Real Estate Madness

Follow-up to yesterday's post on Art Coverage. For the record, the gallery coverage in The New York Times today is extensive. With 7 reveiws in the Art in Review section (including three by one of the new writers I didn't mention yesterday, Bridget L. Goodbody [yes, still sucking up]) and 4 major stories sprinkled through out. There's still only one listing for a Chelsea gallery, which suggests that section is winding down altogether, but I give credit where it's due, and admit when I was emulating Chicken Little.
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The Chelsea real estate sky is falling! The Chelsea real estate sky is falling!

OK, so again, perhaps a bit of hyperbole, but as reported in the Times today, unless you're a behemoth gallery or independently wealthy, your odds of getting a good Chelsea location are getting slimmer all the time. We were lucky to get a ground floor space when we did (and even then, we're closer to New Jersey than we are to 5th Avenue), but are terrified of what things might look like when our lease is up (can't think about that just now, must think happy thoughts!)

Here's the essence of the drama:

The contemporary art auctions at Sotheby’s and Christie’s this month are among New York’s colorful rites of spring. Art dealers say they expect the spring sales to be especially bountiful this year, thanks in no small part to the record bonuses on Wall Street in December.

“The demand is huge,” said the art dealer Perry Rubenstein, who added that the contemporary art market was “accelerating as we speak.”

While the market is red-hot, many prominent New York dealers are scrambling for ever more gallery space. Some of them have traded up to bigger spaces that allow them to show larger works, while others have opened second — or even third — galleries.

The competition for gallery space is probably fiercest right at the heart of the art market in Chelsea, the neighborhood that has become a magnet for contemporary art collectors. The core gallery district stretches roughly from 20th to 26th Streets between 10th and 11th Avenues. There are a handful of galleries a bit north or south, but almost everything is west of 10th Avenue.

“That’s where the hedge fund people go to drop a lot of cash,” said Matthew Bergey, a real estate broker at CB Richard Ellis, who is an art collector himself. “They enjoy art, and they are also trying to get into the right social stratosphere,” by collecting contemporary art.

Mr. Bergey said the tight market for space in the Chelsea gallery district is forcing out many young dealers. Some of them are taking space a few streets farther south, toward the West Village, while others are opening galleries on the Bowery, in the East Village. But when new space becomes available in Chelsea, it is usually the better-established dealers who can snare it.

In addition to how hard it is to find a Chelsea space at all now, unless a gallery was flush enough to buy their Chelsea location, many are now facing their initial leases coming up for renewal and landlords are raising rents to astronomical sums. I've heard of 60% increases by landlords who consider themselves pro-gallery. Furthermore, I was recently told of one space where the rent soared to 10 times what it was less than 5 years ago.

With all the new condo buildings going up in the neighborhood (suggesting if the galleries have to move out, there will be plenty of residents to support restaurants or boutiques moving in), there's every reason for galleries who don't own to start considering where the new concentration of New York's contemporary art scene might be in a few years.

Uggh...I can't think about that right now. I still haven't unpacked everything from our recent move.