The cities create burdensome regulations, in the form of historic building status or adhere to ADA compliance, driving up the cost of any remodel and thus driving away any business opportunities at these locations, then turn around after realizing the loss in taxes, allow for utilization of a building with a look-the-other-way mentality fraught with legal craziness.
If one of those buildings catch fire, will the insurer pay out for a non-stated use of the building. If the insurer does pay-out, it is a one-off option as they will most definitely increase premiums to handle the new risk of these "artisans."
It is a great concept, however, it just points to how regulatory burden price out competitive up-starts and defends entrenched players.