Fergus McCaffrey. Photo Jean-Philippe Piter.

Even as rising rents drive Chelsea galleries to eye real estate in other parts of Manhattan, the Upper East Side gallery McCaffrey Fine Art is expanding into 9,000 square feet at 508 West 26th Street. The expansion will include space on the first and second floor, much of it storefront property overlooked by the High Line. The renovations will encompass the space temporarily occupied by Harris Lieberman Gallery as well as the area around it. The drab gray walls and loading docks that currently face the street will be replaced by floor-to-ceiling windows, dramatically changing a rather dowdy stretch of the block.

Founded by Dublin-born Fergus McCaffrey in 2006, McCaffrey Fine Art will now be neighbors with venues like Robert Miller, James Cohan and Lehman Maupin. The renovated facility, which will also host Alexander Gray Associates (currently on the second floor of the same building) and another gallery, as yet unnamed, may open as soon as early March, according to McCaffrey.

"The opening show will be a groundbreaking exhibition of Natsuyuki Nakanishi, one of the most important figures in postwar Japanese art," said McCaffrey, 42, speaking by phone recently with A.i.A. Nakanishi was a founding member of the collective Hi Red Center, founded about 1963, McCaffrey said. About a dozen Nakanishi works were included in the recent exhibition "Tokyo 1955-1970: A New Avant-Garde" at New York's Museum of Modern Art, he added.

The 5,000-square-foot second-floor space formerly occupied by Nicole Klagsbrun will serve as a project room, McCaffrey said. He has already leased the space for about 18 months. "We lent space to various galleries after Superstorm Sandy so they had a place to let their art dry out," he said.

Currently ensconced in modest quarters on East 67th Street—about 1,400 square feet on one floor of a brownstone—McCaffrey primarily shows work by Japanese artists, such as Koji Enokura, Sadamasa Motonaga and Kazuo Shiraga, who are associated with the Gutai group, the Hi Red Center collective and Mono-Ha. "But we're by no means a Japanese gallery," he was quick to clarify, explaining that he has been expanding his roster in preparation for his larger facility, adding contemporary European and American artists including Jack Early (former creative partner of Rob Pruitt) and the Glasgow-born Gary Rough.

The Upper East Side offers cheaper rents than Chelsea, according to New York real-estate broker Susan B. Anthony. While storefront space in Chelsea might command $90 to $100 per square foot annually, an uptown brownstone might go for $50-60 per foot. But it's tougher to get curators and collectors to visit when you're uptown, McCaffrey acknowledges. So why did he originally choose the Upper East Side location?

"I had worked both uptown and downtown," McCaffrey said, "in Chelsea, where I worked five years at Gagosian, and the Upper East Side, where I worked four years with Michael Werner. I thought it was perhaps better, since I was working with historical material that was not so well known, to start in a context where more established material is shown. And that has served us incredibly well.

"But the idea of Chelsea has always been at the forefront of my thinking," he said, "and the new location brings different dimensions of foot traffic and proximity to other galleries. We'll have great north light and 15½-foot ceilings. We're delighted to be able to occupy such beautiful space."

Despite its location in a neighborhood that has undergone such extensive development, the ground floor at 508 has long been underused. The landlord, Gloria Naftali, wanted to put a restaurant there, McCaffrey said, but her plans never came to fruition. While those negotiations dragged on, amazingly, the area around the space rented by Harris Lieberman has remained for years a workshop and a place to store trash before moving it to the sidewalk. The Wolff Building was erected 1926-27 to house the H. Wolff Book Manufacturing Company, and during a recent visit to the space with McCaffrey, A.i.A. spotted an antique printing press standing in the ground-floor space, where a building staffer was assembling an acoustic guitar—as a gift for his grandson, he said.