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Anticipating Closures, Small Galleries Feel the Financial Costs of the Pandemic

Anticipating Closures, Small Galleries Feel the Financial Costs of the Pandemic

Last week, dealer Adam Lindemann filed a lawsuit in Manhattan federal court to break his gallery Venus Over Manhattan’s $365,000 lease at the tony 980 Madison building, home to mega-gallery Gagosian. Lindemann’s lawyers are arguing that New York Governor Andrew Cuomo’s temporary shuttering of all nonessential businesses during the coronavirus pandemic has produced unforeseen circumstances that prevent the gallerist from doing business. The motion sets the gallerist at odds with another billionaire collector, the real estate magnate Aby Rosen, who owns the building where Venus Over Manhattan operates through his company, RFR Realty. Lindermann is also reportedly selling his Montauk estate, once owned by Andy Warhol, for around $65 million.

But the financial woes of a wealthy dealer are just the tip of the Covid-19 iceberg; galleries across the country are struggling to pay their rent, negotiating with their landlords or pursuing legal action to keep their businesses afloat amid a looming recession. Lindemann, a wealthy businessman and collector who has been featured in ARTnews’s annual Top 200 Collectors list, is well able to mount a lawsuit, but for smaller dealers without the working capital to do so, or to weather an economic downturn, quarantine may spell the permanent end of business.

Rebecca Elmquist opened Larrie’s doors in 2017 as a venue for emerging artists, most of whom had never received an exhibition before. But her gallery on Manhattan’s Lower East Side, proposed as a destination for collectors looking to discover new talent, will close if the landlord doesn’t budge on the gallery’s $4,000 per month rent.

“It almost makes me cry,” Elmquist told ARTnews. “It’s a scenario in which most galleries were already hurting. Rent has always been high and it’s always been a struggle to get by. But I think we are going to see a lot of spaces close.”

Elmquist had previously applied for relief through the CARES Act, but her application on behalf of Larrie was denied. A separate application for her public relations business was, however, approved. That momentary relief has allowed the gallerist to think about the future of her art space, but lawyers to fight landlords are expensive and she says it may be more beneficial to give up her space and combine with another small gallery in the area to share costs.

Over the last few days, ARTnews interviewed several other New York gallerists who described themselves in a similar position as Elmquist. They declined to be named for fear of reputational damage in an industry that’s often silent about financial woes.

“You can’t talk about the fact that you don’t have money in the art world,” Elmquist added. “Everything I have has gone back into space. If nothing happens, smaller galleries like mine will be gone.”

In Chelsea, Yancey Richardson’s namesake gallery has worked closely with its landlord to reach an agreement. The dealer is currently paying only a portion of its normal rent and will negotiate again in the fall to see what happens about the unpaid fees. “The big question is whether the rents of early March will be relevant in our new economic environment,” Richardson noted. “I don’t think spaces that are being vacated are going to be rented.”

And in Brooklyn, Max Marshall of Deli Gallery says that business has remained steady for now. He is participating in Fair, a virtual exhibition by the New Art Dealers Alliance (NADA) that provides an alternative profit-sharing model that pools a portion of all sales between participating galleries and artists. With artworks that generally sell in the range of $2,000 and $10,000, his inventory also sits in the sweet spot for most collectors who buy online. And luckily, Marshall’s landlord has allowed Deli Gallery to postpone rent payments for now. But even so, the young gallerist is worried about the art world’s future.

“Everyone is nervous,” he said. “It’s pure, economic triage right now.”

From the Lower East Side to Chelsea and Tribeca, NADA executive director Heather Hubbs has heard from galleries struggling to meet their landlords’ demands. “It’s a massive concern right now,” she said. “I think we will see closures. I don’t know how that’s avoidable if something isn’t done.”

Her organization is currently advocating for New York to cancel rent during the quarantine, a cause that has garnered support in the state senate, but appears to lack the momentum needed from the governor’s office to be signed into law. But because there is a moratorium on evictions in the city, she is advising galleries not to pay their rent if cash flow is an issue.

“Unless they have a legal obligation to forego rent, there isn’t a landlord in the city who’s going to forgive it,” said Jonathan Travis, a real estate broker who has worked with clients including Anton Kern Gallery and Bortolami. “But right now, the leverage is in the hands of the tenant.”

In the last two weeks, Travis has seen some movement in the market with more than a few galleries looking for new spaces. Ultimately, he recommends that galleries experiencing financial straits first try to negotiate with their landlords before seeking a legal remedy like Lindemann. After all, many of the city’s property owners—especially in gallery-rich neighborhoods like Tribeca—are single-building operators and thus more likely to bargain.

Across the country in Los Angeles, Alex Ahn is trying his best to navigate the post-physical world. For the last five years, his gallery AA|LA has served an important function in the city of stars—providing emerging artists a platform to showcase their work, often for the first time.

“Coronavirus is the biggest challenge we have ever had to face,” he said. “We can’t pay rent because we don’t have money. I don’t know any gallery—unless they own their own space—that is going about things normally right now.”

Like so many other gallerists in the area, Ahn says that he is currently negotiating with his landlord for rent relief. But the outcome looks bleak. Online sales and digital content are not adequate replacements for his business model, and regular business might take months, if not years, before returning to pre-pandemic levels.

What this will mean for artists who rely on smaller outfits like AA|LA for their big breaks is still unclear. But no matter what happens with his gallery, Ahn says that coronavirus has not shaken his resolve to stay in the art world.

“There are larger issues that the pandemic has brought up in terms of how galleries operate,” he said, “but as a gallerist, I will continue to support artists however I can. I still want to be there for them.”

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