CLEARING’s Closure and the Fragile Economics of Art Galleries

The sensational headlines announcing yet another gallery closure, often wrapped in a neatly polished obituary, are becoming tiresome. These stories deserve more than a grabby headline—they need context and a narrative that acknowledges the slow unfurling of events that lead dealers to throw in the towel, which are rarely the same from one art gallery to the next. Every gallery, and every founder, has a distinct history, a unique set of values and—perhaps most crucially—a financial reality that cannot be ignored.

The sudden, though not entirely surprising, closure of CLEARING after 14 remarkable years offers a different kind of case study. CLEARING’s evolution from a visionary artist-led space to an internationally respected program shows how the art world’s relentless demand for growth and expansion can strain even the most imaginative dealers—especially those who didn’t launch with deep-pocketed backers but put the artist’s vision before profit, gambling everything on each show, often at great personal cost.

As I waited to see whether CLEARING founder Olivier Babin was ready to commit to a profile, I realized I might already know the story or at least be familiar with its outline. The first part is the one Babin told me himself in the gallery’s viewing room—me, a young advisor just back in the city post-pandemic, had earned his trust. Babin had a way of making time for anyone drawn into CLEARING’s orbit, no matter their background, so long as they made the trek to that strange and wonderful Johnson Avenue stop.

Importantly, Babin’s story is very different from other recent gallery closures, though it reflects a model shared by many other, often younger, galleries operating today—one built on passion and vision before venture capital, where founders push forward until it becomes unsustainable. The Baer Faxt commentary following the announcement was particularly eye-opening, as was the pushback (more on this below). But first, here’s Babin’s story—just a glimpse for now, for context. I’ll share the full wild ride when he’s ready.

Olivier Babin moved from France to the U.S. as an artist. He didn’t come from money, and he didn’t come from the art world. In Bushwick, he had a studio where he began organizing small shows, pairing his own work with that of other artists to draw a crowd. The first were Harold Ancart and Jacob Kassay, both of whom now command far higher prices than the under $10,000 offered at the time. Babin soon realized he might be better at showing art than making it, though he never let go of the naïve, visionary spirit he had as an artist, even as he transitioned into the role of gallerist.

Eventually, he secured the now-legendary space at 396 Johnson Avenue—both a proving ground for CLEARING and a cornerstone of the Bushwick art community. Just a year later, in 2012, he opened in Brussels, reportedly to get into Liste in Basel. Around the same time, he began representing some of the most compelling artists of a new generation: Ancart, along with Marguerite Humeau, Korakrit Arunanondchai, Jean-Marie Apprieu, Meriem Bennani, among others. These were artists with vision, edge, ambition and, soon, institutional appeal. The vast industrial space helped, allowing them to stage museum-quality exhibitions before the museums caught on.

As the artists gained fame, the gallery grew with them. At its peak, turnover reached $15 million, Babin told Katya Kazakina for Artnet. In early 2024, CLEARING announced it had outgrown its Johnson Avenue home and was relocating to Manhattan. A few months later, the new address was revealed: a two-floor space at 260 Bowery. In the meantime, the gallery was still tied to the Bushwick lease for another year and struggled to find a tenant. Babin eventually did—Swivel Gallery, which relocated from its former swirling-walls Bed-Stuy space—after some behind-the-scenes maneuvering I was part of, though that’s another story.

But something shifted when they left Bushwick. The Bowery space never quite captured the same energy or crowd. It lacked the raw quality that had allowed the gallery’s vision to flourish and brought new pressures. Even Babin seemed different at the opening. Months later, he appeared nostalgic when he returned to the Bushwick space to check in on the incoming tenant. In hindsight, the move didn’t seem entirely of his making. Was it investors? Pressure from collectors? Hard to say. Ludovico Corsini, Babin’s longtime partner since Brussels, seemed the most energized that night. Within a year, they’d parted ways. Corsini launched his own gallery, taking part of the roster with him. Meanwhile, IRS-labeled envelopes and bank letters arriving at the former Bushwick space hinted that something was not going as planned.

CLEARING, with locations in New York and a new L.A. space that opened before Bowery in 2024, had scaled up but also begun to lose its edge. There were more paintings—likely to limit selling risks, push volume and sustain the rapid expansion. When I sat with Olivier at the Dallas Invitational this April, it was clear things weren’t going his way. By July, the Manhattan space had become a fashion showroom. The closure was softly pitched as a “shift” in focus to their new seasonal Basel project. Now, the summer’s Maison CLEARING barbecue in Basel feels more like a bittersweet farewell.

In his Instagram/press statement, Babin wrote, “With no viable path forward, we are closing today because we can no longer operate at the standards we’ve always held ourselves to—for our artists, our teams and our entire community.” Until the very end, he had hoped to turn the corner, but the math didn’t add up.

Several artists have since reported—and in some cases openly commented on the gallery’s social media profiles—that they are still waiting for payments, which now seem unlikely to come as the gallery filed for liquidation last week.

Speaking to Carlie Porterfield for The Art Newspaper, Babin said, “I have no regrets, but yeah, I probably should have done a few things differently… But ultimately, everyone’s suffering right now.” Babin is tired of fighting. He said he’s going to the Amazon to drink ayahuasca. “I’ll see what I learn and what I find out. Where I should go, what I should do.”

Where margins go and why profit rarely follows

Just the day before, the storied Kasmin Gallery had announced it would close, only to immediately reemerge as Olney Gleason, under the leadership of the two partners who had been running it since Paul Kasmin’s death in 2020. But this is a very different story (for another piece next week), despite art media chasing likes and clicks by pairing it with the recent exits of Tim Blum or Adam Lindemann stepping back from Venus Over Manhattan.

Meanwhile, this wave of gallery closures prompted Josh Baer of the Baer Faxt into an uncharacteristically candid reflection: galleries, especially those focused on primary market work, are essentially businesses running on razor-thin or nonexistent profit margins. “It’s a mystery how things can be this difficult for an industry that works on such large margins—up to 50 percent for most galleries, for inventory that they don’t have to buy, invest in or manufacture,” he wrote, adding, “Many businesses run, profitably, on much lower margins—a supermarket, for instance, at 2 percent!”

In just a few paragraphs—contradictions aside—Baer hit a nerve, exposing the structural paradox of a business where high potential margins rarely translate into profit. But he also overlooked something essential about how galleries like CLEARING operate. As my own Instagram story on this began circulating, it sparked even more conversation, and I decided to take the time to unpack the challenges facing an increasingly fragile art system.

Galleries are not supermarkets. Many of the most dynamic galleries today, the ones doing the groundwork, are not built on capital injections or clear ROI models. They’re often driven instead by intuition, stubborn passion and the belief that they’re helping shape the future of art.

Swivel Gallery’s founder Graham Wilson—who also transitioned from artist to gallerist—put it plainly: “First of all, a gallery is not a supermarket, as art is not a necessity,” he said in response to Baer’s provocation. “Everyone needs to eat—so yes, a supermarket may operate at far lower margins, but it also runs on a daily, repeating cycle for the masses.”

The comparison, he adds, also assumes that all the work a gallery shows is guaranteed to sell, which isn’t the case. Galleries often show what they believe in, not just what they know will move. And belief takes time. “You can do a show with 10 paintings at $10,000 each, but if you only sell two, and your overhead is $25,000, then you’ve just lost $15,000,” he notes. “Still, you believed in something, and you committed.” Wilson relocated again last year, this time to Manhattan, opting for a smaller, more affordable and more accessible space. It was part of a broader recalibration—not just in response to a shifting market and rising rents but also to changing collector behavior.

For a Parisian gallerist with double space in the Marais, who wishes to remain anonymous, the paradox is clear: most galleries aim to offer a luxury-level presentation while running on a supermarket-level gross margin. “If you keep a supermarket’s gross margin, you need a supermarket’s cost structure—ultra-lean, low-cost operations, warehouses in disguise, low-rent locations, minimal staff costs and brands paying extra for visibility. If you want to operate like a luxury brand—premium locations, beautiful spaces, curated experiences—you need a luxury-level gross margin (x4, x5 or more) to sustain it,” he notes.

Up to that point, for art dealer and advisor Henri Neuendorf, Josh Baer’s comment raises important questions about how galleries can make substantial sums from sales but still fail to turn a profit because their costs are too high. For him, most gallery owners simply aren’t conscious enough of their expenses. “Most galleries are operating out of their expense capacity. They’re growing too big too fast,” he says, noting that the art world would do well to follow Andrew Carnegie’s belief that costs can be strictly managed while profits are subject to market fluctuations. “This is especially important to keep in mind in good times so that galleries can survive during periods of market contraction,” he adds.

It’s a fair point, but also an almost inevitable outcome when working with creative people who entered the art world out of passion, not profit. To attract and retain artists—especially when megas are constantly poaching from their programs—galleries often have to support the artist’s vision without scrutinizing every invoice.

A space like CLEARING, even in Bushwick, demanded scale. That scale tripled when they began operating like a mega-gallery without the infrastructure to match. Production costs, shipping, travel—these pile up quickly. Reportedly, once he moved to Manhattan, plus his space in L.A., Babin was paying $75,000 per month in rent. Yet what galleries like this rarely want to compromise is the program’s quality. And, of course, artists get paid first. That’s non-negotiable, though even that becomes hard to uphold when things go too far south.

The art market never has been, and never will be, a place for traditional business models. It’s a place for passion and impracticality, reflects Nicodim’s global director Ben Lee Ritchie Handler. “We’re selling magic, spirituality, higher consciousness—things you don’t find in the produce aisle—and the artist-gallery relationship is a sacred one,” he says, recounting how Mihai Nicodim lent artists his spare bedroom for months to help them along. Lee himself has given up his car, loaned valuable clothes, books and objects to artists—none of which were ever returned—but, hopefully, fueled some of the inspiration behind the shows that make up Nicodim’s now twenty-year history.

Producing great shows is not cheap. “There’s rent, shipping, dinners, travel and salaries for everyone who facilitates the aforementioned items, and most galleries I know contribute to an artist’s production costs. And I didn’t even mention the art fairs!” he adds. They’re doing all this on a tight budget, trying to tighten further—but they’re not going to cut the nose off a show just to make an extra 2 percent profit. “We’re farm-to-table wizardry, baby.”

New York gallerist Margot Samel also points out that the idea that galleries operate with “free” inventory overlooks a crucial reality: many contribute significantly to production, covering costs like framing, shipping, installation, photography and catalogues. Those 50 percent margins disappear quickly under overhead—rent, salaries, art fair participation, travel, insurance and the cost of holding unsold work for years, notes the Estonian-born gallerist who opened her own space in Tribeca right after the pandemic, around the time the market first showed signs of slowing. “When sales slow but expenses don’t, as often happens during downturns, the pressure intensifies.”

This tension between budget constraints and creative vision isn’t unique to galleries. Institutions wrestle with it constantly—and even auction houses are starting to feel the squeeze. And, as Samel points out, the same strain runs through publishing, music, fashion and film: creators feel intermediaries take too much, while intermediaries shoulder high risk and overhead. “In a fragile economy, both are under strain, and the cracks are becoming more visible.”

“The gallery’s role is not just to sell, but to steward an artist’s career, and that requires sustained investment—often with no guarantee of immediate return,” says Sarah Markowitz of Hive Contemporary, one of the most dynamic new Chinese galleries, based in Shanghai but championing an international program and presence. “A dedicated gallery invests in an artist’s long-term trajectory—leveraging its network, curatorial expertise and resources to position the work within a broader cultural and historical context. Marketing is too light a word for this; it’s about shaping how an artist is seen, ensuring the work reaches the right collectors and institutions so it has the chance to enter museum collections, appear in major auctions and ultimately secure a place in art history.” It’s a business built not on quick transactions but on long-term vision.

After five years of building an experimental program from the ground up, Dooyong Ro of CYLINDER in Seoul confirms that the gallery’s operations take 50 percent of the margin. Unless you come from a super-wealthy family or are a second-generation gallerist—unlike him, who started with no resources—running a gallery can feel like a daily war fought with inadequate weapons. “At the beginning, I thought I could make a meaningful profit if I kept doing this for a few years, but I soon realized that for a young gallery like mine, it was tough to sell works in the gallery itself, so I had to do fairs,” Ro admits. “Now I’m stuck in the fair loop, constantly thinking about preparing the money for the next fair. And of course, that money comes from the previous fairs.” Ro says he worked alone for four years to cover expenses, cutting on sleep to save costs. He recently hired a gallery assistant to ease the workload, but feels like he’s working more than ever as the system pushes him to keep up with scale and pace.

The problem isn’t the margin; it’s the volume, says Dr. KK Chan, a collector based in Hong Kong. In his view, the issue is over-saturation. “Nowadays, there are way too many artists and even galleries, but the buying power can’t keep up with the growth.” For Chan, the art world is simply undergoing a painful consolidation. “More galleries will close down, sadly. It’s just the stage we’re in.” If the recent wave of gallery closures has raised questions over the structural viability of the art business, it’s also up to galleries to find creative solutions to control costs, especially the less essential expenses.

Rising costs as a gallery grows and expands is something Elizabeth Johs understands firsthand. The Swiss-Danish founder of JO-HS opened her first space in Mexico City before expanding to New York last year. But gallerists of her generation are already testing new models to navigate a market that has changed dramatically in just a few years. That means being more strategic: prioritizing art fairs as moments to meet new collectors, while deepening relationships with existing ones the rest of the year. “In our case, collaborating with other galleries has been more fruitful—and more sustainable,” she says. “Another model I’m exploring is doing exhibitions in domestic settings—treating the gallery experience like an intimate relationship.”

The intimacy of a more domestic, curated setting is also the approach being taken by one of the few—if not the only—new galleries opening in these troubled times: Felix Rödder, former director at David Zwirner, will open Rödder Gallery this September at 22 East 80th Street in New York, in the same Upper East Side building as Sprüth Magers. From the press announcement: “Unlike the typical white-cube model, Rödder embraces the charm and intimacy of a refined, residential viewing space.” The inaugural show will be a solo presentation of sculptural paintings by New Yorker Wyatt Kahn.

Yet relocating to zip codes beyond the art world’s usual capitals can open unexpected doors. After years working in galleries and art advisory in New York, Laura Burton moved to Houston, where she could finally do something she never imagined possible in the city: open her own gallery. She simply called it Laura. Launching without a silent partner gave her the freedom to remain nimble and deliberate. Houston, with its rich cultural fabric—shaped by institutions like the Menil—but far more forgiving rents, has allowed her to show artists she believes in, whether from the local scene or her broader network spanning New York, Europe and Asia. She rarely finds herself competing with other U.S. galleries for the artists she wants to show. “The scene here is still growing, but it’s vibrant and there are fewer galleries operating at my scale,” she tells Observer. Still, she’s kept a tight grip on costs. “I don’t throw lavish dinners,” she says. “But I host happy hours and intimate hangs that foster real connection.” While she’s relatively new to Texas, her reputation has followed her. “Collectors have learned to trust my eye—especially when the artists I back early end up gaining real traction.”

The spirit of collaboration, especially among younger dealers across borders, is already offering a hopeful counter-model to the megagalleries’ global dominance. “The business is changing. Maybe—hopefully—it’s evolving toward a model rooted more in collaboration than competition,” says Ricardo Diaque of GENERAL EXPENSES, another rising young gallery in Mexico City. For him, applying traditional supply-and-demand logic to the art world misses the point. “That paradigm exists, but anyone who gets into art solely for business is bound to face some form of exile. We’re not playing Monopoly. It’s more like an exquisite corpse.”

While some might chalk up the recent string of high-profile closures to the rising costs of art fairs, Diaque sees it differently or, at least, not so simply. “The closures come from burnout—doing too much,” he says. “In my opinion, make your model something you enjoy. If not, you’re already dead.”

It’s a sentiment that cuts to the heart of the matter: sustaining the passion to keep going. Perhaps it’s one younger galleries are still more inclined to embrace—as Babin, Blum and others once did—even if it means accepting sacrifices that those dealers, after years of fighting, may no longer have the stamina for.

“We might not have that much money, but we have time and endurance. People should know that this is a tough job,” says Dooyong Ro. “However, I’ve chosen to take this road of my own will and will take my responsibility until I terminate this journey.”

The other factor in the equation, of course, is the changing audience. As Babin noted in Artnet, the music has changed: the American and European industrialists who once came to Basel to buy and party are older now, far less likely to jump on a flight for yet another art week after years of doing it. Yet as contemporary art has seeped deeper into lifestyle and popular culture, data confirms a rising global base of younger collectors. The real question is how to bring them into your world—your space, your story—and how to get them buying and supporting.

In years of giving private gallery and fair tours around the city, I’ve seen firsthand a much broader appetite for art than many expect. The barrier isn’t interest; it’s awareness. Most people don’t know about the galleries in their own city, or even on the block where they work every day, sometimes literally upstairs. Or they assume these spaces are locked behind appointments, introductions or some invisible key. Yet once they step inside, there’s enormous potential to cultivate tomorrow’s supporters, especially in a city like New York.

Another question is worth raising: Could this more flexible Millennial generation of dealers—fluent in global networks and trained in stamina by growing up through a carousel of crises, digital upheavals and economic shocks—be the ones to drag a fundamentally unsustainable business into its next chapter, exploring new paths and new audiences? We’ll have to wait and see.

Meanwhile, we can only offer a bittersweet farewell to some of the legends who shaped the latest chapter and hope they get the kind of break that lets them remember the passion that got them into art in the first place.

More in galleries and collecting