A Turning Point for the Art Market?

0:20Mariët Westerma:And this is the Yard Angle, a podcast by Artnet News.

0:30Mariët Westerma:I'm thrilled to be able to say that the latest edition of Artnet's intelligence report, the Mid-Year Review 2025, has been published. It's free for all comers. Head to Artnet News to download it as a handsome PDF. Within its covers, you'll find a bounty of information on the auction world and the art industry, which artists have been having a great year, how various countries' markets are performing, and a great deal more. Surprises abound from the old masters to the ultra-contemporary. You'll also find interviews with power players from the field, like the Guggenheim Museum's chief, Mariette Westermann, and the widely admired, now-retired art dealer, Jack Hanley.

1:13Mariët Westerma:And then there is the cover story by our ace columnist, Katya Kazakina. It's titled, The Storm Hits the Art Market, Who's Getting Swept Away? It looks at recent upheavals in the art industry, with galleries closing and everyone spending the summer thinking about how to run an art business now. There are tales of crash outs and heartening new models. There's something for everyone. I'm thrilled to have Katia on the Art Angle podcast after she pounded the pavement at openings for exhibitions all over New York City. All right, welcome to the Art Angle. Katia, thank you for coming on. How are you doing?

1:49Thanks so much for having me. I'm doing well.

1:51Mariët Westerma:Good to hear. We are here convening because the Artnet Intelligence report just came out, and you've written the cover story, The Storm Hits the Art Market, which has been making the rounds. It's much discussed, much debated. Before we delve in completely to what you found through your reporting, I thought we might take a little step back and talk about just how it came about and what this summer, as you were working on it, you were thinking about. You originally came with a very different idea. And I should say to kind of tee it up, the storm hits the art market. The headline is sort of self-explanatory.

2:26Mariët Westerma:It's about how people are grappling with the downturn. But what were you originally thinking about this summer? To be honest, I wasn't thinking about the story at all because, you know, all through last year, I would say there's been this narrative that maybe we hit the bottom, that maybe the downturn is turning around i'm sort of tired of writing these doom and gloom stories and i think after the last uh auction cycle several people mentioned to me like how these collections come together and the idea of patience that collectors need at this moment more than money even sometimes in building their collections that are very significant.

3:10And, you know, I was intrigued by this idea and I kind of thought that it might be big enough umbrella to write something very different and maybe frankly softer. And then I started reporting kind of end of July, early August. And my big surprise, all the conversations I started having with people were really more about how difficult it is on the ground and advisors and collectors and galleries and it was kind of like a strange situation because I wasn't really looking for this narrative at all my mind was somewhere completely different and in the past two years where I've been kind of reporting this out fairly diligently.

4:01I think there was some pushback. I would say people kind of didn't want to engage in the beginning. They didn't think that these downturn were serious. But in this case, this summer, what really surprised me that like something shifted and all of a sudden this narrative, there was some kind of like understanding and embrace of where the art industry is and there was acceptance almost like a self-evident acceptance that we are in a very serious downturn and you know it's going to get worse that we're not bottoming out and the tenor of these conversations really surprised me because there was kind of hopelessness in a way that I haven't encountered before.

4:48People just didn't know what comes next. There was acknowledgement that the system doesn't work, that what was built somehow is much bigger than the demand that exists at the moment. But people didn't know how to maybe come out of it and what's on the other side. And that really surprised me. And I think that that's when I came to you And I said, Andrew, I think we need to tell a different story.

5:19Mariët Westerma:Absolutely. Absolutely. And there was that moment, just as you were talking to sources, getting together what you were going to tackle in this story, Olivier Babin, founder of Clearing Gallery, decided to close and gave you what I thought was really one of the most remarkable interviews I've read with an art dealer before. Thank you. This is early August. For people who aren't familiar, Olivier had run the gallery for, what, it was 13 years or so? It was 2011 he started. In Bushwick, he was an artist. And he wasn't happy with what was happening with his art career or artwork. And he started showing a work of his fellow friend and artist, Carl Enghardt.

6:02They were both in Bushwick in the studio. And so that's how the gallery started. and he became like one of the top emerging art galleries in the world for a period of time very gregarious guy you know he recently expanded to new york to manhattan from bushwick and uh parties shows very like vibrant vibrant scene and so there have been like rumors i think people have been talking that something is changing I think our colleague Annie Armstrong she was passing by at some point this summer and so like that the space had like a pop-up something unrelated to art anyway that he came out on Instagram and he said that he's closing the gallery and that was a big shock but also not just because of his gallery but because it followed several other or well I guess what happened right before right Blum closed yes and then Venus over Manhattan closed and then Olivier said that he is closed and I think right before Olivier Casmin closed so it was like kind of a drumbeat of these closures of prominent galleries and I called him right away because sort of a story behind the story but I would just remember that over the years I would talk to people like I remember I had conversation with team gallery and like really in-depth interesting conversations but because of where I was at the time there wasn't really the appetite of this kind of in-depth Q &A and then Andrew Goldstein did those interviews and I was always so jealous because he did such a great job and I felt like this was very valuable I think I always found those kind of exit interviews very valuable and I learned a lot from them but I also kind of felt like I was sitting on this very similar material and I wasn't able to publish it and so when Clearing said that they're closing I was like okay I'm not gonna make this mistake again I really need to talk to him and and so I called him and he said give me a day call me tomorrow.

8:25I need to talk to my PR manager. And so I called him the next day and didn't expect him to be so open. Didn't really know what he was going to say. And then we talked for almost two hours as he kind of roamed the Lower East Side. It was incredible material. And remember, it was on Friday, which is when my column unit comes out. And I said, I have to write it up like right away.

8:51Mariët Westerma:Drop everything and just write it up. Crash this, yeah. And we totally crushed it. It came out. It was amazing. But, you know, I left, again, a lot of material on the cutting room floor. And so I knew where my head was at the time already with this intelligence report story that it really fit into this narrative, too, because it kind of really exemplified this struggle that I think a lot of galleries are having. I wanted to bring it up because you opened the piece for the cover story. You opened the cover story with Olivier. And I was happy you did that because my senses had really struck a nerve, that story, for a few different reasons.

9:31Mariët Westerma:I mean, I think one was that he's 50 now, but he'd come up, as you said, over the last 14 years from Bushwick, opening in L.A., moving to New York, out of Brooklyn. He represented this whole group of artists, Kelvin Marcus, Korokit Arundicai, Zach Kitnick. I mean, really interesting people who were kind of coming up with him. And you think, you know, this is someone who's doing Basel, who's doing all of the right fairs. And yet he talks really candidly about the sort of structural problems that many people have been complaining about. There's one quote I wanted to read to kind of tee up what I think you're getting at in your article.

10:08Mariët Westerma:He says, with Basel, you can't get away with spending less than$80 ,000 for a small booth. We'd come back from a fair and we'd sit down with the bookkeeper. So how was it? I was like, it was great. And then we'd look at the numbers and realize that it felt greater than it was. The numbers were not great. They were okay, but not great. And he essentially walks through. There's the massive expense that goes into doing these fairs, running these galleries with overhead. And he was not even by any means the largest operation in town. You see galleries with huge staffs, branches all around the world.

10:44Mariët Westerma:Tell us about why that felt like a case study to open up with and kind of the structural things you encountered in your reporting. Well, I think that there's been a lot of talk over many years about the pressure and the burden and kind of this love-hate relationship, maybe not love-hate relationship with fairs, but what art fairs have become to galleries and the role they play in the whole ecosystem. But the main thing is that they're very expensive for galleries and they are very prestigious. That's where collectors go. That's where they meet curators and buyers. And, you know, for a lot of galleries and there's a lot of data, art fairs represent a huge chunk of their revenue.

11:25So Art Basel obviously is the pinnacle. So everybody is trying to get into Art Basel and like younger galleries. Sometimes they are in like a section, a particular small section, and then they kind of gradually move up sometimes to the main section. But either way, it's like very, very expensive for them to do it. And I think that this anecdote kind of seemed relevant because for a small gallery not to do well in Basel after putting in so much money into this endeavor would be very difficult. Like we kind of entered year four of this contraction. And I date this based on my reporting, the contraction to right after Basel in 2022.

12:01two. This contraction was very initially kind of quiet and not well understood. I understood it only a year later when it kind of manifested itself at an auction. You know, there was a Feinberg auction at Christie's. But then when I started talking to my sources about this, they said, well, actually it started a year earlier. So clearing, got into Basel, did several Art Basel's Miami Basel and then that quote that you just read that it was good but it felt better than it actually was so this year what was interesting I remember and you probably remember right like a week before Basel suddenly this email came saying that they're not doing Basel Basel but they're renting this maison this house very close to the fair and they're gonna show their program in that house.

12:57I wasn't in Bago, but you were. So you went there, right? Yeah, it was great. Really cool. But it was different, right? Like it was a very different setting. So pictures, the art was in the staircases, in the attic, in the basement. There was a big courtyard with long tables and they were barbecuing and partying. It was like a very lovely kind of environment. I don't know. I wasn't there.

13:19Mariët Westerma:But that perfectly captures it. I think we're staying there as well. as you said, they were having dinners, but every inch that you could use to show art, they were using. It really felt like a super ambitious, renegade, guerrilla move outside this giant convention center. And then it ended up kind of looking like a Hail Mary pass, that it just wasn't enough, as you're reporting from. And he said, and Olivier told me, he said, this was like really a striking situation, which I think frustrates a lot of people right now, and maybe gets a lot of pushback against this narrative, is that, you know, he told me they got great press.

13:55They had really good sales. It was a success. However, and he said, and it really struck me that the hole in which they were standing was too deep and it just wasn't enough to get him out of there. And just to see like how deep, like on one level, almost immediately, concurrently with this announcement of closing gallery, his landlord filed a lawsuit against the gallery saying that it owed him like$400 ,000 in rent. And it was rent and there was fees and taxes and whatever, but it was like the whole thing is a lot of money.

14:31Mariët Westerma:So you get this sense of just these structural, these fixed costs. The fares is one part of it and the cost of doing business at that level. But then it's also having the real estate, having the overhead for staffing, you know, payroll. Insurance, shipping, everything. I mean, And shipping is killing everyone right now. It's a whole other story which we could investigate. But anyway, and so it felt just like very sad, right? Like you put in so much into this and you give it your best shot and it's just not enough. Yeah. So that's why I thought that that really captured the current zeitgeist on many levels.

15:13Mariët Westerma:Yes. Yes. And right now, as you said, and you write this in the story, that the circumstances of all these closures are very different. But there is this sense of upheaval. There is this sense of people really trying to rethink how to go about doing the business of running an art gallery, marketing artists' work. and you look at a few alternative models, one being Leo Koenig. But talk us through what you saw, how people are responding to this moment of these high costs, these difficulties of doing business, a tough economic environment. How are people pivoting? Well, you know, like some people are closing.

15:51Some people who are not closing, they're downsizing. And so let's say if the galleries have multiple spaces, it seems like in the last month i've heard a lot of news coming out of la like small galleries either closing there or some leasing like the whole is looking to sub-lease its space in la also in new york already after we filed the story and we covered that canada gallery sub-leased its space it had two spaces in tribeca it had a main space and then an annex across the street And so Max Levi is going to take over the ground floor of that space. So Canada is downsizing. We've heard just today, right, that Hannah Hoffman and Bridget Donoghue are merging.

16:39Well, her two galleries, right, moved in together on the lower side also last month. So I think people are doing just like how to cut costs. Like maybe this is funny in a way, but during the Armory show, there weren't many big parties. people are cutting down on entertainment.

16:57Mariët Westerma:I think it's an important indicator. You're seeing less of that super public after-party thing. Things are just scaled back a little bit. Yeah, right, right. And then some interesting things, I guess, you know, Leo Koenig, who opened his gallery, he was young in his 20s. He opened the gallery in 1999 on the Lower East Side and then for many years had a space in Chelsea. So I kind of checked in with him just because I remember when I started reporting about the art market when initially it was just coincidentally the New Yorker wrote a big profile of him. Great story. It was a great story called The Salesman.

17:35Just have known him forever. And so I wanted to check in with him. He opened a space in May in Andes. It's like a tiny town in the Catskills. And so he's doing something interesting like he still has a space on some upper floor on medison avenue on the upper east side but he said like very few people come to that space and he said like he realized that he needs a phone and his contactless to be a dealer right like he doesn't need to be sitting in that place where nobody comes to and so he opened the space in the andes and is trying to turn it into like this destination for collectors. He invites his customers to come for a weekend.

18:17He hosts them. There are dinners. They go hiking. They go fishing. They go to deer beacon. They have this really nice time. Artists come up. They look at art and they also have a good time. And sort of within those parameters, he sells the work. And he said that his dollars go way farther when he's out there. It's also just like something else about an experience that is a lot less varied and that is more personal and intimate in some way. And he kind of said that that works for him. But then in addition to this, he was kind of thinking about having that space from May through October. And then from November until the spring, he goes to Palm Beach where he has a space and storage and where a lot of very wealthy people go for the summer.

19:07And so he said that most of his revenue is done for the year there. So you have like kind of triangulation, basically, like that model, which is interesting.

19:18Mariët Westerma:Smart. Yeah, that he's really worked out these different ways of bringing in clients. I mean, he's someone who has had spaces all over. He's done the big Chelsea thing. He's done the Brooklyn thing. And now it's upstate and it's Palm Beach and Upper East Side. But thinking about the kind of argument you're making in the story and what you're reporting was showing you, it's partially the structural issue. It's the cost of doing business, which Leo's kind of tackling by doing this interesting model. And then, of course, it's partially a demand situation, which you talked about the kind of negative feelings in galleries among collectors.

19:52Mariët Westerma:You also highlighted the sense that some really big people are not buying right now. And this was news to me. This was, I think, really kind of a powerful indicator of just how small the art industry is in some ways, that a few people sit out. It can really change how people operate. Talk us through that and what you found there. So that was a surprise to me, too. One of the people I talked to for the story was Bathurden de Woody, who is lovely and kind of consummate collector, right? So many galleries rely on her. And she's a collector of emerging arts. So she is a real kind of a leader in this field.

20:35There aren't really that many people like her. And she supports a lot of galleries. She supports a lot of artists really early in her career. And then for galleries, like people have told me that, you know, when they try to sell these artists work later, they would say, oh, Beth bought it. And, you know, so they use her support. Yeah, she was a key tastemaker. And so she told me that to really scale back and she's not buying really right now. And kind of similarly, I think to what we said earlier, that every story of every gallery is a little different. It's very individual piece and that there are broader themes.

21:11And so in her case, there are reasons why she is not. It's not just because of pricing or the economy. I mean, you know, she has personal reasons why she's not doing it. But, you know, she is not in the market in the same way. And what it means, what really struck me about how one dealer thought about it, who worked with her for many years, is that it's not just the money, the amount of money she spends with the galleries. Although that's also very, very important. But for collectors who follow her lead, they just don't know what to buy. if you think about it it's important you don't want to buy something not even from the value perspective but just putting something on the wall that signals a wrong thing i don't know but so so he said that the situation were rudderless and that really struck me because not only we're talking about a money outflow from the market but there is really like no sense of direction and aesthetically even, you know, what is the next thing?

22:15Like, what is important? What is lasting, you know, in terms of art right now? And then another very significant complaint that I've been hearing for the past two years is that the prices are just out of whack. Like, just completely out of whack. And I think people are just, like, really freaked out by it. Maybe they still have money to spend, but they just don't want to spend it. Right. And that's kind of has to do really with the resale market and the fact that the primary prices have gotten so high for many artists that they have no necessarily resale market. That's important to understand also because, you know, we're not talking about when we're saying the storm has come for the art market.

23:03Look, nobody is questioning the significance of art, of art making. We are all art lovers, right? like in one way or another that's what nourishes us what nourishes me there's obviously no question that there will be artists art will be made somebody is making art of the future somebody is making the work that is going to be very very important right now somewhere you know but structurally things are shifting and the big question is like that bloat in my mind right like based on my conversations and interviews is that everything everybody says the same thing it just gotten too big there are too many art fairs there are too many galleries there are too many artists there are too many art consultants and just the prices are too high like it's out of whack yeah yeah and collectors even very seasoned collectors are like on the sidelines another big kind of caveat and like the nuance in this dynamics is that a lot of collectors that galleries have come to rely on like bathrood and dowody and another collector i spoke with for the article was dean valentine you know talking about people who support emerging artists very early in their careers there's an arc of collecting right like early in the arc you buy a lot right towards the end you buy less it was interesting i ran into pamela joyner yesterday at the opening of nathaniel mary quinn at gagozian and chelsea you know i asked her do you buy as much because she used to buy a lot and she said no she scaled back but she said like now she's filling in the gaps of her collecting probably she said that she spends as much money or more she doesn't need as many pieces right she said that she would have liked a painting by nathaniel mary quinn something she liked wasn't available.

24:58And she said like in his case, like she would keep adding to her collection, but you know, just where she's in the arc of collecting. And I think that a lot of collectors, especially collectors who are older in their lives, they don't collect with as my Jazeel. And so the question is who is coming up and what is the next generation of collectors?

25:18Mariët Westerma:And that's something you've written about a fair amount, the sense of a generational shift and a real fear around the next generation perhaps not emerging to the seams. Right. That was our intelligence report cover last time around. It's just a moment of a lot of shifting. You know, is there a next generation of collectors? What do they want? What do they like? Will they like the same things? Will they invest in the same artists? Will Warhol and Jod and will these artists mean something to them? Or will they pay that much money for them as their predecessors. Maybe not. They will make their own masters.

25:55But I feel like there are just a lot of questions and a lot of uncertainty about how that would look.

26:09Mariët Westerma:Massive uncertainty, this moment of just real upheaval. You have a line in the article that talks about, there is this sense out there among advisors, among top level people in the field, that there will be more closures, that there will be more. That's at least the feeling in the air. So a lot of bad news, but I'm also going to ask you, what are bright spots you see? Are there any positive indicators that you have seen, whether it's in the data, in the intelligence report, in your reporting? For instance, I know that some younger dealers get mentioned in your article that that people are kind of looking to, to perhaps create some energy and build up the field again.

26:51Mariët Westerma:But what do you see as positive indicators? Well, I think that also, like, the younger generation, you know, I caught up with Sebastian Gladstone, someone I've been watching this year. He came to New York, expanded, added a second location. He was based in LA and opened a space in Tribeca. You know, I caught up with him because I really wanted in my reporting I've tried to cast a very wide net you know in terms of scales of the galleries and just to really understand the current situation and he said that he's like very optimistic he said he's doing well there were a number of shows that sold out for him I guess he's moving into a new space in LA and opening with this artist kind of a forgotten abex artist Herman Cherry really beautiful I don't know I don't think maybe color field but sort of in that vein adjacent and adjacent and he said that he sold out that show already like weeks before the opening that's coming up later this month you know and he said that there are galleries and younger deals between like more than 20s to maybe mid-40s who are more like on the ground and who maybe don't have as big of an overhead you know maybe they have one or two staff members and maybe their rent is less expensive in many cases and I think I mean that's the same story like it's very generational like they're more nimble they're more scrappy and so I feel like people who don't have high overhead right now can navigate through this system but then on the other hand I was reminded there are a lot of rumors in the market about Pace Gallery and what's happening there and I kind of realized that maybe they stem from the fact that they just have a huge rent, you know, fixed cost in the beautiful building in Chelsea.