How Rental Revenue Helps Keep Some Art Galleries in the Black

The art market has its ups and downs, but with high fixed costs including rent, salaries, utilities and insurance at big city galleries, a down month with slow or no sales at an art fair booth or gallery exhibition can become a financial catastrophe. Consequently, many gallerists look for “additional revenue streams,” Andrew Schoelkopf, gallerist and former president of the Art Dealers Association of America, told Observer.

Tapping into those additional revenue streams can involve providing a variety of what are typically referred to as client services, such as art advisory, appraisals, auction support and helping collectors find works by artists not represented by the gallery. Yet another stream may come from renting out gallery spaces for events.

Renting out space when a gallery would otherwise be closed has become a growing source of income for owners. “Some galleries we work with make more money from events than from selling art,” said Matt Bendett, co-founder and senior vice-president of Peerspace, an online marketplace that connects people searching for event venues with the owners of those venues. Peerspace works with more than 40,000 spaces around the country—3,000 of which are commercial art galleries. The average art gallery rental rate falls between $100 and $200 per hour, with a three-hour minimum, making them competitive with, and often less expensive than, more traditional event venues that don’t offer the kind of culturally keyed-in ambiance galleries can provide.

Not all galleries that make spaces available for events advertise on listing sites like Peerspace—many can be rented by request but don’t necessarily make their availability widely known. Nor do they limit rentals to special events. The Chase Young Gallery in Boston, for instance, is regularly rented out during off hours for yoga classes, concerts, corporate breakfasts and nonprofit fundraisers. Kate Kostopoulos, director of the gallery, told Observer that the revenue from these and other events covers the rent. Meanwhile, rental revenue constitutes between 15 and 20 percent of the annual income of Houston’s Nicole Longnecker Gallery, which hosts holiday parties, wedding showers, bat mitzvahs and  “whatever people can dream up,” said owner Nicole Longnecker. And New York’s Davidson Gallery, which closed earlier this year, rented out its space for weddings, fashion shows and parties “half a dozen times a year,” according to Charles Davidson, the former gallery’s senior director, who said that the income from these events was equivalent to one good show.

Gallerists across regions report that requests to rent out art galleries come in fast and furious, but revenue must be balanced against risk. Halley K. Harrisburg, director of New York’s Michael Rosenfeld Gallery, said that people regularly ask to utilize the gallery for “cocktail parties, fashion shoots, you name it,” but although they represent “an attractive business opportunity” the answer is almost always no. Anthony Meier, a gallery owner in Mill Valley, California and current president of the Art Dealers Association of America, explained that galleries that choose not to host events are often worried about the cost of liability—someone could get hurt or artworks could get damaged.

SEE ALSO: The 2024 Artlogic Gallery Report Offers Insights into U.S. Gallerists’ Lack of Work-Life Balance

“Some gallery directors are overwhelmed by the thought of putting on events in their galleries, seeing it as full of risks,” said Kostopoulos, but the real issue at hand might be lack of expertise. Before she became director of Chase Young, she managed an event venue and is familiar with what’s involved. At the gallery, events do not go past 9 p.m.; there is no amplified music, no smoking; beer and wine but no cocktails and “we provide the bartenders” so that the number of drinks guests consume is monitored. The gallery also requires that its preferred catering company provide all the food, which is prepared and served in an area of the gallery well away from the artwork.

Setting those kinds of ground rules is an important element of handling gallery rentals in a way that limits risks—and thus, anxiety. The Bisong Gallery in Houston, for example, turns down events that have a higher risk of incident, such as kids’ parties, while AO5 Gallery in Austin, Texas does not allow red wine at events.

Keeping artwork safe from damage and theft is a real concern for Kostopoulos (“knock on wood, nothing has been damaged or stolen”). Several art galleries listed on Peerspace take down the art on display during events, Bendett said, though in some cases, artwork may be kept up during an event “for an additional fee.” Los Angeles’ Good Mother Gallery, which charges a gallery rental fee of $1,800 per day, removes all artwork from the walls as a matter of course. “The space comes completely empty,” according to director Vanessa Indries.

That likely puts off some potential renters who are looking to hold events in galleries because of the unique atmosphere having original art on the walls creates. “They don’t have to worry about decorations,” explained James Frederick, owner and founder of Pittsburgh’s James Gallery, which hosts approximately twenty events annually.

“People who want to host events at galleries often have a connection with art, and they want an interesting and unique venue,” Longnecker said, adding that some event-goers even come back to the gallery to buy the art. Events can be another way a gallery can introduce people to art or an artist they may not have entered before. “It’s a kind of marketing.”

And it works. Carla Bisong, owner of Bisong Gallery, reported that between three and five percent of the gallery’s overall sales involve a visitor attending a private event and returning to purchase art. “Some brides who marry in the gallery want to purchase a piece as a reminder of their special day,” she said. Those event-driven sales aren’t necessarily consistent from month to month but those sales are an added bonus—20 to 30 percent of Bisong Gallery’s revenues come from private events.

In the past, the art market had very distinct lanes and people knew to stay in them. These days, however, auction houses hold primary market exhibitions and arrange private sales, which used to be the exclusive domain of art galleries, while many galleries now hold auctions and work one-on-one with collectors to help them find art they like, whether or not the gallery represents that artist, stepping on the toes of independent art advisors. Museums—both art and science—were once the go-to for private events, but those galleries willing to open their doors for weddings and other gatherings are likely usurping some of that business.

Given that, perhaps “art gallery” isn’t the best descriptor for these spaces; a better one might be “multi-service shop.” That’s how Clare Mcandrew, founder of the firm Arts Economics and the author of the annual Art Market Report published by UBS and Art Basel, refers to the newer breed of galleries that have to do more than just show and sell art to survive in an increasingly competitive art market. A gallery might show you art, sell you art (a piece at a time or enough to fill an entire building), frame your art, commission artists to create one-of-a-kind works for you, evaluate your existing art collection or help you throw a party there among the art.

And hosting events has become more than just a sideline for some galleries—sometimes even turning into the tail that wags the dog. Caelum Gallery, located in the art-rich Chelsea section of Manhattan, first opened in 1996 as a venue to show contemporary artists. It only began hosting events in 2016. Today, the gallery charges $2,520 per day year round for events that include birthday and engagement parties, with a special focus on get-togethers planned for New York Fashion Week. What they no longer do, according to gallery owner Misuzu T. Bergman, is represent artists. “We used to show art, but the artists whose work sold moved on to other galleries, and now 100 percent of our income comes from rent.”