Live-work rentals for musicians

[Doug DeMars]

That's the property. Here is my situation
I can find basic rents for the area.
I can find rental rates for sound studios and practice stages.
I do not have any similar "music-orientated" projects in my market.

Hey Denis-
What is the variance between "basic rents" and "rental rates" for this specific/unique apartment building?

I'd be inclined to believe that any additional income created by the unique set-up would be off-set by higher OE. Musicians (and their ilk) are typically "financially challenged"...it sounds strange to tap into such a lack-luster market segment. You'd think that setting up a "computer-lab" specific apartment building with uber-high speed internet for all tenants and a "nerd-talk" gathering place would be a better risk.

 

[Lost Cause]

The one in SOMA (South Of Market Area) San Francisco has me sold; one of their amenities is "free beer"!

Thanks for the link!

Both NYC locations I inspected offered free beer, too.

 

[hastalavista]

Hey Denis-
What is the variance between "basic rents" and "rental rates" for this specific/unique apartment building?

I'd be inclined to believe that any additional income created by the unique set-up would be off-set by higher OE. Musicians (and their ilk) are typically "financially challenged"...it sounds strange to tap into such a lack-luster market segment. You'd think that setting up a "computer-lab" specific apartment building with uber-high speed internet for all tenants and a "nerd-talk" gathering place would be a better risk.

The variance looks to be about $200 to $400 (I'm still refining that a bit).

I thought the same thing with "musicians". Every musician I know personally has a "day job". They make next to nothing on their music, but they pursue it passionately.
So, the target market here isn't professional musicians who earn their living 100% from their music (as I said, these configurations are not "recording-studio" quality). The target market here is someone who has another source of income, and currently rents space for their music production/practice.
There are more of those types than what I originally thought.

Also, these units can house up to two people (there is a dedicated bedroom, but another room that is labeled as an "office" on the floor plan, but is functioning as bedrooms for the occupied units).
With the exception of the recording engineer (who we think actually does do this full time), the other occupied units we saw were shared by more than one occupant.

The location is in Oakland, but not in the high-tech area. Definitely in the "urban-street" area (if this were West Oakland, it would be a lot easier as there is significant gentrification occurring there).
The property's profile (location, configuration, and condition) definitely fits the young, urban-hipster type market.
The tenant-profile is more the rapper/DJ segment rather than the concert violinist segment. :new_smile-l:

 

[CBBoston]

I agree with Denis. For many of these folks it will never be a full time money making career. That said they never seem to quit dreaming that maybe they'll make it big. Even when they're will into their 40's!! My wife's kid is one of those. At any given time he might be in 2 or 3 and they all have practice space. I can't believe how many of these groups practice for years and never have a paying gigs or any gigs at all. Although he's been in some that made money and a couple that traveled on the national bar circuit. However most have some practice space. I know some band members live in the space until the LL gets wind of it and tells him to get an apartment somewhere because the zoning doesn't allow for residential use. I know he would have loved the idea of a living/practice space. I think there is way more demand for this type space than you might believe. Being in a band isn't much different than say golfing which costs a fortune these days.

 

[leasedfee]

Every musician I know personally has a "day job". They make next to nothing on their music, but they pursue it passionately.

Ditto.

One was explaining to me that cheaper technology has made the professional studio unnecessary, and can now be done in home studios. He's a burnt-out philosophy professor in his 40s. He would definitely be the psychographic for your property. The appeal of your property is that you're surrounded by peers who share your passions and aren't going to complain about noise. I'm told that there's one building in my' burbs that is almost entirely occupied by South Asian Indians. There is a robust literature abut lifestyle segmentation or urban enclaves. Birds of a feather flock together. "Sometimes You Want To Go Where Everybody Knows Your Name. / And they're always glad you came. / You wanna be where you can see our troubles are all the same."

Valuationwise, it's a multi-family loft building (with personal property and a small possibility of b-value for concierge-like services, if any). Cheers.

 

[CANative]

Ditto.

One was explaining to me that cheaper technology has made the professional studio unnecessary, and can now be done in home studios. He's a burnt-out philosophy professor in his 40s. He would definitely be the psychographic for your property. The appeal of your property is that you're surrounded by peers who share your passions and aren't going to complain about noise. I'm told that there's one building in my' burbs that is almost entirely occupied by South Asian Indians. There is a robust literature abut lifestyle segmentation or urban enclaves. Birds of a feather flock together. "Sometimes You Want To Go Where Everybody Knows Your Name. / And they're always glad you came. / You wanna be where you can see our troubles are all the same."

Valuationwise, it's a multi-family loft building (with personal property and a small possibility of b-value for concierge-like services, if any). Cheers.

How does that square with this:

what really stuck out was the number of live-work spaces that specifically stated "no musicians/bands" in their advertising.

 

[leasedfee]

Noise complaints.

 

[Greenra]

Good thing they are raising the minimum wage, because this sounds like a minimum wage assignment. Apparently, the last appraiser may have over valued the property given there was a loan and foreclosure--- maybe no fault of his, just a lack of data.

It sounds like you make a good case that the current use is not the Highest & Best Use--- supported by the foreclosure. Therefore, it is a HBU issue where analyzing alternative uses and the cost to convert is likely beneficial to the overall analysis. Since it does not functional as small music studios, then conclude the use is a traditional work use space and use similar rents for the most likely work/live use and compare with typical work/live properties.

The owner can try and lease the property to any market segment he wants, but this shouldn't limit your analysis to that specific use; especially if that type of uses dosn't make since and it sure sounds like it doesn't.

Good Luck!

 

[CANative]

Noise complaints.

Of course. But what does it say about marketing a specific type of use when no one who lives there wants that?

I'm not trying to give advice or anything. It just seem ironic.

 

[leasedfee]

CAN,
Just different psychographics -- different strokes. Like age restricted communities, 55+. They don't want to live around children, yet other people over 55 want to live around rambunctious, impulsive children and don't want to be shuttered off from the living. If the subject is just one property in a huge city, I wouldn't be very worried. If it was 1,000s of units, then we'd have a big problem. Something like this makes me think of the art studio coops that have a showroom front. Or executive office suites that charge extra for the receptionist, photocopier, mail box services, and conference room. As long as we don't mingle business revenue with real estate rent, I think you'd be fine. If the music live-work thing doesn't pan out, then reversion to normal lofts.