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Real-Estate Developers Offer Artists Free Rent to Up Cool Quotient

It is the Art Scene Paradox: As a neighborhood or city known for its creative community becomes trendy, the artists who made it that way can often no longer afford to live there.

Several developers are now trying to solve the paradox by offering artists cheap, or even free, rent. The idea is to seed their buildings with the kinds of creative people who make places cool—and turn their presence in the buildings into an amenity.

In February, Magellan Development Group in Chicago announced artist-in-residence contests at two new rental buildings, the SoBro in Nashville and Exhibit on Superior in Chicago. The SoBro is close to downtown in a city known for live music, while Exhibit is located in River North, a neighborhood famous for galleries. The contests, advertised on flyers in coffee shops and bars as well as through local music schools, asked musicians to upload one-minute videos by late March in Chicago and by early April in Nashville.

About 30 musicians applied to each contest; the developers will select three to six semifinalists. Later this month, each building will host a live contest a la “America’s Got Talent” where residents will vote for whom they want to become their “artist in residence.” The winner will get a year of free rent in either a studio or small one bedroom, valued at roughly $1,850 a month at the SoBro and $2,200 a month at the Exhibit.

Future Magellan buildings might include chefs, painters, sculptors or personal trainers, who, like the SoBro and Exhibit winners, will be required to perform and offer classes or services to residents, said Jim Losik, national marketing director for Magellan. New buildings typically have vacancies in the first year, so the amenity is essentially free for the developer, Mr. Losik said.

The company contemplated whether an artist might feel awkwardly on display for wealthier neighbors, Mr. Losik said. But ultimately it decided that a musician would welcome a ready-made audience. “It isn’t like we put them in a cage certain days and hours. It’s very flexible,” he added.

Residential construction in downtown Los Angeles is booming and developers are competing for young, artsy types who might be attracted to inner-city living.

Olive DTLA, a 293-unit building where rents range from about $2,000 to $4,100 a month, began hunting in early March for a Los Angeles-based visual artist for its artist-in-residence program. Applicants will be winnowed down by a panel of judges—most from arts organizations and one from Scottsdale, Ariz.-based developer the Wolff Company—to three finalists April 24, with a final winner chosen May 18. The winner gets six months rent-free in a one-bedroom loft (market price: $2,500 a month). The prize also includes $2,000 a month for art supplies to support events for residents and space on building walls to display their work. So far, over 100 artists have applied.

The program “helps create authenticity,” said Amber Huntley-Ruiz, director of marketing. “What really makes a building stand out in the market is the intangibles, the personality and sense of community.”

In London, when 42-story Manhattan Loft Gardens is completed in 2018, developer Harry Handelsman said most units will be condominium sales, from about $625,000 for a studio up to $19 million for a penthouse. But he wants “to hold back at least 100 for myself,” to rent to artists and other creative people at below market rates. “I don’t know where the prices are yet.”

Choosing the right creative people for the building is something of an art in itself: “I want to curate the building with people who might be beneficial for the building who might not be able to afford it,” said Mr. Handelsman.

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