ART : A New Picture for Art Market : Sales decline spreads concern, but a long view is for a renewal of aesthetic values

When the contemporary art market fizzled, nearly a year ago at New York’s May auctions, the art world heaved a public sigh of relief. Speculative frenzy had disappeared and sanity had returned to the market--and that was great good news, it was said. But privately dealers worried that business would suffer without the excitement of spiraling prices.

Worse, they faced the reality of an economic downturn that had already reversed the fortunes of newly rich art buyers and now threatened to hit the back rooms of galleries where deals are done.

As it turns out, these fears were well founded.

James Corcoran’s venerable gallery in Santa Monica first felt the economic squeeze last May after the disastrous auctions. After a period of unprecedented growth, the auction houses were left holding a bag of overpriced contemporary art and the shock waves reverberated to the West Coast, he recalled.

Los Angeles dealer Manny Silverman got an earful of gloomy market talk at the Chicago Art Fair, shortly after the auctions, when collectors and dealers who visited his booth grumbled about the lackluster New York sales. “That was the first glitch and it got worse in the fall,” Silverman said.

Rosamund Felsen was caught up in the excitement of moving her gallery from La Cienega Boulevard to Santa Monica Boulevard last summer and fall. She didn’t feel the chill until around December, after increased business involving her inaugural show of Mike Kelley’s work had died down. Other Los Angeles dealers track the arrival of hard times to different moments, but nearly all agree that the recession has hit Southern California’s art galleries.

Most observers of the art scene say the effects don’t appear to be as bad in Los Angeles as in New York where dozens of galleries have closed and dealers’ back rooms are choked with inventories. Or at least the situation isn’t as bad yet. Los Angeles is buffered from the extremes of the New York market, but there is talk about a possible delayed reaction that could lead California’s economy to slide into the economic abyss that has swallowed the northeastern states.

At first glance, these concerns seem exaggerated. Openings are as well attended as ever. On a sunny Saturday afternoon--peak traffic time--local galleries are bustling with collectors and critics who check out the latest fare and exchange tips on current shows, as always.

But take a look at 2114 Broadway in Santa Monica, where Krygier/Landau Contemporary Art used to mount exhibitions of such intriguing artists as Rachel Lachowicz, John Mandel and Dan McCleary. The gallery has disappeared. Karl Bornstein Gallery will soon move in, trading its relatively isolated location on 10th Street for Krygier/Landau’s high-profile spot in a gallery complex.

Former partners Irit Krygier and Susan Landau report that they sold art consistently but they couldn’t make enough money on young artists’ works, priced in the low thousands, to support their high overhead. Even a sold-out show didn’t cover their costs. Like many dealers, they depended on back-room resale business that has largely dried up, Krygier said. She hopes to open a gallery again, but she is currently pursuing curatorial projects. Landau is dealing privately with the work of emerging artists.

Not far away, at 1634 17th St., the Richard Kuhlenschmidt Gallery has scaled down from 4,000 square feet to 1,700 square feet. Kuhlenschmidt’s clients are heavily into real estate--a market that has been hard hit by the recession--so he decided to reduce his overhead when his lease expired. “Some of our collectors say they just can’t buy anything right now,” he said.

“For Lease” signs hang on several former galleries, including Michael Maloney’s space at 602 Colorado Blvd. in Santa Monica and Fiorella Urbinati’s show space, at 8818 Melrose Ave. Urbinati, who specializes in early 20th-Century art, said the economy is only partly responsible for her departure. Fatigue, a leaky roof and lack of air conditioning also pushed her out. After 16 years of running a gallery--about three of them in Los Angeles--she has opted for the quieter life of private dealing. So has Maloney, who closed up shop a few months ago.

Dealers are typically secretive about their business, but even those as successful as Corcoran say that sales have leveled off. His gallery is keeping pace with last year, he said, but the steady climb of the last four years has stopped. “The figures aren’t going up,” Corcoran said.

Except for occasional success stories--such as the Jan Turner Gallery’s recent show of John Alexander’s paintings and Kiyo Higashi’s Roy Thurston exhibition--dealers report that collectors are more cautious than they were a year ago.

“People have their minds on other things; they aren’t as focused on art now,” Silverman said. Clients who ask a dealer to reserve a piece of art while they make a decision are less likely to follow through with a purchase now, dealers say, and it may take twice as long to make a sale as it did a year ago. Those who buy, take more time to pay and the customary 10% discount often grows to 20%, with artists and dealers sharing the reduction.

Sales are rare enough in the best of times for all but a small percentage of artists. The recession has forced many to depend more heavily than ever on outside work, such as carpentry, graphic arts and teaching. John and Barrie Mottishaw, for example, have had an unaccustomed dry spell, making them particularly grateful for John’s teaching jobs at Otis/Parsons and Santa Monica College. Dealer Tobey C. Moss, among many others, worries that artists who depend upon income from art sales will be badly hurt by the economic downturn.

With fewer sales and more competition for buyers, some prices have dropped or at least stabilized. Emerging artists’ prices don’t have far to fall, so they have remained fairly constant, dealers say. But resale works by well-established artists, particularly those whose prices escalated sharply during the ‘80s, are a different story. “The days are over when prices went up $5,000 with every phone call, when dealers were selling to each other,” Krygier said.

In those heady days there was an agreed upon price for, say, an Ed Ruscha or Robert Rauschenberg print, and dealers held to it--if only for an hour before the price shot up again--Landau said. But now the price for prints from the same edition or paintings from a particular period might vary sharply from gallery to gallery--depending on how much dealers paid for the work and how eager they are to sell it.

It’s a buyer’s market, but collectors are not necessarily happy about that. “People used to ask me how high a piece of art would go. Now they ask the other question. I didn’t have an answer then and I don’t have an answer now,” Silverman said. “I don’t know how long the recovery will take either. What I do know is that paintings are forever, in spite of the highs and lows.”

Nervousness about falling prices--or at least awareness of them--has influenced appraisers’ business as well. Some of Nancy Escher’s clients who have hired her to reappraise their collections every year or so as the value rose don’t call anymore. “They don’t want to know,” she said. Instead, she has been evaluating charitable contributions and working on fraud cases, sometimes involving insurance claims on art that has been willfully damaged or destroyed. “If you can’t sell your art, you can burn it or have it stolen,” she quipped.

Business has taken a different turn for appraiser Jackie Silverman, wife of dealer Manny Silverman. She continues to reappraise collections, lowering values she had previously raised for “smart business people” who know they can get by with lower insurance premiums now and are eager to do so, she said.

The most difficult element to measure in an economic downturn is the psychological climate. But many dealers, collectors and artists agree that a malaise permeates the art scene. Dealers describe a cautious--even fearful--mood that has taken much of the excitement out of buying art. Some attribute the mood to a preoccupation with bad news and the Gulf War rather than actual financial hardship. “All the reports in the media have made people afraid to part with their money,” Felsen said. “Most of the people who buy art have as much money as they ever did. They’re still riding around in their Ferraris.”

But “the urgency to own art” has dissipated, as Marc Richards puts it. He contends that only two parts of the market are lively: “politically correct art”--the “flavor of the minute” collected by the in-crowd--and decorative art that is bought by “uninformed” people. “Everything else has fallen dramatically,” he said. More important, “a belief system has eroded along with the need to own art. There are questions about how art is perceived, what purpose it serves in society,” Richards said. “Exhaustion has set in; the pace of the ‘80s couldn’t continue. But now there is a sense of confusion. People are asking, ‘What is quality? What is good work?’ If the art they bought in the ‘80s was wrong, what’s right?”

Artists’ experience of the malaise seems to stem from revulsion over the exploitation of art’s investment potential as well as the current economic crunch. They also lament their estrangement from each other and the lack of a nourishing environment. One group of Southern California artists holds regular meetings just to exchange ideas about art, as a conscious effort to become more engaged in aesthetics and their own intellectual community.

Artists are fed up with making products that are just so much “grist for the money mill,” according to painter Karla Klarin. “Most of my friends are burrowing in and trying to find an emotional equilibrium to do the best work they can,” she said.

Gallery closures and retrenchments, decreased sales and prices, a cautious attitude and a general malaise--the evidence of change is persuasive. But does it add up to serious trouble? Not for collectors who haven’t suffered financial losses. It is easier to get the art they want, and they may be able to buy it for less money. They can take time to reflect on a purchase rather than rushing to avoid losing something to another collector.

Not for some dealers, either. Jan Turner is moving west, from 8000 to 9006 Melrose Ave., next to Cafe Figaro. And she is expanding from 3,600 square feet to 6,000 square feet. Her new establishment will contain a mezzanine gallery for photography, Turner/Krull, owned by her associate, Craig Krull. “Things are great; my billing is up from last year,” Turner said.

Few echo Turner’s optimism, but longtime dealers tend to take the recession in stride. Corcoran, for one, says hard times in 1975 and the early ‘80s were more severe.

The recession hasn’t been all bad for Salander-O’Reilly, a prestigious New York gallery that last fall opened a branch in Beverly Hills. While admitting he would have preferred to sell more pictures in the new space on Camden Drive, co-owner Larry Salander said the economic slowdown has given him time to get the kinks out of his new operation. “When the economy gets up and rolling, we’ll be going full steam ahead,” he said. Flatly denying a rumor that the Beverly Hills gallery is closing, Salander said exhibitions are booked there for the next two years and that Salander-O’Reilly is opening a branch in Berlin.

Like many veteran dealers, Salander puts the recession in perspective: “You either have the art or you have the money. If you’re stuck with the art, that’s not so terrible, particularly for galleries like ours that deal with older art and represent artists’ estates.” A dealer who sells a valuable piece of early- or mid-20th-Century art may not be able to replace it. And any replacement may cost more than the piece that was sold. While galleries need to make sales to stay in business, the best way to make money from well-established art is to hold on to it until it appreciates, he said.

Dealers who operate on a financial edge or represent emerging artists can’t afford to be so circumspect, but many counsel patience in the face of a recession. “The people who caught the (art appreciation and collecting) disease will be back. It just takes time,” Manny Silverman said.

Felsen also views the current situation as just one more period of belt-tightening in a business that has always been subject to ups and downs. But other dealers, as well as some collectors and artists, say this time is different because the recession follows an unprecedented period of rapid growth in the art market and it reflects a loss of faith. As discussions about the art world’s economy go on and on, a moral tone often threads through the conversation.

“The ‘80s will be remembered for the market, not art. Maybe now people will begin to look at the work again and base their decisions on aesthetics, not money,” Silverman said.

“Art does not equal a dollar sign. It’s about something you can’t buy with money. I hope we never have a period like the ‘80s again; that was obscene,” artist Klarin said. “I personally think that the recession may be painful in the short run but a good thing in the long run for the art world.”

Dealers may privately cringe at these words because the costs of doing business are enormous, but many say they look forward to a less money-conscious future. “This is a healthy thing. It gets away from the craziness of the ‘80s,” Felsen said.

Landau agrees, and interprets the downturn as a sort of cleansing process. Dealers, auction houses, collectors and artists all collaborated--to some degree--in turning art into a commodity, Landau said, but the attempt to quantify the value of art failed. “I don’t think that culture can be quantified. It is a necessary part of our lives, but it is not a commodity,” she said.

The change that forced her out of her gallery is actually “a wonderful thing,” she said, claiming it put an end to the commodification of art. “People who want to possess art will return, and they will buy what they care about because of what it represents and how it enhances and enriches their lives.”