COMPREHENSIVE

MARKET ANALYSIS

COMPREHENSIVE MARKET ANALYSIS 1

Table of Contents

INTRODUCTION 2

MARKET SURVEY 3

METHODOLOGY 3 ARTS ORGANIZATIONS - RESULTS 4 INDIVIDUAL ARTISTS - RESULTS 9

SASKATOON’S MARKET FOR STUDIO SPACE 15

MARKET DATA 15

2 COMPREHENSIVE MARKET ANALYSIS

Introduction When artSpace first formed in April 2014, it did so to address the increasing lack of affordable studio space for artists in Saskatoon. To tackle this problem, artSpace looked to other cities to see how they overcame this very same issue. As recently highlighted in a report released by the city of Saskatoon on Mapping Cultural Facilities, the new growth and development in our city has priced many artists and creative groups out of the market. artSpace Saskatoon believes that one recognizable, public location to connect these groups would propel our creative community. The cost-saving effects of shared space, combined with the economies of scale realized by merging many individual groups, will both empower our city’s creative community, and provide public accessibility to arts’ amenities currently not available in Saskatoon. A cultural hub will provide significant benefits to the arts, local communities and the economy of Saskatoon, as well as accomplish many of the goals set out by the City’s plan for growth. The cultural vibrancy of Saskatchewan is one of our greatest assets. Providing Saskatoon’s creative groups and individuals with appropriate, sustainable, and inspiring spaces will ensure continued asset protection.

The following research, undertaken by artSpace Saskatoon, provides a comprehensive examination of space and preference for Saskatoon’s artists and arts organizations and a look at underlining market conditions leading to a loss of creative space in our city.

COMPREHENSIVE MARKET ANALYSIS 3

Market Survey One of the most important aspects for a project like artSpace is to determine the needs of our end users and target market. To date, discussions with groups of artists, musicians, dancers, arts organizations and the general public, have driven our direction. There is tremendous excitement from all of these groups and it is our goal to build this project to be as inclusive as possible. To that end, we have created two surveys that were launched in April. The first is for Art Organizations and is structured to determine their physical and financial requirements, their future plans and their potential interest in co-working with artists and other like organizations. In many existing, successful projects, an important aspect is the synergy that comes from organizations working together, sharing resources and locating close to their clients. Office space for these groups is a cornerstone of our plan. We have consulted with several groups while designing the survey to ensure that the information compiled through both surveys is useful for our purposes as well as for the arts community in general. The Artist’s Survey is constructed to give us information on space requirements for individual artists or groups, specific safety considerations and affordability concerns so that we can tailor our future space to accommodate these needs.

Survey Methodology From April to July of 2015, artSpace Saskatoon conducted a detailed market analysis of Saskatchewan’s artists and arts organizations, focusing on their spatial needs. The market analysis was conducted through two online surveys. The specific objectives of these surveys were:

To gather basic information from artists about their current living, and working situations and how their art practice fits into that.

To gather basic information from arts organizations about their current operations, and usage and agreements of their current facilities

To identify the main uses of the facilities these organizations occupy. (i.e. office, instructional, exhibition, studio etc.)

To identify the most common inadequacies of the spaces currently being used by both arts organizations and individual artists

To identify specific space requirements in demand amongst both groups To identify required space amenities that both arts organizations and individual

artists would be willing to access on a shared-use basis To assess the market demand for a multi-tenant facility in Saskatoon that

provides space in close proximity to other artists and organizations, with shared amenities and a focus on arts cultivation

To assess the budgets and actual square footage requirements of both groups.

To establish forward-looking trends for space needs of artists and arts organizations.

4 COMPREHENSIVE MARKET ANALYSIS

195 individual artists completed the survey created for artists, and 26 representatives completed the survey created for organizations serving artists.

Arts Organizations Based on recent data obtained through the Canada Council for the Arts, Saskatchewan’s arts and culture organizations are substantial contributors to employment, volunteer opportunities, educational programming, and public engagement in our province.

According to Hill Strategies’ Report on Volunteers and Donors in Arts and Cultural Organizations in Canada 2010, Saskatchewan outperforms the per capita national average for both number of volunteers and number of donors in arts and cultural organizations with 27,000 and 26,000 individuals respectively.

With 52% of respondents operating with a budget between $100k to 250k, it is clear that our city’s expensive market for space will have a serious impact on their limited budgets.

These organizations employ an average of 4 FTE and 7 PTE, as well as an average of 3 Independent contractors on a regular basis.

In addition to employment, 86% of respondents cited that volunteers served their organization in some aspect, and the average number of hours a typical volunteer served these organizations was around 30 hours/yr. These organizations have the human capital but, in small organizations, employees tend to become spread thin, and perform many different jobs in their position.

7%3%

17%

21%

52%

Survey Organizations by Operating Budget

> $5 M

$1M - $5M

$250,000-$1M

$100,000-$250,000

<$100,000

58.60%

6.90% 3.40% 0% 3.40%

27.60%

0%

10%

20%

30%

40%

50%

60%

70%

Respondents by Number of Employees

COMPREHENSIVE MARKET ANALYSIS 5

Overwhelming workload, combined with a small organization’s inability to compete with larger organizations when it comes to compensation and benefits, leads to high turnover rates and less effective employees. Creating a space where several smaller arts and cultural organizations could share resources like staff, boardroom space, and office equipment could help reduce overhead costs.

Findings: Art Organization Facilities

Of the 30 Arts Organizations surveyed, just 16 % owned their facilities, while the majority of respondents rented their space or received use through donation. Nearly 30 % indicated that their facility was secured on a month-to-month basis, and an additional 12% stated that their facility was being used on a temporary basis. The fact that more than 40% of respondents have secured their space on a lease of one month or less suggests that a large portion of this industry is unable to obtain secure use of their facilities.

The Cultural Facilities Inventory completed in the city’s 2014 Cultural Mapping project labels nearly 50% of the cultural venues in Saskatoon as “Multi-Functional Commercial Space,” and just 2% as “Creation/Production Space.” This report represents the unambiguous lack of purpose-built, dedicated makerspace existing in Saskatoon.

Considering this data, it’s not hard to see why, in addition to their inability to secure a facility for a reasonable length of time, 33% of respondents to our survey stated that their current facilities were not technically sufficient for the majority of operations conducted in their organization, and 23% said this lack of adequate space prevented their organization from being able to serve the majority of consumer demand for class offerings or me memberships.

“Facility cost sharing, as well as administrative resource sharing could make a large financial impact to a small operating budget, allowing these organizations to benefit from economies of scale .“

20%

8%

8%

28%

12%

16%

2-5 Years

1 Year

< 1 Year, > 1 Mo

Month-to-Month

Temporary Basis

Owned

Studio Space Tenure

6 COMPREHENSIVE MARKET ANALYSIS

Furthermore, when asked about future relocation, 61% of the arts organizations surveyed, stated they hoped to relocate in the next 5 years. Those planning to relocate during that time period noted motivators of their move would be to expand operations, accommodate growth, better accommodate technical needs not being currently met, or to stay within their organization’s facility budget.

With over half of respondents indicating that their lease rate had increased over the past 3 years, nearly 62% said cost would be the main consideration when selecting a new facility. This represents not only a loss of revenues due to inadequate space, but also a high frequency of trade-off between adequate space and affordable space for these organizations.

63.40%

57.20%

42.90%

35.70%

7.10%

0%

Accommodate Growth

To Accommodate Technical Needs

Expand Operations

To Keep within Budget

To Secure a More Longer Lease Length

To Relocate to a More Desireable Area

Considerations When Looking For a New Facility

Planning to Relocate

61%

Not Planning to

Relocate39%

Plans to Relocate in Next 5 Years

Rate of lease

Increased56%

Rate of Lease

Decreased44%

Lease Rate Change In Last 3 Years

COMPREHENSIVE MARKET ANALYSIS 7

Of the organizations that responded to our survey, 80% currently operate out of facilities that are less than 1,500 square feet, with those operating in less than 1,000 square feet having a facility budget of $1,000 or less/mo and those operating between 1,000 sq ft. and 1,500 sq, ft having a facility budget of between $1,000 and $3,000/mo. This represents a rough price/sq ft of around $12/sq ft for a year, which is consistent with the high end of current rates for commercial/industrial space in Saskatoon. Only 50% of respondents, however, indicated that their current facilities were purpose built for their intended use, which reinforces the claim that artists and arts groups in Saskatoon are experiencing high facility cost rates for inadequate space. Of those respondents who marked that their facility was not purpose-built for their intended use, 38% said they were not currently able to provide adequate studio/rehearsal/ or maker space to their organizations paying members or customers.

With over 60% of respondents hoping to relocate in the next 5 years, the data suggests that this market is undoubtedly in need of purpose-built and adequate space for their operations.

In anticipation of an arts hub where these organizations could permanently relocate, respondents were asked to identify facility amenities their organization would be willing to access on a shared or scheduled use basis. The results revealed a strong willingness to occupy shared space. As the next graph illustrates, the 3 main areas identified as having the most potential to be used on a shared basis were Meeting/Conference space with 91.3% of respondents willing to access this amenity on a shared basis, followed by Kitchen/Break Area with 82.6% willing, and Instructional/Classroom Space with 78.3% willingness to have shared access. Although these 3 were identified as the facility amenities with the highest propensity to be consumed under a shared space model, as illustrated by the graph, there was significant willingness across the board to operate in a shared space facility.

8%

12%

28%

52%

Respondents Current Facility Size

10,000 Sq. Ft. or More

4,500-9,999Sq. Ft.

1,000-4,999Sq. Ft.

1,000 Sq. Ft. or Less

8 COMPREHENSIVE MARKET ANALYSIS

The data uncovered in this survey reveals not only a substantial need for purpose-built space in our community, but also a group of consumers who have suitable facility budgets, plans to relocate within the next five years, and a willingness to access many essential facility amenities on a shared or scheduled use basis.

35%

35%

44%

44%

48%

70%

78%

83%

91%

Gallery Space

Retail Space

Performance Space

Collaborative Studio Space

Office Equipment

Green Space

Instructional Space

Kitchen/Break Area

Meeting/Conference Space

Facility Amenities Tenents Would Most likely Want to Share

0%

0%

0%

0%

3.30%

6.70%

6.70%

6.70%

6.70%

6.70%

10.00%

13.30%

13.30%

26.70%

Metalsmithing/Jewlerymaking

Glassblowing

Sculpture

Photography/Digital Media

Fine Crafts/Folk Crafts

Literary Arts

Woodworking

Pottery/Ceramics

Singing/Muicians

Other

Visual Arts

General Creative Arts

Acting/Theatre

Dance/Performance Art

Organization Survey Respondents by Discipline

“In our one on one interviews, we discovered there was a significant willingness across the board to operate in a shared space facility.”

COMPREHENSIVE MARKET ANALYSIS 9

Individual Artists

Data from a recent Hill Strategies report on Artists and Cultural Workers in Canada’s Provinces and Territories cites Saskatchewan as having 2,800 artists, defined as individuals who “spent more time at art than any other occupation”

From 1989 to 2013, Saskatchewan saw a 1% decline in artists (The only province in Canada with a decline in artists) It is also lagging behind the national average per capita as seen in the graph below.

Source: Hill Strategies: Artists and Cultural Workers in Canada’s Provinces and Territories

10 COMPREHENSIVE MARKET ANALYSIS

0.5%

2.6%

2.6%

2.6%

3.6%

3.6%

3.6%

4.2%

4.2%

4.2%

4.7%

5.2%

5.2%

5.7%

6.3%

6.8%

12.5%

21.9%

Electronic/Digital Arts

Dance

Metalwork/Blacksmith

Literary/Storytelling

Fibre Arts

Glass Blowers

Woodwork

Other

Sculptor

Jewlery Makers

Theatre/Actor/Director/Technical…

Film/Digital Media/Photography/…

Sincer/Musician

Interdiciplinary/Multi-media

Crafting/Fine Crafts/Folk Crafts

General Creative Artist/ Non-Specific

Potter/Ceramics

Visual Arts/Painter/Illustrator

Artist Survey Respondents by Discipline

Findings: General Information: Individual Artists

Additionally, the age range of artists who responded to our survey was fairly even, with the largest population of respondents at 29% between the ages of 56 and 65.

With respect to the market for studio/maker space or live-work space tenants, this spread means that the market is not limited by any particular-age group of potential tenants, but that there may be a slightly larger market in this area for artists between the ages of 56-65.

With 80% of respondents identifying themselves as female, the majority of our respondents are also married (78.3%), and generally have some formal education with 64.8% having at least a 4-year degree, and nearly 80% completing at least some college education.

15-257%

26-3518%

36-4516%

46-5518%

56-6529%

Over 6512%

Age Range of Individual Artists

COMPREHENSIVE MARKET ANALYSIS 11

4.6%

20.9%

9.8%

9.8%

5.9%

7.2%

7.2%

6.5%

7.8%

10.5%

7.2%

2.6%

$150,000 or More

$100k-$149k

$90k-$99k

$80k-$89k

$70k-$79k

$60k-$69k

$50k-$59k

$40k-$49k

$30k-$39k

$20k-$29k

$10k-$19k

>$10,000

Annual Household Income of Individual Artists

This group also reported a generally even spread of household incomes, demonstrating both groups of artists who likely have disposable income to contribute to market priced studio or maker space, as well as artists who may qualify for subsidized or below market space rates as part of our operating model.

Findings: Current Studio space of Individual Artists 69% of artist respondents said that they currently use a space dedicated to their art practice but only 37% of those spaces are outside of their living space. Of

1.2%3.0%

16.5%14.6%

3.7%

36.0%

16.5%

4.9%3.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Education Levels of Individual Artists

High School, no diploma

High School Graduate or Equivalent

Trade/Technical/Vocational Training

Some College, No Degree

Associate Degree

4 Year Bachelor's Degree

Masters Degree

Professional Degree

Doctorate Degree

12 COMPREHENSIVE MARKET ANALYSIS

6.5%

15.4%

20.7%

25.4%

32.5%

33.1%

41.4%

43.2%

46.2%

Transit/Travel Time to Reach Dedicated Art…

Other

Lack of Access to Essential Equipment…

Lack of Access to Adequate…

Lack of Dedicated…

Distractions in my in-home Workspace

Lack of Income Generated from Artwork

Other Family Related Responsibilities

Other Job Related Responsibilities

Barriers Affecting Time Spent Towards Making Art

those leasing a space for their art practice, more than 57% lease their space on a month-to-month basis. This suggests that for artists working in spaces outside the home, not unlike the market for arts organizations, a sizeable portion of these consumers are unable to obtain secure use of studio/ maker space. Once again, demonstrating the instability of this market. 45.2% of respondents claim that they spend no more than 15 hours on their art practice per week, although more than 82% said they would like to be able to dedicate more time to their art practice but are prevented by various obstacles.

Excluding other job and household related activities, the data reveals that up to 32.5% of artists are being prevented from producing art due to a lack of access to dedicated adequate space, or equipment.

Findings: Studio Preferences for Individual Artists

Overall, 72.3% of respondents who use a dedicated art space use 500 sq. ft. or less, with 88% of the individual artist respondents using less than 1,499 sq. ft. Of those artists currently using a dedicated art space within their living space, 40% said they would be willing to pay $200.00 or less per month for the use of a

42.3%

1.9%

40.4%

9.6%

3.8%

1.9%

0.0%

I only need access on a per-use basisPrice is not a factor

$200 or less/mo$400 or less/mo

600 or less/mo$800 or less/mo

$1,000 or less - $5000/mo

Rent Threshold for Use of Dedicated Studio Space

COMPREHENSIVE MARKET ANALYSIS 13

dedicated space outside their home, with 15% willing to pay between $200.00-$800.00 and 42.3% stating they need access to a dedicated space only on a per-use basis. The 37.2 % of dedicated space users who regularly use a space outside of their home and do not receive use of this space for free, reported they paid an average of $333.00/month (trimmed mean). Those respondents who rented dedicated space on a per use basis reported paying an average of $11.25/hour. 88.8% of these respondents considered their current rate affordable and sustainable, suggesting that the rent threshold of individual artists renting less than 1,000 sq. ft. is somewhere around $333.00/month, and that this size of space would be suitable for over 80% of individual artists.

In addition to budget and space preferences, respondents were also asked to indicate the importance of specific building amenities. Notably;

89.3% rated lighting as important or very important 80.6% rated water access as important or very important 81.2% rated health and safety features such as proper ventilation as

important or very important 86.1% rated night and weekend access as important or very important 66.7% rated access to specific equipment or technology as important or

very important Suggesting that adequate, or purpose built maker space is important to over 80% of individual artists.

Respondents were also asked to rate how helpful access to certain services, spaces, and tools or equipment would be to their practice, and the income potential of their practice.

65.4% of respondents rated access to dedicated studio space as helpful or very helpful.

64% rated access to more adequate studio space as helpful or very helpful. 63.4% rated access to workspace near other artists as helpful or very

helpful. 64.1% rated access to collaborative maker space/studio space/ or

initiatives as helpful or very helpful. 61.4% rated access to equipment or technology essential to the creation of

specific artwork as helpful or very helpful. 72.3% rated access to gallery space/retail space/showcase space as

helpful or very helpful.

“…adequate, or purpose built maker space is important to over 80% of individual artists.”

14 COMPREHENSIVE MARKET ANALYSIS

75% rated access to showcasing/marketing platforms and support as helpful or very helpful.

49.7% rated access to business and or office/administrative support as helpful or very helpful.

73.3% rated access to networking events and opportunities as helpful or very helpful.

59.5% rated access to business development resources and/or mentoring as helpful or very helpful.

72.2% rated access to artistic mentoring and/or resources as helpful or very helpful.

These numbers suggest individual artists have a significant need for an arts focused facility that could provide art cultivating services to its tenants and/or members, as well as a significant interest in working collaboratively with and within close proximity to other artists.

63.4% rated access to workspace near other artists as helpful or very helpful.

64.1% rated access to collaborative maker

space/studio space/ or initiatives as helpful or very helpful.

COMPREHENSIVE MARKET ANALYSIS 15

Saskatoon's Market for Studio Space Similar to Saskatoon, both Toronto and Calgary have recently faced disruptions to their traditional, established artistic hubs, brought on by the redevelopment of lower rent core neighbourhoods. In Saskatoon, the re-development of the warehouse district and Riversdale has priced many artists and creative groups out of the market. While development is a good thing, it brings unexpected consequences to some segments of the marketplace. Compounding this problem is an acute lack of space to rent or own. This is not only an issue for the arts community, but for many other sectors within our local economy. The effect this has had on the creative community was recently highlighted in a report released by the City of Saskatoon on Mapping Cultural Facilities. The researchers found that one major issue facing the creative community was a lack of available studio/creative space for rent. Alleviating pressure on the arts community is a key objective for artSpace.

The following market data explores the root cause of this pressure and explains why there has been a continual loss of creative space in Saskatoon over the past eight years.

Market Data

Saskatoon is currently experiencing an acute lack of available retail space to rent, leading to some of the lowest retail vacancy rates in North America. According to a recent retail market report from Colliers International - Saskatoon’s retail vacancy rate continues to decline year over year from 2.4% in 2013 to 1.72% in 2014. Compared to other Western markets Saskatoon is almost a full percentage point lower than both Calgary, Edmonton, and Regina at 2.8%, 2.9%, and 4.0% respectively. Affordability is also an issue when rent per square foot has increased by 61% in the last 7 years - from $15.50 in 2007 to $25 in 2014.

16 COMPREHENSIVE MARKET ANALYSIS

The situation isn’t much better for the Industrial market with the price per square foot is considered exceptionally high. Colliers International reported that while net rent is down (4.4% from $11 in Q4 of 2013 to $10.52 in Q4 of 2014) - the vacancy rate of 5% was higher than the national average of 4% in 2014.

With some of the highest costs in Canada, many artists have simply been priced out of the rental market. The following graph compares Saskatoon to other major cities in Canada. Saskatoon is not only one of the most expensive markets for industrial space, it has experienced a dramatic increase in cost over the past 8 years - increasing from $5.75/sq. ft. in 2006 to $12/sq. ft. in 2014.

COMPREHENSIVE MARKET ANALYSIS 17

Another interesting comparison of industrial rates comes from a January 2015 presentation by Colliers International. The North American Net Rent Snapshot 2014 put Saskatoon and Regina in 3rd place, right behind two land locked cities on an island. This is another good example of how competitive and expensive the local market place can be for new and existing entrepreneurs.