Street Art Is Real Estate: What Appraisers Need to Know
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Street Art Is Real Estate: What
Appraisers Need to Know
By Michele Wood, Valbridge Property Advisors
Art is real estate—what? Yes indeed— an environment of social cohesion, and willing to pay an average of £8,549 more
read on. 3) to encourage economic stabilization. for a home in an area with street art.
There was a time when images Communities are paying attention. A Thirty–two percent of those surveyed
spray-painted onto the walls of buildings Google search for “Street Art Blog” reported that they would spend as much
was a sign of blight and urban decay. results in 830,000,000 links. Similarly, as £50,000 more.
These days, many cities are joining a a search for “Street Art Tour” brings up These results have been borne out
growing movement of not only allow- countless links in most cities that are anecdotally in many other places. In
ing graffiti to exist, but even fostering its included in the search terms. Miami, for example, visitors from all over
development as “street art.” How does Can the presence of street art the world flock to the Wynwood area to
street art affect the real estate on which affect real estate pricing? The evidence see the “Wynwood Walls,” a series of
it is placed, and does it affect the real is starting to suggest that it does, and murals painted on the exterior walls of
estate market around it? What distin- in a positive way. Researchers at the old warehouses. The project started in
guishes street art from graffiti? How are University of Warwick in England set 2009 with 18 large works and has since
the interests of property owners, artists, out to quantify the link between street grown to cover 800,000 SF featuring 50
and the community balanced by rele- art and value. Their thesis, that areas of artists. The project was so successful that
vant laws? We will touch on all of those higher concentrations of street art would rents began to increase substantially. For
topics in this article. see a correlative uptick in real estate instance, a warehouse that leased in the
Graffiti is as old as civilization itself. values, was predicated on the premise early 2000s for under $10 per square
The term comes from the Italian “graf- that creative industries are key to building foot now rents for an average of $50 per
fiare,” which means “to scratch.” Graffiti a successful city economy. The scientists square foot. Galleries, restaurants and
generally is understood to be simple looked at images of London uploaded retail shops have all moved in to capture
words or a name, sometimes in stylized to the social media site Flickr between the foot traffic, increasing demand for all
form, but never pictorial. Street art, on 2004 and 2013 in which the word “art” kinds of real estate.
the other hand, includes visual elements was tagged. They then used that data to Multi-family projects are taking
such as characters, landscapes, portraits, compare the number of art images in a note of the street art benefit as well.
poems and other written word forms in neighborhood to changes in residential Developer Crescent Communities has
order to express the artist’s intent. real estate prices in that neighborhood. started to incorporate street art into
Public street art can be seen in almost They found that increases in mean their new apartment properties. The
any community nowadays, and it is no residential property prices are significantly marketing director has noted that people
longer a phenomenon of larger coastal associated with higher proportions of art will drive or walk over to see the art and
cities like New York or Los Angeles. images per neighborhood. end up touring the property as potential
Street art has gained wider acceptance A follow-up survey done in 2017 by residents. Renters almost always request
as a desirable visual element in com- the Affordable Art Fair revealed that 43 units with views of the art. Muralists all
munities and acts, as all public art does, percent of British citizens would rather over the United States are starting to get
to serve three functions: 1) to beautify live in an area with murals and street art requests from landlords looking to have
the public space, 2) to create and foster than a local coffee shop, and would be their buildings painted as they think
it will attract tenants and discourage
“unsanctioned” graffiti since there is a
mutual respect among artists wherein
they don’t deface others’ works.
Michele Wood is Director of Business Development for the Right-of-Way and Litigation
Services practice groups with Valbridge Property Advisors | Houston. She also heads up The Rice Mill Lofts in the Bywater
research and special projects for the firm. She has worked in commercial valuation for 15 years. neighborhood of New Orleans also
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12 Working RE Winter 2019
found a way to incorporate street art
into its design. Originally built in
1892 as a rice mill, the building was
renovated to loft apartments in 2010.
Because the building had sat vacant for
several decades, there were numerous
walls with graffiti. The developer
decided to incorporate the art into
the new units, preserving as much of
it as possible in the renovation and
hiring local artists to add more. This
aspect is featured on the property’s
website saying, “The improvisational
riff of text and images tells both
tales of caustic discontent, as well as
stories of sacred archetypes, heroes
and mythmakers.” The 69-unit project
reached full occupancy in five months,
and the units with the most distinctive
graffiti pieces have a wait list. Within
two years of the renovation, the
property was the highest rent-per-unit
residential building in New Orleans.
In 2012, well-known muralist
Eduardo Kobra painted murals on a
building in New York City. Between the
time that the murals were done and the Art Alley, Rapid City, South Dakota
sale of the building four years later, the
price increased from $880,000 to over or reputation.” VARA is similar to community, or by some cross-
$2,000,000. Though it was difficult to section of society. This sets a rather
copyright, but applies only to works
break out the murals’ contribution, a low bar to determine that a work is
of visual art. Unlike copyrights, VARA
local real estate agent attributed 10 to
rights cannot be transferred from the of recognized stature as there are
15 percent of that value growth to the
artist to anyone else, and expire on the many ways to convince a court that
murals. If one is lucky enough to own a
artist’s death. a cross-section of society deems the
building on which the notorious street
With private ownership of a framed work as having merit.
artist Banksy paints, the property value
painting hanging on a wall, VARA • The property owner cannot destroy
could double overnight.
presents few conflicts. However, with or alter the work in any way. This
The Wall Is the Painting street art, the wall is the painting, so includes scrubbing it off, painting
The addition of street art to buildings is ownership and control of that wall over it, or carving a drive-through
not without its complications, however. can become problematic between the window out of it. The property
As works of original visual art, many property owner’s rights and the artist’s owner does, however, have the
pieces are protected by a federal law VARA rights. Some important features of right to sell the artwork. Numerous
called the Visual Artists Rights Act of how VARA affects real property include: people have carved Banksy stencil
1990, or “VARA.” VARA seeks to protect • Artwork is covered under VARA if art off of the walls on which
an artist’s moral rights in addition to it is of “recognized stature” only. they were painted and sold them
the economic rights conferred by copy- To determine if a work qualifies, for substantial sums. VARA only
right law. This means that an original the artist must prove that the work protects the integrity of the art, not
work cannot be destroyed, distorted, is viewed as meritorious and that the physical location of the work or
mutilated, or modified in any way that this is recognized by art experts, the ownership of it.
“would be prejudicial to his or her honor other members of the artistic page 14 8
Winter 2019 Working RE 13
7page 13
• If the property owner wishes to is known as the California Art
demolish a building on which Preservation Act (1979).
artwork of recognized stature exists, • Because VARA allows artists to waive
the owner must make a documented their VARA rights, property own-
good-faith attempt to notify the ers are best protected against VARA
artist before destruction and grant claims by securing a waiver before
90 days from contact for the artist commissioning a work or before
to remove or document the work (at buying a property that has street art
the artist’s cost). incorporated. This could have spe-
• The property owner does not own cial relevancy to title companies.
the copyright of the image unless In general, property owners of origi-
the artist has transferred the copy- nal street art can enjoy great collaborative
right in writing. Using an image of relationships with the artists. Most artists
the artwork in merchandise or pro- recognize the place of their work in the
ductions would be prohibited unless larger built environment landscape, and
permission is granted by the artist. street artists especially are comfortable
Appraisers could photograph the with the ephemeral nature of their art.
work for use in a report, but any Conflicts tend to arise when a property
commercial uses of the image would owner acts with disregard or disrespect
be prohibited. Copyright is distinct to the artist, the artwork, or the commu-
from VARA protections. nity. Such a case recently made headlines
in New York when a developer painted Banksy stencil, New Orleans, Louisiana
• VARA does not apply to works that
advertise or promote a product or over dozens of well-loved murals on a
service, and works that are illegally site that had been known as 5Pointz.
5Pointz was the name given to a Notable details from that case include
done (i.e., without the property
site of vacant and run down industrial Wolkoff’s “willful” destruction of the
owner’s permission) are likely not
buildings in Queens. Developer Jerry works, his hostile attitude toward the
protected by VARA, though case
Wolkoff purchased the site in the ’70s artists and the judge during the hear-
law is not entirely clear on this
to hold as an investment for future ings, and his failure to grant the artists
point in all instances. If a work has
development. In 1993, Wolkoff gave an the requisite 90 days to remove or doc-
been in place for a long time and is
artist, Jonathan Cohen, access and verbal ument the works. The takeaway seems
of recognized stature in the commu-
permission to paint on the buildings and to be that respect and collaboration
nity, it may be protected by VARA
“curate” the artwork that was done on result in the most lucrative relation-
and copyright, even if illegal.
the walls. The site gained notoriety as ships for both parties.
• VARA does not protect works against a premier location for aerosol artists, Developers, property owners and
obfuscation. If a property owner and people started to come from all appraisers need to be aware of street art
wants to obscure the view of the over the country to see it. In 2013, works, VARA, and how it can potentially
work by adding a wall or covering the Wolkoff decided to go ahead with impact the value of residential and com-
work in a way that would not damage redevelopment of the property into new mercial real estate. It cannot simply be
it, it would not be illegal. However, residential towers. The artists, though excluded as personal property from the
owners have faced tremendous pub- they knew Wolkoff had always intended valuation any more than tenant improve-
lic outcry when they have obscured redevelopment, tried in vain to prevent ments can be. As it becomes more preva-
access to popular artwork. the razing of the structures. In November lent and more sought after as an amenity,
• New York and California grant of 2013, a judge denied injunction to the real estate professionals will need to be
even stricter moral rights to artists, artists and Wolkoff, overnight, had the versed in the nuances of VARA and its
so property owners in those states buildings whitewashed. applications. No longer a sign of urban
need to be aware of the restric- A group of artists from 5Pointz, decay, street art is now becoming a sign
tions that apply to their sites. including Cohen, filed a claim under that a colorful neighborhood is the most
In New York, the law is called VARA and in February 2018, the devel- vibrant part of a city, and making a mean-
the Artists Authorship Rights oper was ordered to pay $6.75 million ingful, measurable contribution to real
Act (1984) and in California it in statutory damages to those artists. property value. WRE
14 Working RE Winter 2019You can also read
