rented through the model, Martineau is well on his way to realizing his company’s namesake of zero empty commercial spaces.

The inception of Zero Empty Spaces began during Martineau’s earlier career as a marketing and regional director with Westfield, a global shopping mall developer and owner. He started a commission-free art gallery in the mall as an amenity for the shopping center and to support local artists.

“Since then, I've created a lot of vacancy management strategies for shopping centers as a consultant, so I have an idea of what types of spaces these owners might need us for,” he said.

Now, as much of the retail sector struggles to keep the lights on, malls have become one of Zero Empty Spaces’ most activated property types. The company works with everyone from individual property owners to institutional landlords like Simon Property Group, the country’s largest mall owner.

“Simon and Brookfield are probably the most frequent spaces that we're in. They call us when they have chronic vacancies, or a Neiman Marcus is going out of business, or there's a wing [of a building] going dark, that sort of thing,” said Martineau. “A lot of cities are suffering from vacancies, especially in their downtowns. Additionally, there are a lot of big box spaces that are vacant now. If you have 20,000 to 30,000 square feet, unless you get another big box to take it, then you must figure out how you're going to split that space up.”

Since launching in 2019, Zero Empty Spaces has opened about 30 locations, with eight currently in operation in Florida, Massachusetts, and Richmond, Virginia.

“We're in everything from enclosed malls to lifestyle centers, street-level retail, and mixed-use residential sites. We’ve opened inside of banks, or former Burberry and Payless stores, so it’s a diverse range of commercial retail spaces. We've also recently started to get into some office space as well,” he said.

Most places Zero Empty Spaces has activated across its portfolio were vacant for six to 12 months before they took over.

The company sets up shop in locations that are a minimum of 3,000 square feet and uses divider walls to break them up into stalls between 100 to 300 square feet for eight to 11 artists.

“We’ve got it down to a science now and it’s very easy to build out, so it takes us about three days to get a space open and operated,” said Martineau.

Zero Empty Spaces executes a licensing or lease agreement with the property owner and subleases the space out to the local artists on a 30-day basis. Depending on the market, the company charges anywhere from $2.50 to $4.50 per square foot, including utility costs. “We provide the property owner reciprocal liability insurance, pay for the utilities, and act as one point of contact for the property owner. But the artists are paying us,” Martineau explained.

He said lease lengths currently average about a year, with some open for only a few months and others that are going on their fourth year. Lease duration depends on factors such as location, how busy the building or neighborhood is, and the general leasing market.

But the idea is that Zero Empty Spaces won’t be in the property for too long. The space remains listed on the market while the artists are occupying it, with the property owner’s goal being to secure a permanent tenant.

“A lot of property owners use it as a strategy to generate interest and get permanent leases,” Martineau said. “It provides an advantage for them because now your space is open and active seven days a week. [Potential tenants] don’t need to wait for a broker to let them in, they can just walk into the space and view it.” He said owners use an app to track who comes and goes from the building and to approve access for tenants or visitors .

“That's worked out well with a lot of property owners, and we don't take any commission if somebody leases the space. Most of the time we end up having to leave when a property owner gets a permanent lease, but they usually move us into the next vacant space,” Martineau said.

And while the artists may have to move, the benefits they get from Zero Empty Spaces amount to more than just cost-savings. Compared to renting spaces in less-than-ideal warehouse districts, the new street-facing retail studios offer foot traffic exposure that’s a boon to their business.

“It’s hard to invite a client or gallery curator to your studio if it’s in a bad neighborhood. So this gives them a real opportunity to come into the commercial environment,” Martineau said. “For example, a space we have in Massachusetts is next to a Louis Vuitton, and a space in Hallandale Beach, Florida, is next to a Williams Sonoma. We have a space in the Boca Raton Innovation Campus, one of the largest office centers in the state of Florida.”

The artist tenant clientele runs the gamut, said Martineau. Zero Empty Spaces rents to everyone from “emerging to established artists, everywhere from ages 18 to 80,” he said. Some are retirees creating art as a hobby or a second career, and others are full-time artists making six figures and showcasing their work in museums and galleries.

Zero Empty Spaces also doesn’t take a commission from the artists’ sales like a traditional gallery might. According to their website, artists average $2,000 worth of sales during their tenancy.

Activating vacant spaces with artist studios also bolsters the neighborhood and surrounding community, minimizing real estate vacancies while also increasing walkability and area activity. Martineau noted the ripple effect that filling the spaces has had, as non-profits now often choose these spaces for fundraising events, as well as local community and chamber of commerce groups that use them for meetings. “So, each location kind of develops its connection with the community in other ways, which is great because it's very organic. It's been a fun and very rewarding project in many ways.”

Zero Empty Space’s next venture is tackling office vacancy, which has been mounting since the pandemic. After getting requests from office landlords, they now operate in two office building locations.

“[The studios have] also become an amenity for the office building. Some of our spaces offer art classes for employees,” he said. “Owners are thinking about how to differentiate their spaces. Everyone has a conference room, or maybe a restaurant downstairs, but how many other buildings have artist studios where you can offer potential employees opportunities to paint, create and make art? So they’re thinking of it as another differentiator from all the other properties that clients see.”