Chelsea Gallery Owners Cash In as Former Garage Returns 1,650%

(Bloomberg) -- Some big-time Chelsea art dealers are cashing in on the local real estate boom.

Andrea Rosen and Luhring Augustine Gallery sold their shared building on Manhattan’s West 24th Street to Siras Development for $28 million in March. That’s a 1,650 percent return on the approximately 10,000-square-foot former garage, which they bought in 1997 for $1.6 million, according to property records.

The deal is being financed by a $25.5 million loan from a fund administered by the family company of Jared Kushner, as well as DW Partners, property records show.

The sale is the latest sign of the transformation of Chelsea’s art district, which is concentrated west of 10th Avenue between 19th and 28th streets. Galleries moved to this then-desolate stretch two decades ago after being priced out of Soho, the Manhattan neighborhood they had helped gentrify. In the early 2000s, Chelsea was transformed into the epicenter of contemporary art in the U.S., with more than 300 galleries calling it home.

Rising Rents

More recently, scores of smaller galleries have been pushed out by rising rents and real estate developers eager to capitalize on the area just south of the Hudson Yards development and near the High Line, an elevated park built on a former railway line.

“It’s not necessary to have a permanent space in order to do meaningful projects,” Rosen said Monday in an interview. “The world is evolving and there will be lots of models moving forward."

The West 24th Street block has been a power center in Chelsea, with such galleries as Gagosian, Gladstone, Metro Pictures, Matthew Marks, Mary Boone and Marianne Boesky.

Rosen, who opened a Soho gallery in 1990 and helped launch the careers of John Currin and Wolfgang Tillmans among others, stopped representing most of her artists last year. She’s the executor of the estate of Felix Gonzalez-Torres, which she now co-represents with David Zwirner Gallery. Her staff moved to a smaller space across 24th Street and is focusing on art that’s less object-based and more ephemeral, she said.

Contemporary Artist

Luhring Augustine, founded in 1985 by co-owners Lawrence Luhring and Roland Augustine and known for ambitious multimedia installations, represents many key contemporary artists, including Christopher Wool, Pipilotti Rist and Glenn Ligon. Clients include billionaires Tom Hill and Eli Broad, as well as newsprint mogul Peter Brant and former hedge-fund manager Howard Rachofsky. In 2012, the gallery opened an additional space in Bushwick, Brooklyn.

“It feels like it’s time to make the change," Augustine said in a telephone interview.

The gallery may lease back the space until the middle of next year, he said, declining to comment on where it will move next. “We are going to continue our rigorous program no matter where we end up.”

Siras Development, which built the 56-room Hotel Americano on 27th Street, intends to maintain gallery spaces on the first floor of a planned new development that will also include custom office space, Ashwin Verma, a managing partner, said in a phone interview. Dense zoning in the area allows for five times the building’s footprint, or up to 135 feet in height, Verma said.

High Line

“The High Line is an area we strongly believe in,” said Verma, whose firm built the Soori High Line condominium complex on the West 29th Street block that once housed the Peter Blum and Sean Kelly galleries.

The Kushner Credit Opportunity Fund, which Kushner Cos. uses to place investor funds into other developers’ projects, teamed up with DW Partners, a New York firm founded by David Warren that specializes in corporate debt and structured finance, to back the purchase, property records show. Christine Taylor, a spokeswoman for Kushner Cos., declined to comment on the deal, while messages left with DW Partners weren’t returned.

Some gallery owners are managing to sell and still remain in the neighborhood. In 2013, Lisa Spellman sold the West 21st Street building that housed her 303 Gallery for about $8 million to developer Scott Resnick. It’s now headquartered in the condo tower built in its place.

David Zwirner, who rents on West 19th Street and owns a building on West 20th, became a shareholder in a Renzo Piano-designed project developed by Casco Development Corp. on West 21st. His gallery will occupy three floors of the mixed-use development that will also include 38 luxury condos and a restaurant.

The parcel was assembled from Zwirner’s West 20th Street property with four lots on West 21st owned by Casco, along with additional air rights, according to Stefania Canta, a spokeswoman for Renzo Piano Building Workshop. Construction is expected to be completed in late 2020, she said.

--With assistance from Oshrat Carmiel

To contact the reporters on this story: Katya Kazakina in New York at kkazakina@bloomberg.net, Caleb Melby in New York at cmelby@bloomberg.net.

To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Steven Crabill, Peter Eichenbaum

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