The artists were squatting in an abandoned factory as their studio.

squatting 是动词 squat 的现在分词形式。squat 本意是"蹲下"，引申为"未经许可占用空置建筑物"的意思。在这里指艺术家们未经正式许可就占用废弃工厂作为工作室的行为。