14th St. Art Galleries Hit by Rising Rents
And then there were none?
The Washington Post
Friday, July 31, 2009
And then there were none?
Gallerist Annie Gawlak announced recently that she will close her Logan Circle gallery on Aug. 14. After enjoying years of subsidized rents, Gawlak and the three other dealers at 1515 14th St. NW -- the 1920s-era edifice that marks the District's gallery center -- face major rent increases from their landlord, District developer Giorgio Furioso. With the departure of Gawlak's gallery, G Fine Art, there's a strong possibility that the building's other galleries will go, too.
In a climate of radically reduced art sales, tensions have run high for months as the gallery tenants at 1515 scramble for cash, clients and new leases. All the gallery leases come due this fall.
When the 1515 building opened in the fall of 2004, Furioso promised a blue-chip gallery hub that would attract both the general public and collectors hungry for the best contemporary art. Furioso outfitted the structure with the open, industrial spaces favored by dealers. He included a massive freight elevator capable of delivering 8-by-8-foot paintings and sculptures to upper floors.
With the pledge of cheap rents and custom build-outs, the developer persuaded the city's top galleries to move into the three-story building that Furioso's company bought (along with two adjacent parcels) for $3.8 million. Dealers came from Georgetown and Seventh Street.
The building solidified the fast-growing neighborhood as the city's art center, joining a handful of smaller art outfits that had opened in the 14th Street corridor since 2001. Furioso's wish to build a gallery nexus had, for the time being, come true.
Now, after 20-some months spent trying -- and failing -- to refinance his building, Furioso can no longer afford the rent breaks. His current bank has refused to refinance his mortgage, he says. As he approaches other lending institutions, he says each one cites the same issue: If Furioso can't command market rate on his upper stories, there must be something wrong with his building.
"It's a building that's extremely valuable, but the bank scratches its head," says Furioso, a former artist who gave rent breaks to the now-defunct alternative arts space Signal 66 and other artist-inhabited spaces. "They think there's something chronically wrong for renting way below market. They don't get it. They don't see the value of having art."
Gawlak says Furioso has been more than generous in recent negotiations, but a paucity of sales and an uptick in rent did not jibe with her slim margins.
"He was willing to cut us a deal which was very good, but it was still well out of my reach based on the current economy," Gawlak says. "This economy is a brick wall."
The Italian restaurant Posto, Furioso's first-floor tenant, pays a rent that's comparable to other storefronts in the area: $35 a square foot, plus "triple net," a standard commercial-lease feature that adds another $8 to $9 a month per square foot to cover a percentage of communal building costs such as taxes and insurance.
By comparison, the building's smallest gallery, the 234-square-foot Curator's Office, pays a flat rate of $7,656 per year. According to Furioso's office, if communal building maintenance were factored in, Curator's Office pays close to $17 a square foot each month.
None of the other galleries would divulge the terms of their current leases, citing pending negotiations. Furioso claims the galleries pay "substantially less" than the market rate but declined to discuss specifics because, he says, each lease is different. (Hemphill Fine Arts, which rents the entire third floor and subleases a portion to a framing shop, is also in talks with Furioso. The gallery declined to participate in this article, citing pending negotiations.)
"I can't subsidize them anymore," Furioso says of his need to bring gallery rents in line with the market and to charge them for communal building services, such as water and electricity. "Whatever the taxes are, whatever the utilities in the common areas are, I have to pass on those costs. Even if I don't increase the rent at all, there's a substantial increase in absorbing cost for the building."
The fate of the tiny Curator's Office is closely linked to that of G and to another second-floor tenant, Adamson Gallery. If Adamson were to follow G and close its doors, it's unlikely that Curator's Office could stay.
"It's hard for Giorgio to keep me here as a small tenant on the second floor," says Curator's Office director Andrea Pollan.
If she's able to stay, Pollan suspects her monthly rate will increase to $1200, a figure she may -- or may not -- be able to handle. Says Pollan, "I'd really like to stay -- which doesn't mean I haven't kept my eyes open in other parts of the city."
The 1515 building's most enviable tenant is Adamson Gallery; its lease expires at the end of November. Director Laurie Adamson and her husband, David, also own a buzzing print studio downtown, which has grown exponentially in recent years. Publishing editioned prints by major international artists and distributing them worldwide, the Adamson Editions venture helps pays the bills and assures the Adamsons a place in the art world -- whether they operate a gallery or not.
"Nobody wants to bleed to maintain a gallery," Laurie Adamson says. "I'll look at it and see if it's worth it. I could leave and pull back and come back in another time."
Adamson stresses that no decisions have been made.
"We are leaning toward the lease, but we're not sure how long we'd want to commit to the lease, whether we'd do a year or two years or what," she says.
Video and performance artist Jefferson Pinder, one of G's most important area artists, says "other galleries need to start thinking about regrouping and planning strategies to compensate for the gap that [Gawlak's] vacancy is going to cause." He notes that "it's an expensive location, and I wouldn't be surprised if they all began to start looking for other, more affordable spots. This seems to be the trend."
As for Gawlak, she's looking for a smaller venue for her gallery. No permanent new space has been secured.
Furioso insists, "I don't want to get rid of the galleries." Yet, he says, "having those galleries there has put me at a tremendous disadvantage. I don't know who is going to be there at the end of all of this."
Copyright 2009 The Washington Post