Commercial galleries Market USA

Slicing up the Big Apple

New York's galleries scatter as rents rise and generations shift

From desolation to destination, Chelsea is now a developer’s dream

Manhattan is in flux. While the richest dealers are supersizing their Chelsea spaces and an emerging generation is consolidating in the Lower East Side, a swathe of dealers is looking for a new place to call home.

“In 25 years here, I’ve seen the city constantly reinvent itself. But this is of a different magnitude [because] the city is running out of space,” says Sean Kelly, who moved from Chelsea to become the only dealer in Hell’s Kitchen last year. “New York is very different from the time when galleries moved from Soho to Chelsea,” says Stuart Siegel, the senior vice-president at CBRE, a commercial estate agency. Mass migration is no longer possible. “There aren’t really spare neighbourhoods any more.”

Kelly is not the only one going it alone. Postmasters gallery opened in Tribeca this month after 15 years in Chelsea. “Moving here now, we’re a trend of one, and I’m completely comfortable with that,” says Magda Sawon, the gallery’s co-owner. Casey Kaplan plans to celebrate his gallery’s 20th anniversary in 2015 by leaving Chelsea. “I want to spend the next 20 years concentrating on art and not be involved in a discussion about real estate. I can achieve that by moving out of Chelsea,” Kaplan says. He has not decided on a location but says it will not be in the Lower East Side. “It’s not my generation. The right move is to strike out on my own rather than migrate to another gallery ghetto.”

Others prefer strength in numbers. “There were around a dozen galleries in the Lower East Side when we opened in 2007 and now there are more than 50. It’s a huge increase,” says Augusto Arbizo, the director of Eleven Rivington. Newcomers from Chelsea include Monya Rowe, Gasser Grunert and Valerie McKenzie. “Chelsea had become so gargantuan. I felt overlooked. I was on the second floor and might as well have been in Siberia,” McKenzie says. Her former building in Chelsea was bought in 2007 by the real-estate giant Related Companies, which forced many smaller businesses out. As the neighbourhood became more corporate, Chelsea turned into “a place for supersized galleries with non-avant-garde art and a solid foot in the secondary market [that are] more of an amplifier than a generator”, says Tanja Grunert of Gasser Grunert.

Rents are rising everywhere. Prices have more than doubled in Chelsea and have risen by around 30% to 35% in the Lower East Side, dealers say. Middle-tier dealers have been hit hardest. Larissa Goldston moved from an upper- to a ground-floor space in Chelsea last year, but is now without a home because the building was torn down to make way for a new residential tower. “Can I afford a gallery space in this landscape and this market? It’s complicated to be in the middle ground,” she says.

The pressure has forced some to reassess. Nicole Klagsbrun closed her gallery earlier this year after 30 years in the business, saying: “The old-school way was to be close to the artists. Nowadays, it’s run like a corporation.”

Some dealers have closed and gone on to join larger enterprises: Christopher D’Amelio, who ran D’Amelio Terras for 15 years, is now a partner at David Zwirner, while the founders of Harris Lieberman now work for Metro Pictures and Marianne Boesky.

Even if the majority of galleries that rent decide to leave Chelsea, dealers who bought their spaces years ago, such as Paula Cooper, Barbara Gladstone and Gagosian Gallery, are likely to remain. “We may see a fracturing of the landscape like never before, based on property ownership,” says the gallerist Edward Winkleman, whose Chelsea lease is up for renewal next year.

Many of the dealers who own their spaces have been “offered huge prices for their properties—multiples of what they paid—but it puts them in a dilemma of where they would go”, Stuart Siegel says. “Maybe when they retire they have a wonderful asset they could sell.”

The fact that many of these dealers are approaching retirement age is encouraging other gallerists to make their mark in the city. While some are expanding in Chelsea, others are looking uptown, such as Emmanuel Perrotin and Dominique Lévy, who both opened on the Upper East Side last month.

Some see opportunity within the increasingly fragmented scene. “It’s interesting to see how New York will change in the next few years because of the generational shift,” says one dealer. “It’s going to be major.” 

Chelsea prices through the years

Chelsea, once full of empty lots and garages, is now in the middle of a property boom. As soon as the construction of the High Line was announced in 2006, developers began a land grab. The elevated park attracted three million visitors in its first two years: ten times more than expected.

“I was initially so excited because I thought ‘the more people through the door, the better’. But most of them came for the toilet,” says the dealer Magda Sawon.

1995: Paula Cooper buys two buildings on 21st Street for $500,000.

1996: Matthew Marks, Barbara Gladstone and Metro Pictures buy a 29,000 sq. ft factory space on 24th Street for $2m.

2001: Gagosian Gallery buys a 22,000 sq. ft space on 24th Street for $5.7m.

2007: Marlborough Gallery buys a 10,000 sq. ft space in the Chelsea Arts Tower on 25th Street for $9m.

2010: David Zwirner buys a three-storey parking garage on 20th Street for $8m. This will become the dealer’s third gallery in Chelsea.

2013: 303 Gallery sells its space on 21st Street for $8m and opens another space on 24th Street. The gallery is scheduled to move to a new residential tower on 21st Street in 2015.

Data courtesy of Propertyshark.com, Bloomberg.com and Art on the Block by Ann Fensterstock

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Comments

26 Oct 13
23:58 CET

JONATHAN LEVINE, RUTHERFORD

Everyone should move to down town Newark, NJ. It is a 10 minute ride from Manhattan. It is vacant, close to the trains station as well as the airport.

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