When the Clay Studio was founded in 1974, Old City had plenty of factory buildings but a dwindling number of functioning factories. That made it perfect for artists, who converted the light-filled lofts into studios. In those days, barely 500 people lived in the narrow lanes between Second and Third Streets. It’s true that fires would occasionally rip through the neighborhood’s cast-iron buildings, recalls Kathie Dalzell, one of the studio’s founders, but the rents were insanely cheap. Old City soon became Philadelphia’s gallery district.

What followed was a now-familiar cycle in the evolution of American cities: Factory lofts were turned into apartments, expensive houses and restaurants sprouted in the gaps, and the neighborhood’s residential population swelled. Not all the galleries have been pushed out, but several marquee destinations — Rosenfeld, Snyderman-Works, Rodger LaPelle, Moderne, the Painted Bride — have either closed or moved on in the last few years.

With neighborhoods across Philadelphia experiencing similar residential booms, it is becoming ever more of a challenge for artists and arts groups to find affordable work spaces. While the Clay Studio had the advantage of owning its building on Second Street, the space was far too small for its programs, particularly its popular partnership with the Philadelphia schools.

So, the Clay began scouring the city for a new space. That was a decade ago. It looked at bigger buildings in Old City but couldn’t find one in its budget. It considered moving into an old church on Spring Garden Street but feared the renovations would be too complicated. The potters also longed to be among artists again. Eventually, the Clay Studio set its sights on North American Street in South Kensington, one of the few remaining outposts where you can still find a critical mass of artists, makers, designers, and architects.

This week, the Clay Studio finally broke ground on its new home, a handsome, four-story, 34,000-square-foot structure designed by Digsau architects. The project promises to cement American Street as a makers’ corridor. But this time, Clay Studio is no pioneer. When the organization moves into the building late next year, it will be surrounded by a cluster of new apartments.

For now, the location offers a concentration of like-minded arts groups and fabricators, enough to give the street the feel of an arts district. Crane Arts is just across the street. That massive, early-20th-century warehouse, which consumes the block between Master and Jefferson, anchors the corridor and provides homes for five art galleries. NextFab, a collaborative makers space, has settled into a location a few blocks north. In the manner of Old City, American Street also has accommodated crossover businesses, such as Beaty American and Bahdeebahdu, that work with found objects, furniture, and architectural relics.

What’s notable about the Clay Studio is that it is the first of those arts groups to construct its own building. The organization had originally expected to burrow into an existing structure. “I think we looked at every abandoned factory” left in Philadelphia, director Jennifer Martin told me. In desperation, they approached the Crane’s David Gleeson, who owned the grassy lot across the street. He agreed to hold the site for them until they could raise money for construction.

It wasn’t just the proximity of other artists that attracted the Clay Studio to the neighborhood. Although the studio was founded by experienced potters who pooled their resources to create a common work space, it had evolved into a cultural center that offered classes, hosted gallery exhibits and lectures, and ran an extensive community outreach program. Moving to South Kensington will put the Clay Studio closer to families who can take advantage of its offerings, Martin explains.

As is often the case in Philadelphia, fund-raising took longer than the group expected. The delays gave Digsau’s design time to evolve.

The $13.5 million building started out as a sleek, museum-like structure, with long expanses of glass and a jutting roof like Digsau’s cafe at Sister Cities Park. That was probably too slick for American Street, and for a down-and-dirty makers organization like the Clay Studio.

The final version is rougher, but it is still more refined and formal than any recent building the neighborhood has seen. You could easily imagine it in Center City.

The Clay Studio chose Digsau because the firm has a similar affinity for the texture and eccentricities of the handmade. Digsau’s early designs, like the Challenge Program headquarters in Wilmington, which was made from reconstructed wood pallets, were simple essays on texture and pattern. Even as the firm won more commissions with bigger budgets, it continued to build with real brick and stone, applied one block at a time to emphasize that buildings are one of the few products still assembled by human beings.

Despite Digsau’s preference for the artisanal, its facades tend to be variations on the grid. (The Study Hotel near Drexel and its office buildings at the Navy Yard are the most extreme examples.) The new Clay Studio combines that mix of quirky materiality and regimented geometry.

The inspiration for the Clay Studio’s grid, Digsau’s Mark Sanderson says, were the simple wood cubbies that its potters use to store their unfinished work between firings and glazing. The hallways and studios at the new building will be lined with Digsau-designed cubbies.

It would be pretty dull if the architects simply replicated that same unrelenting grid on the exterior. Fortunately, the designers have scrambled the rhythms a bit. The facade will be clad in a buff brick, ideally one flecked with bits of mica and iron. Most of the windows are square and deeply recessed in angled brick frames. Those voids alternate with solid sections, as well as larger, rectangular windows. Digsau marks the central staircase with an entirely different kind of window, framed pop-outs that stagger down the facade.

Digsau’s approach is very much in the tradition of the “decorated shed,” a term coined by Robert Venturi and Denise Scott Brown. It’s not just that the Clay Studio’s proportions resemble those of Venturi’s and Scott Brown’s ISI building at 36th and Market. The use of bricks made from clay reflect the activity inside the building. From American Street, passersby will be able to glimpse the glazed orange walls of the roof deck and a ground-floor event space. It’s the architectural equivalent of some ceramic vessels, smooth on the inside, rough on the outside.

The new building is also designed for maximum sociability. The ground floor will house a public gallery, store, an outdoor sculpture garden, and an events space, which doubles as parking for the studio’s “Claymobiles,” the vans that bring classes to city schools. The project will also be able to roughly double the number of kilns and worktables. A fourth-floor conference area and deck give the studio more opportunities for lectures. Like many arts groups, the Clay Studio hopes to make money renting out the space.

It’s a big switch from the Clay Studio’s early days in Old City, when industry and business were fleeing. Here people keep coming. The Streets Department is finishing up a major reconstruction of American Street, once a major industrial corridor. No one is sure what’s next for the neighborhood and its many makers. But whatever happens, the Clay Studio’s new building ensures that its artists will always have a home.