Recession Impacts Secondary Market


As the global economy continues its downward spiral, the banking crisis deepens, currency fluctuations wreak havoc and the high-end real-estate market remains frozen, there’s a flurry of activity for some parties in the art world: a sudden increase in secondary sales volume for dealers. Perhaps it’s because of those dismal financial factors that sellers are looking to cash in on blue-chip artworks, and are choosing not to take their chances at auction. Marc Glimcher, president of PaceWildenstein, was recently offered Picassos, Warhols, Dubuffets and works by other big-name artists, “far more than is usual” consigned by longtime clients. All of those works were promptly shipped off to new buyers, indicating a still robust sector of the art market. “We are seeing an increase in sellers, and consequently buyers, of some extremely important secondary market material,” confirms a gallery spokesperson. (Glimcher, along with most dealers interviewed, declined to
disclose prices.)

It’s hardly an isolated incident, according to a number of dealers. Emmanuel Benador, a director at Jan Krugier Gallery, reports the same trend. “Before, it was really rare to see longtime clients offer top work at reasonable prices,” he says. In December and January, Krugier was offered important pieces by Max Ernst and Richard Diebenkorn, among others. “Those clients don’t want to risk sending paintings and sculptures to the auction houses and end up getting burned if the works fail to sell,” Benador explains. “Other dealers have told me they’ve had clients offer great work by Franz Kline, Cy Twombly, Lucio Fontana, even Burri and Surrealist artists,” says Benador. “At last, the swing of the pendulum is away from the auction houses
and back to dealers.” But it’s not simply a case of only midcentury trophies suddenly reappearing on the market. Contemporary examples are also showing up, observes Chelsea dealer Zach Feuer. “We are seeing the same trend, since collectors know it’s an uneasy market, and they don’t want to take a gamble on the auctions.” He cites works by such artists as Barbara Kruger and Sherrie Levine that would have gone to auction only six months prior.

Angela Westwater of Sperone Westwater cited a total of 12 works on consignment, including classic examples by Guillermo Kuitca, Susan Rothenberg, Bruce Nauman, Piero Manzoni and Lucio Fontana. “For the most part, these works have been consigned to us from collectors who are now willing to accept lower prices than they were one year ago,” when her gallery had far fewer blue-chip works on offer from established collectors. “With the auction houses no longer offering guarantees, those clients see their own dealers as a far more reliable outlet,” she says. “We know who was originally interested in the paintings and can follow up with thosepotential buyers.” Clearly, collectors are aiming to capitalize on works by proven artists with consistent track records. “I’m not seeing work by emerging artists appear on the secondary market,” says Feuer. As for the profile of the clients, Feuer notes that they generally have been collecting for over 10 years and are far more seasoned in the art market than the newly rich, or newly interested, who entered at the height of the boom.

While the primary market has slower for Feuer and his colleagues internationally, he recently sold some new work to museums, many of which had been squeezed out before by the overheated market. Further evidence of this market shift is the paltry number of consignments Christie’s and Sotheby’s landed for last month’s sales in London [which took place after this issue went to press]. In February 2008, for example, Christie’s postwar and contemporary art sales featured 54 lots in their evening sale and 284 lots in their day sale. What a difference a year makes. This February, they offered only 31 lots in their evening auction, while their day sale dwindled by more than two-thirds, to only 91 works of art. A similar attrition played out at Sotheby’s London, where the contemporary sale shrank in the same period from 365 to 174 lots, a drop of over 50 percent.

The estimate for the evening auction was $32 million for a mere 27 works, in marked contrast to the prior year, when Sotheby’s garnered $189.4 million for 72 lots. With the general market slowdown, buyers are now in the driver’s seat. An informal poll conducted by A.i.A. of members of the International Association for Professional Art Advisors revealed that many of them are skipping the auctions. “We are definitely going directly to dealers, not through the auction houses,” said Oakland-based Suzy Locke. “My private clients are patiently waiting for prices to fall further,” said Heidi Lee from her Manhattan office, “and many believe the market will hit bottom
around May.”  

Image: Piero Manzoni, Achrome, 1958-59, $2.5 million at Sperone Westwater.