The building has been an artist-led space since the 1970s, initially run by the Association of Artists and Designers in Wales (AADW), established in the mid-1970s. One of its goals was to find and manage affordable studios for artists. Over time, AADW managed several buildings across Wales, including two old, rundown warehouses in Cardiff. In 1980, AADW acquired 54b/c Bute Street, quickly becoming a successful studio building.

When AADW ceased operations, the artists working at 54b/c Bute Street formed a group called Butetown Artists to continue using the space. By the 1990s however, the building's condition had severely deteriorated, with water damage making some floors unusable. Cardiff City Council agreed to become part owners with AADW and funded some repair work during this time.

In 1997, the building was in critical condition, and Butetown Artists faced a choice: leave or find a solution. They chose to stay and reconstituted as a company limited by guarantee, aiming to transform the building into a complex comprising of a series of studios and a public art gallery. Ownership of the building was transferred to Butetown Artists by Cardiff City Council and the trustees of AADW on the condition that it remain a public arts facility. Butetown Artist Studios opened in 1999 and BayArt Gallery opened publicly in 2002, managed by studio member Phil Nichol with an education program operated by Maggie Nichol. 

In the same year, the company launched a capital project to repair and refurbish the building, completed in 2002. Funding came primarily from the ACW Lottery Fund, with additional contributions from Cardiff City Council, CADW, the Foundation for Sports and the Arts, and the now-disbanded Cardiff Bay Development Corporation.