There were cheers and champagne in the lobby of Midway Studios as the news was delivered with a flourish, a black cloth pulled from a board to reveal a message: "We won the bid!"
Keen Development this week agreed to sell Midway Studios, a 200,000-square-foot building in Fort Point, to the residents for $20 million. Midway includes 89 artist studios, a gym, and commercial spaces.
The sale, which hinges on some fund-raising by the residents, would mark a rare victory for Boston artists, many of whom have been displaced by climbing real estate prices and rents over the years.
"It worked out. I can't believe it," said Nicholas Ortolino, a resident of the Channel Center Street building since it opened as artist-designated housing in 2005. "My head has been spinning for the last couple of days."
When Keen first opened Midway, the developer promised that residents would eventually be able to purchase their spaces. That never happened. Keen has said that a series of unanticipated problems, from the economic downturn to government regulations, made the ownership change impossible over the years. So the dozens of painters, sculptors, and crafters at Midway continue to rent the airy industrial studios that for many are where they live and work.
In 2012, Keen and residents feuded over the landlord's decision to rent out the building's theater to Ops-Score, a company assembling military helmets. Ortolino, recently named president of the tenants' board, publicly declared Midway "a complete disaster" during the dispute. The disagreement was eventually resolved, with city officials stepping in to help Ops-Score relocate elsewhere in Boston.
Earlier this month, Keen let residents know it planned to sell Midway.
Within days, the majority of artists living there had met, pledging to kick in $500,000 of their own money to help buy the building. They also banded together with New Atlantic, a development company that is working to recruit additional investors to help preserve the building as artist studios and housing.
"A lot of people, not only in this neighborhood, but across the city, are behind this cause and this mission," said Peter Roth, the president of New Atlantic, which has also helped develop the ArtBlock project in the South End and the Brookside Artist Lofts in Jamaica Plain.
That appears to include Keen Development. It spent roughly $18 million to renovate the building and make improvements in recent years. Keen said it received five other bids for the building, all of them for more than the $20 million offered by the artists.
But Daniel Taylor, the executor of the estate that owns the building, said he preferred to stick with the artists. That, he said, was the goal of the late Bob Kuehn, a noted preservationist and the developer behind Keen who specialized in affordable housing and mixed-use projects. Known for renovating the Baker Chocolate Factory in Dorchester, the Kennedy Biscuit Lofts in Cambridge, and an array of other local projects, Kuehn, who died in 2006, had hoped Midway would help artists stay in Fort Point as renovated factories turned into luxury condos.
Fort Point was once home to hundreds of artists, most of whom moved into abandoned factory buildings in the 1970s and 1980s. But over the past two decades, many artists, along with such cooperative groups as Mobius and The Revolving Museum, were forced to move to less expensive spaces in East Boston or Lowell by rising real estate prices and new developments.
Midway would not be the first Fort Point building to be owned primarily by the artists who live there. Two other buildings in the neighborhood, at 249 A St. and 300 Summer St., are also owned by artists, those purchases made in 1983 and 1995, respectively. What's unusual about Midway is that the studios would remain rental units.
"It's really important to maintain rental housing in the neighborhood," said Jennifer Mecca, the president of the Fort Point Arts Community, a nonprofit that has been working with the artists and Roth. "If it had gone to a co-op like 249A and 300 Summer, we'd probably have people moving out because they couldn't afford to purchase."
The new deal would allow residents and other investors to buy in at any level, whether they invest $100 or $100,000. The building would be managed by a board of directors, half appointed by residents, half by New Atlantic. New Atlantic would receive a fee for managing Midway.
Roth declined to go into detail about how investors would be compensated, saying it is too early to discuss.
Taylor praised Roth for his ability to work out a deal. He said the original offer by the residents was "quite low," without providing specifics.
"We would not have sold to them at that price, but [Roth] brought the offer up to what I'd say is a reasonable number," said Taylor. "That we were supporting what Bob Kuehn hoped for, that's what guided me. If Bob were sitting at the table, I think he would have smiled and said, 'let's do this deal.'"
State Representative Nick Collins, who represents the section of South Boston that includes Fort Point, lobbied Taylor on behalf of the artists and said he wasn't surprised that the artists mobilized quickly to get a deal done.
"Anybody who knows the people who live down there would not be surprised," said Collins. "But from the outside looking in, anytime you're able to pull together a financial deal like that on short notice it's very impressive."
Still, the financial work is far from over for Midway residents.
Roth and the artists need about $21.2 million, which includes the $20 million purchase price plus other expenses related to acquiring Midway. They will assume a $15 million loan from Keen. Roth is also hoping to secure $4 million from the City of Boston and Boston Community Capital. The artists have pledged $500,000 of their own money. That leaves a gap of roughly $1.7 million that will have to be raised by the time the deal is expected to close in March 2014.
That was the message this week after the cheers died down.
"What begins now is a period of fund-raising that is very, very crucial," said Raber Umphenour, vice president of the newly formed residents' association. "If we can pony up the money that we have committed to, but also reaching to other people – friends, family, other investors – we have a real chance of making this real."
Geoff Edgers can be reached at Geoff.Edgers@globe.com.