In the mid-90s, three friends and I signed a five-year commercial lease on an empty loft along the waterfront in Long Island City, in a building that had long ago housed a lamp-casting company. We gutted the 2,400-square-foot floor and built a live/work space, installing a full kitchen and bathroom and restoring the space’s bricked-up windows. Later we took the connecting floor above, adding another 1,500 square feet to our space and creating two more studios and a second apartment.
On spring and summer days we played stickball out in the empty street at sundown like the Bowery Boys ripped from some sepia-toned newsreel. One evening after a thunderstorm the sky turned the most beautiful violet-gold I had ever seen, and suddenly Long Island City looked like a medieval illumination; a saintly glow encompassed everything, from the dilapidated brick buildings to the half-paved upended cobblestone streets to the broken bottles and used condoms littering the sidewalks.
Living got rough, however, as fall turned to winter: the 3,900 square feet of the loft were heated by a single gas-powered blower hanging from the ceiling of the kitchen, and I often found myself with a coat on indoors, hunched over the coils of a space heater. During a blizzard in our first year, the kitchen turned into a gigantic snow globe, with glittering crystals spinning around our stove, table, and chairs. We scurried to reinforce the windows as snowdrifts piled up on the floor.
Despite our efforts at renovation, the place was falling down. A significant crack ran through the brick foundation from ground to roof and we could never get rid of the perpetual drift of dust and flaking paint that wafted through the respiratory system of the bunker. The best thing I can say about the place is that it was cheap, meaning we didn’t have to get full-time jobs. The worst thing is that we were basically squatting, except that on the first of each month our landlord asked for rent.
Our live/work space survived for a little more than ten years. The rent went up as the police cleaned up the neighborhood. They eventually swept the local prostitution ring over to Maspeth, while making way for newly arrived couples to stroll lovingly down our darkened street. To cover the increase, we subdivided the space into smaller and smaller units until it was a warren of unfinished Sheetrock cells. With the Museum of Modern Art’s adoption of the p.s. 1 Contemporary Art Center, and the announcement that a second Citibank tower at Court Square was in the works, we knew our days in the neighborhood were numbered.
The building was sold in late 2006. The studio space is now empty, encased in a wooden scaffold, and marked for demolition. I suspect half the block was bought at once, in a deal that our landlord, Mickey, had been waiting for all his life. From the Queensboro Bridge you can see a line of construction cranes running along the Long Island City waterfront. The line stops at and looms over our dilapidated brick building. The rumor is that Fordham or NYU will build dorms on the site, but the location and view seem more suited to luxury condominiums.
From the moment we signed our lease we suspected our landlord had a plan for the property. Mickey was no patron of the arts. For him, the studios were the easiest way to collect rent without having to maintain the building. We represented an important stage in the life cycle of the property: our presence made it both less and more valuable.
In his analysis of gentrification, the geographer Neil Smith proposed the concept of “rent gap” to describe the role that devaluation plays in the development of a neighborhood. First, buildings are actively devalued by landlords, which in turn brings down the value of a plot of land. The price of “land rent” also decreases in relation to the devaluation of other buildings in the area. As the actual price of the land decreases, the speculative price of property (all dependent on further development) increases. It is this gap between the actual land price and its potential, termed “rent gap,” that prompts further development. The landlord therefore receives a double reward for milking the building—incurring no maintenance costs and increasing its rent gap.
Any homesteading artist knows that the arrival of the art community in his neighborhood accelerates the process of land speculation. As more artists, who tend to be young, educated, and white, move into low income areas for cheap rents and raw space for studios, those neighborhoods attract the interest of developers. Once a second wave of landowners buys the property from the first, they either demolish and rebuild on a site or gut renovate the vacated buildings. The “luxury studio lofts” built in place of the artists’ studios secure even higher rents from the next wave of renters—young professionals, for whom the hipness of a neighborhood is a selling point—while nodding, ironically, to the area’s departed transitional population.
In our case, we came across a building that was in disrepair; our only inducement to rent it was its low price per square foot. Mickey made a half-hearted effort to keep the building up to fire code and left all other repairs to us. He was betting that the speculative value of the land beneath the building would outgrow the price of the building itself, and that a second round of property buyers would soon arrive and buy at a price beyond his imagination. Our landlord doubled-down on the building’s rent gap, and we were his chips.
The movement of artists across the city foreshadows the path of development. One thinks back to Robert Rauschenberg and Jasper Johns’ Water Street duplex studios and Warhol’s Factory in the 1960s, and then to artists like Donald Judd and Philip Glass, who populated SoHo’s abandoned cast-iron giants in the 70s. By the early 80s, the artist community had drifted to the Lower East Side, creating a renovated downtown bohemia with new galleries, clubs, and performance spaces. In the late 80s and early 90s artists found themselves occupying live/work spaces in abandoned warehouses running south from Greenpoint through Williamsburg. By the mid-90s, landlords were giving shorter leases on these spaces as property values grew and buildings could be sold off more quickly than in previous decades. In the dumbo area of Brooklyn, developers actively courted communities of artists to “break in” the neighborhood for their prospective long-term tenants, greatly speeding up its gentrification. And the process continues, moving outward to Harlem, the South Bronx, Jersey City and Newark, Woodside and Jamaica, even to Bushwick and other infamously crime-ridden Brooklyn neighborhoods.
Ten years is now a respectable life span for a live/work space in the greater New York area. But as the development of neighborhoods is carried out more rapidly and systematically, these spaces seem to be fading into the past along with the tenement and the squat. There are still live/work lofts deep in Brooklyn, but one has to travel farther and farther from Manhattan to find them. At a certain point, the real estate problems facing artists will become the problems of the developers who rely on them: if cheap rent fuels the influx of artists to a location, thus accelerating development, what happens when those rents cease to be available? What happens once the artists are priced completely out of the city? Does everyone then move on to Berlin?
join the artists occupying
the city storefront at 125 Delancey
Street (Delancey St. stop on the M)
for cheap booze and propaganda
chill thrills on New Years
chill thrills on New Years Eve
—poster for The Real Estate Show, 1979
It is New Year’s Eve 1979, and an anonymous group of thirty-five artists have organized a guerrilla-like protest exhibition titled “The Real Estate Show” in an abandoned storefront on the Lower East Side. The object of this exhibition is to call attention to the gentrification of downtown neighborhoods and the practices and politics surrounding the Department of Housing Preservation and Development. The content of the show is less in the works displayed than in the venue itself: this particular storefront is one of many in the area held vacant by the city, which has kept silent about its intentions for the property. On the morning of the second of January, after an opening well attended by artists and the community alike, the NYPD padlocks the space, effectively confiscating all the works of art within and locking the artists and spectators out. The city’s refusal to allow even temporary use of the building fuels suspicion that the city is engaged in long-term real estate speculation: sitting on its holdings in the neighborhood indefinitely, and tacitly encouraging the area’s decline into a ghetto.
In response to the closure of the exhibition, the artists’ group known as Collaborative Projects (Colab), many of whose members participated in the show, succeeds in generating a publicly watched protest followed by a short standoff with city lawyers. As a way for the city to settle the debate, which the local press has reported in David-and-Goliath terms, the city not only relents, relocating “The Real Estate Show” to a building down the street (172 Delancey Street), but gifts the lease of another city-owned building (an abandonded beauty parlor at 156 Rivington Street) to a group of the protesting artists. This lease comes with the condition that they use the building as a community art center. Inspired by the remaining
letters on a nearby sign, they name it ABC No Rio.
The annexation of ABC No Rio to a community of local artists happened three years after the city was forced to reinvent itself out of dire economic necessity. Since the late 60s, the city had been faltering, losing manufacturing jobs to other parts of the country. As the tax base withdrew, city government kept spending, as if in denial of an impending default. By the early 70s, the city was in need of a federal bailout. Public services were slashed: fire department, police, sanitation, and transit all shrank. As unemployment shot up, neighborhoods that bore the brunt of these cuts in basic services turned into ghettos. Real estate brokers engaged in “blockbusting”—the use of racial scare tactics to provoke panicked selling among white homeowners, often in blocks at a time. Nearly bankrupt, the city appealed to the federal government for a bailout loan but did not receive it. The Daily News’ famous headline from 1975 was indicative of the climate of desperation and hostility: “Ford to City: Drop Dead.” With the police force and fire department depleted, the city was unable to intervene during the 1977 blackout and sat helplessly on the sidelines while Brooklyn burned and the Bronx was sacked.
By 1978, a new mayor had been elected: Edward Koch, who had campaigned on a business-friendly and tough-on-crime platform. Though the Ford administration did eventually change course, its big buyout of city bonds was leveraged by large banks and investment houses that effectively conspired to change the demographics of the city. It was a new era for New York City—away from the LaGuardia /Moses public works that had modernized it, and toward a free market overseen by its largest investors.
To replace revenue from lost industry, the city looked to its only natural resource: real estate. By the late 1970s, the city’s land investments were astronomical in size, and on the Lower East Side approximately sixty percent of its holdings were amassed through owner abandonment and tax default. With the backing and economic guidance of the major banks, and the interests of the city’s private investors in mind, the city began to grow these and other land investments through gentrification.
The first step in the city’s plan was to consolidate its property, amassing contiguous lots which could then be sold to private developers for the construction of luxury housing units. Meanwhile, in a concerted effort to devalue the property, private landlords monopolized neighborhood real estate and engaged in devaluation tactics ranging from passive neglect to active displacement maneuvers. These included installing drug dealers in buildings, permitting long periods without heat and water, neglecting broken front-door locks, and encouraging dark, dangerous hallways through unpaid electrical bills. Lax public-safety codes and a bureaucracy prone to red tape let building owners accumulate safety violations without repercussions. When pressured by tenant organizations, landowners flipped building deeds back and forth between makeshift companies in order to deflect community resistance. Such tactics encouraged the massive population flight that in turn increased the sale value to the next, generally wealthier, “second wave” owners. The flight of the working class also freed enough apartment and storefront space on the Lower East Side to flood the local rental market. With rent cheap, artists flocked to the area.
A 1982 interview between Shelly Levitt of Bomb magazine and Alan Moore of ABC No Rio expresses the dilemma facing the recent immigrants:
SL: What’s your general audience if it is not comprised of community people?
AM: I would say it’s primarily other artists and people who are moving into the neighborhood, white people. People who do the alternative performance circuit. The house doesn’t hold that many people to begin with. The singular thing about No Rio is the quality of cabaret intimacy that is generated. That’s what’s most characteristic of it.
AL: Are the artists who exhibit community people?
AM: Sometimes, but for the most part, no. It’s really hard to locate Hispanic artists. There aren’t too many down there and they wouldn’t be particularly oriented towards No Rio anyway, because No Rio is basically an outgrowth of white, middle class artists who have certain responses to the situation in which they find themselves, and it’s directly related to alternative spaces, an attempt by artists to have their own situation, but it’s still within the art world structure.
My introduction to ABC No Rio came ten years later. When I first moved to Manhattan in the early 90s, I frequented a series of punk and hardcore concerts at the space, which, at the time, I never would have identifi ed as an arts organization. The place was run as a squatter collective with amateur punk/primitive artworks on the first floor and bands in the basement. Outside, my friends and I sat on the curb between shows and traded xeroxed fanzines, drank 40s of Olde English, ate $3 beans and rice, and watched out for the local thugs.
Once when the English band Citizen Fish played a Saturday matinee, it seemed as if every punk rock enthusiast from New Jersey to Washington, DC was in attendance. The building was so crowded it still amazes me that it didn’t collapse. Not only were the parlor floorboards rotting and loose, but the only support beam for the building was in the center of the basement, precariously jammed between floor and ceiling. The entire building was one body slam away from caving in.
As the lead singer, known simply as Dick, railed against Thatcher and her poll tax, dirt from the basement floor was kicked up between oxblood boots—those who couldn’t cram in peered down through the basement’s open metal hatches. Dick’s British civics lesson seemed feeble compared to the more obvious spectacle of our own power: hundreds of white kids safely crowded into one building in the middle of the Hispanic Lower East Side.
By the beginning of the 1990s, Japan’s real estate market had collapsed after a decade of exuberant growth. At the market’s highest point, the speculative price of land in Japan had risen astronomically: in 1989, some properties in Tokyo’s chic Ginza district fetched more than $1.5 million per square meter. A law passed in 1987 capped the amount a bank could loan and the profit that could be taken in a given land transaction, and hastened the end of the real estate bubble. This law, along the lines of Japan’s curb on stock exchange variations, was intended to enforce a crackdown on corruption but ended up encouraging it in other forms. Those saddled with land investments found creative ways to bypass the law. One of them involved the trading of artworks.
Impressionist and modernist paintings figured prominently in a booming auction market for art in the late 80s, and the Japanese, according to some reports, bought forty percent of them. In some cases, large companies invested in thousands of artworks: in one year, the textiles-trading house Itoman acquired no fewer than 7,343 paintings, including works by Picasso, Degas, Renoir, Chagall, Modigliani, and Wyeth. The value of Impressionist works seemed limitless, and the fear among collectors, auctioneers, and museums was that companies like Itoman were out to corner the market.
Their intentions went beyond manipulating the auction houses. Japanese companies saddled with government restrictions on land values after the collapse of the real estate market turned to art in order to make their investments pay off. Sellers of land would be “sold” a Degas or Chagall on the understanding that for tax purposes the painting would be bought back from them a few months later at ten times what they had paid. The operation was counterintuitive, but it worked: suppose, for instance, that you are a developer who, after the real estate bubble has burst, is left with a large investment in land and a significant amount of debt. Because of the new laws, you cannot sell your land to me fast enough or at a high enough rate to break even on your investments. Since the price on your land is capped, I use art to make up the difference in the transaction. I gift an artwork, perhaps a Renoir painting, to you and report it as a sale. As we have agreed, several months later I buy the work back from you at an increased price. This time, however, I secure an unregulated bank loan, in excess of our set land-sale price, to purchase the work. A third party—usually a gallery or a subsidiary company created by me—will facilitate the transaction, paying you what we had agreed on and keeping the rest of the loaned money for me in a slush fund, either to invest in another artwork or perhaps pay off the relevant authorities. All three parties are satisfied: the buyer, seller, and the bank.
The actual operations involved secondary players such as insiders at Japan’s major banks, several of Ginza’s art dealers, and subsidiary companies created in order to certify the transactions, verify insurance values, and create provenance on these double-dealings. The artwork became a tool in what the Japanese call zaiteku—financial engineering.
Though Japan’s land/art scandal barely touched our shores, the press in the United States did gleefully create another kind of Japanese invasion scare. Throughout the 80s, the Japanese seemed to be on a worldwide real estate binge, from châteaus and vineyards in France to large West Coast golf courses, exclusive resorts in Hawaii, and Hollywood studios. In New York City the tabloid press had a field day stirring up a xenophobic panic when, in 1989, the Mitsubishi Estate Company purchased a majority stake in Rockefeller Center directly from the Rockefeller family trust. The transfer of the Rockefeller name to the Japanese was too much for the tabloids to handle, and the deal antagonized a country anxious about the loss of its economic strength.
As the Japanese real estate bubble burst, Mitsubishi withdrew their commitment to the $2 billion investment in the building. Although the press celebrated it as the result of a successful populist protest, the pullout was actually orchestrated to avoid bankruptcy proceedings.
In 2000, Tishman Speyer Properties led a group of investors in the purchase of Rockefeller Center. President and cofounder Jerry Speyer is today vice chairman of the board of the Museum of Modern Art in New York and an avid collector of contemporary art—a kind of heir apparent, in cultural capital, to the Rockefellers. For several years, Tishman Speyer, Rockefeller Center, and the Public Art Fund have worked together to create art events in the courtyard of Rockefeller Center, where the giant Christmas tree sits during the holidays. In September 2003, Takashi Murakami, Japan’s preeminent Pop artist, installed one of his largest works, Reversed Double Helix. In the sculpture, a bulbous fiberglass figure called “Mister Pointy” rose thirty feet above the courtyard, flanked on either side by giant “eyeball” balloons floating over the ice-skating rink. Murakami’s sculpture, a hit with tourists and journalists, satirized the xenophobic anxiety once felt with respect to the site. No longer space invaders, its cartoon mutants served as mascots for the healthy marriage of art and development in the global economy.
Today, Rivington Street on the Lower East Side is lined with saplings. After a gradual renovation, the area hit its stride during the most recent real estate boom, providing hipper-than-SoHo cafes, bistros, tea shops, and wine bars to pedestrians wandering down from the boutiques in NoLIta. A few new galleries have reoccupied the neighborhood, generating nostalgia for its edgier past. The exception to the Lower East Side’s thorough reinvention is ABC No Rio, still a dilapidated storefront with graffiti covered stairs and a post-every-bill facade. It is the black eye of the block, with the aging punk decor of an hospitable crack house.
The history of ABC No Rio illustrates the bizarre financial relationship between the city and its artists. The latest chapter is no exception: after contesting the city’s impending sale of the building to another not-for-profi t organization in 1994, ABC No Rio held out in a protracted legal battle using squatter-rights tactics. They eventually won the right to buy the building from the city. In 2006, the City of New York sold 156 Rivington Street to ABC No Rio for $1.