What David Zwirner’s recent surprise losses reveal about the high-stakes art market


Successful art dealing often comes down to astute management of real estate and supply. So, it was doubly shocking when news broke that David Zwirner, one of the most prominent dealers in history, lost both a long-planned, multimillion-dollar Manhattan expansion as well as a major artist to a rival within the space of six weeks.

These are unusual blows to one of the largest and most smoothly run art businesses in the world, and they have incited plenty of trade gossip. But more interesting are the insights they offer into the high costs and higher stakes of competing at the top of the private art market.

In late July, Zwirner told the New York Times he was abandoning long-held plans for a new five-storey, $50m headquarters in a Renzo Piano-designed residential tower being built at 540 West 21st Street. The tower project, originally announced by Zwirner in 2018 and scheduled to open by 2020, was delayed at first because of the Covid-19 pandemic, and again when developer Uri Chaitchik of Casco Development failed to secure additional financing. The limited liability company controlling the property filed for Chapter 11 bankruptcy protection on 2 August, as reported by Katya Kazakina at Artnet News, transforming the $28.8m “put option” paid by a Zwirner company for the new gallery into a line item on a list of developer debts unlikely to ever be repaid.

Then on 5 September, it was announced that the acclaimed American sculptor Carol Bove had moved from Zwirner to Gagosian gallery.

Some dealers might panic in these circumstances, given the ongoing disquiet and deceleration in the broader art market that has defined 2023. But David Zwirner says he takes things on balance.

“The market has definitely slowed down in the last 12 months, which is the bad news,” he says. “The good news is that we’re having much more rational discussions when it comes to values in the secondary market, and we have seen some promising transactions, even in the middle of summer.”

Carol Bove, Dressing Room, 2017. Courtesy of Sotheby’s.

Build-up, slowing down

What went wrong between Zwirner and Bove? Sources say the gallery struggled to build a secondary market for the artist. Asked for comment, a Zwirner gallery spokesperson said: “We loved working with Carol for over a decade, and we wish her the best in her next chapter.”

Defections from Zwirner’s programme are rare. His 2013 profile in the New Yorker noted just one, the Austrian sculptor Franz West, who left for Gagosian in 2001. But Bove’s departure marks the third in the past two years, following the Donald Judd Foundation (which oversees the artist’s estate) in 2021, and painter Harold Ancart in 2022.

“The Judd Estate left the gallery because they were hoping that a change would positively impact the sagging Judd market, and unfortunately it hasn’t,” a Zwirner spokesperson said. “Harold Ancart left for reasons that are entirely personal.”

(It is worth noting that two major artists have recently joined Zwirner: Gerhard Richter in 2022, and Elizabeth Peyton this summer.)

The three artists to recently leave Zwirner are now represented by Gagosian. The rivalry between the two mega-galleries is well documented. In his 2019 book Boom: Mad Money, Mega Dealers, and the Rise of Contemporary Art, the author Michael Shnayerson described it as “an art-world cold war that has helped shape the entire marketplace”.

The loss of West proved catalytic for Zwirner. Understanding the stakes of the competition, he realised the need for gallery growth, moving from Soho to Chelsea the following year, a real estate decision that helped fuel Zwirner’s rise into one of the few truly mega gallery brands in the world. By 2019, Zwirner had won West’s work back.

Installation view of the Richard Serra exhibition installed at Gagosian’s Britannia Street space in London in 2016. Courtesy of Gagosian

More, more, more

Art sales and real estate have only become more intertwined for dealers in the decades since. As the market has ballooned, so too has the bitter competition among dealers for the best supply of work. Sought-after artists are routinely offered opportunities by rivals for more space and more frequent exhibition opportunities, as well as better access to different international markets—and therefore, potentially, more money and career momentum. Knowing this, many dealers feel compelled to expand their empires, taking on more building space to protect their programmes from poaching (or to better position themselves as the poachers).

But, as both Gagosian and Zwirner have discovered, architectural largesse is not necessarily rewarded with artists’ loyalty—even if construction is arranged around specific artists’ needs. Gagosian, for instance, has designed galleries to ensure they can bear the weight of sculptures by Richard Serra, whose multi-tonne steel sculptures often require extraordinary engineering considerations. Yet this has not stopped Serra, whose representation arrangement with Gagosian is non-exclusive, from working with Zwirner on various projects, including most recently a show of the artist’s new works at one of Zwirner’s New York galleries in 2022.

Similarly, when Zwirner bought a space at 537 West 20th street for $8m in 2009, he “effectively… built this building for Judd and Flavin”, its architect, Annabelle Selldorf, told the New Yorker in 2013. But this did not stop the Judd estate from leaving Zwirner for Gagosian 12 years later.

The handful of galleries at the top of the trade has become known for their lavish treatment of the artists they represent (or want to). But amid a market slowdown, there is talk that production budgets are receiving new scrutiny at galleries including Zwirner.

Asked whether certain artist projects’ ambitions and budgets have been reined in, the Zwirner spokesperson said: “This isn’t true for us. We just realised a very ambitious Yayoi Kusama exhibition across all of our spaces on 19th Street, and we’re looking forward to a museum quality Robert Ryman show in November, curated by renowned former museum director Dieter Schwarz.”

Yet a source working on a Zwirner project says that, while discussions began as open-ended and generous in terms of the artists’ ambitions, they have recently become more focused on product. “We need something to sell,” they say the artist was told.

Yayoi Kusama fans lined up outside David Zwirner’s West 20th Street gallery for an exhibition of one of the artist’s Infinity Mirrored Rooms Alex Wroblewski

Real-estate revolution

It is notable that Zwirner, often seen as prudent compared to some mega-rivals, has undertaken an enormous physical expansion over the past decade. In 2013 Zwirner operated three permanent galleries (two in New York and one in London) ); now it controls 12 across Asia, Europe and the US. (Two of the 12 are still under construction; a pair of others in New York and Los Angeles, respectively, are adjacent properties sometimes used to programme a single exhibition.)

Since 2009, the gallery is known to have bought at least $38.4m worth of real estate in the US alone, excluding the now-abandoned $50m tower project with Chaitchik.

Most of this real-estate growth has been compressed into the past five years. “Fortune favours the brave”, Zwirner told the New York Times in 2018, as the gallery unveiled a slew of expansions, from its involvement in the (now-defunct) $50m development at 540 West 21st Street in New York, to a new, leased gallery space in Hong Kong and the acquisition of a $12m warehouse in Queens for art storage and handling.

The gallery opened a branch in Paris in 2019, leasing a space at 108 Rue Vieille-du-Temple. The Covid-19 pandemic put a hold on any further growth in 2020, but Zwirner initiated multiple US expansions starting the following year. It leased and opened the Tribeca property that became 52 Walker, the gallery space programmed and led by Ebony Haynes, in 2021. Zwirner expanded to Los Angeles as well, leasing two spaces at 616 and 612 North Western Avenue in 2021, then spending $6m to buy a third—a purpose-built flagship property at 606 North Western Avenue that is scheduled to open in early 2024. The company also spent $1m on a two-bedroom house around the corner.

Zwirner has recently announced plans for multiple new bricks-and-mortar expansions in New York as well. In February, the gallery acquired an $11.4m property at 533 West 19th street, which will become an 18,000 sq. ft exhibition space renovated by Selldorf. Asked whether the gallery is tailoring the location to any particular artists’ needs, a spokesperson said: “Our new 19th Street gallery is being designed with a focus on ceiling height, natural light, columns and museum-quality services to facilitate institutional loans.”

Zwirner also leased 36,000 sq. ft of office space at 520 West 20th Street in November 2022, when the annual cost of available space in the building was $145/sq. ft, meaning the gallery should be paying slightly more than $5.2m each year in rent. Asked for comment, a gallery spokesperson said: “We can’t comment on our rental agreements, but we can say that David is a good negotiator.” The offices opened this spring.

These expansions were necessary pivots after the Casco project at 540 West 21st Street collapsed. In total the developers’ bankruptcy filing lists $256.7m in creditor claims, including an unsecured claim of $28.8m by DZ 21st Street LLC for a “put option”.

Eyebrows have been raised by the put option, since these agreements can limit buyers’ usual ability to pull out of deals under certain conditions by locking in the sell price in advance. Put options are typically used as tools to hedge against future price decrease and can indicate potentially negative sentiments about the future value of the underlying asset, mostly benefiting sellers more than buyers. They are more commonly bought and sold in the securities markets, particularly the stock market and the foreign currency market, than in real estate.

The presence of the put option is a reminder of the difficulty dealers were facing in finding decent gallery real estate in Chelsea by the mid-2010s. Prices in the neighbourhood had escalated so wildly that a gallery exodus to Tribeca was underway. Few of Zwirner’s rivals who announced Chelsea expansions were able to buy: Hauser & Wirth took a 42-year lease on its new flagship space at 542 West 22nd Street, signing for the property in 2015 and opening after a five-year renovation in 2020. Pace signed a 20-year lease on its new headquarters at 540 West 25th Street in a move that could cost the gallery a staggering $300 million by the time the lease is scheduled to expire in 2038.

Zwirner is unlikely to recoup his investment in 540 West 21st Street, given how rare it is for unsecured creditors to receive even a small fraction of the amounts owed by a bankrupt entity. Asked for an update, a gallery spokesperson said: “The project is working through bankruptcy proceedings and while this is ongoing, we were advised not to comment.”

It is unclear how much of the publicised $50m budget Zwirner had spent before the tower project entered bankruptcy. (The $28.8m for the property would not include related expenditures these past five years). Given the steep rise in interest rates since spring 2022, speculation in the trade has been growing over the true scale of the gallery’s loss, which would depend on how leveraged the deal was. But the gallery spokesperson says this is irrelevant: “DZ 21st Street LLC is the holding company for the gallery’s investment on 21st Street and, of course, doesn’t hold any additional leverage. DZ 21st Street LLC has no bank loans nor does it hold a mortgage.”

For context, Zwirner’s London gallery posted annual artwork sales of £40.8m ($50.9m) and a net profit after tax of roughly £2.1m ($2.6m) in 2022, according to regulatory filings of the UK company David Zwirner Limited.

However, the UK figures, and the sums at stake in the 21st Street development, pale in comparison with Zwirner’s global revenues, which have reportedly tripled over the past decade. In 2013 David Zwirner told the New Yorker that a $225m estimate of the gallery’s revenues by Forbes was low. By 2019, the Robb Report relayed that revenues had increased to $800m. Despite the pandemic outbreak in 2020, the gallery “did over three-quarters of a billion in sales”, according to a Freakonomics podcast interview with Zwirner in 2021.

But we are now in a different moment. There is anxiety in the trade about what is to come both short-term and long-term, given the ongoing slowdown in the art market, generational shifts in taste and broader economic changes. Trade sentiment about the future of the market runs from calm concern to latent panic, depending on who you talk to and how leveraged they are. Many are wondering to what extent the phenomenal gains in the art market these past 10 years were an anomaly.

Zwirner remains positive. “We’re in the midst of an art market that has to absorb higher interest rates, something that we have not seen in a very long time,” he says. “I feel we’re halfway through this process. Given the strengths that we witnessed in Basel in June, I am cautiously optimistic for the fall.”


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