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costs of collecting art

Artsy’s Sara Roffino’s article, What It Really Costs To Be a Mega Art Collector, helpfully itemizes some of the costs of buying, owning, maintaining, and selling art.

The cost of maintaining a collection can run from 1% – 2% to 15% – 20% of the overall value of a collection.

The variation reflects the costs of collection services. Services include shipping, framing, installation, insurance, security, appraisals, storage, and conservation.

When purchasing from an auction house, expect to pay buyer premiums on top of the hammer price. Buyer premiums at New York auction houses now run from 20 to 25 percent.

The industry-standard rate for the services of an art advisor is 10% (of the cost of a work of art purchased).

Homes that exhibit works of art such as paintings or sculptures may require adjustments such as special lighting, security, and UV window protection.

Specialized fine art storage in Manhattan costs between $10 and $12.50 per square foot per month for a private space. Shared space outside of the city can cost as little as $5 per square foot.

Conservation assessments provided before major purchases are made can cost from  $300 and $1,000. This is for the assessment only, before any conservation work begins.

Rates to insure art, from 5 to 20 cents per hundred dollars, depend on the material of the work of art, type of storage, and geographic location. The same rates apply to artworks of any price.

There are costs to selling works of art as well. Selling costs include de-installation, shipping, and transit insurance.

See:

“What It Really Costs To Be a Mega Art Collector” | Sara Roffino, Artsy.net, 7 July 2017

#art #collectingart #artcollections #shipping #framing #installation #insurance #security #appraisals #storage #conservation

 

 

 

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luxury ・ evolving

Sara Bernát, a freelance brand strategist and Ph.D candidate at Humboldt Universitat, Berlin, focuses on the sociology of luxury.

The aim of her research is “to study social, cultural, and economic forces that have culminated to shape and define the concept of luxury throughout modern historical eras.”

She observes that educated millenials are no longer able to ignore irresponsible social and environmental impacts of product manufacture that promotes and seeks to fulfill heedless demand and unbridled consumption.

Consumerism, however, is core to our existence today. It is also tied deeply into psychological and social behavior. And so, the solution to the sociological and environmental threats lays within.

Rather than becoming the social pariah, a number of new luxury brands recognized that traditional luxury may carry the solution.

With its limited production, carefully sourced materials and respect for craftsmanship, sustainability could be innate to luxury.

See:

“How luxury is the millenial’s unlikely weapon to fight social inequality” | Sara Bernát, Luxury Daily, 4 July 2017

Sara Bernát | LinkedIn

 

#luxury #smartluxury #realestate #art #resilience

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Max Beckmann’s “Hölle der Vögel” (Birds’ Hell) (1937-1938) Sells for US$45,834,365

Max Beckmann’s “Hölle der Vögel” (Birds’ Hell) sold for US$45,834,365 at Christie’s London Tuesday evening (June 27).

The painting, executed in oil on canvas in 1937 – 1938, drew three bidders and sold to Larry Gagosian. It is understood that Mr. Gagosian was bidding on behalf of the New York collector Leon Black.

Art dealer Richard Feigen acquired the painting in 1983. Hölle der Vögel” (Bird’s Hell) has remained in his collection until now.

See:

“Boosted by Gagosian’s Record Bid on Beckmann, Christie’s Notches a $190 Million Impressionist and Modern Sale” | Colin Gleadell, Artnet.com, 27 June 2017

Christie’s Impressionist and Modern Art Evening Sale, London, 27 June 2017, Results | Christie’s

Max Beckmann Hölle der Vögel, 1937-38 (special catalogue) | Christie’s

 

#art #artcollections #artmarket #MaxBeckmann #BirdsHell #HöllederVögel #Christie’s #LarryGagosian #LeonBlack #realestate #resilience #luxury #urbanluxury #NewYork #London

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coastal property, coastal property values, & flood risk

For those considering an investment in real property (residential or commercial) along the eastern seaboard of the United States, insights are offered in an article published in April by the New York Times, “When Rising Seas Transform Risk Into Certainty” (Brooke Jarvis, 18 April 2017).

Some highlights follow. The upshot? Conduct your discovery and due diligence carefully. Try to think long-ish term (what are your long-term investment investment horizons, when do you plan to exit, e.g., sell your house or property, etc.). Consider a  variety of numbers (not only interest rates, number of bedrooms and bathrooms, square footage, appraisals, etc., but also sea levels, projected sea levels, flood zones, insurance premiums, any projected rise of insurance premiums, etc.). Ask your lender (if you are financing), real estate professional, and insurance professional lots and lots of questions.

  • Economists aren’t sure if coastal property values will decline gradually, as the life expectancy of homes shrinks, or precipitously, “the first time a lender refuses to make a mortgage on a nearby house or an insurer refuses to issue a homeowner’s policy.” (Sean Becketti, chief economist, Freddie Mac)
  • “Hundred-year flood zone” | A hundred-year flood zone sounds like sounds like a factor of time, as if the land were expected to flood only once every 100 years. What it really means is the land has a one percent (1%) chance of flooding each year.
  • If the property that you are considering buying is in a “hundred-year flood zone,” then in order to get a federally backed mortgage, you will be required to pay for flood insurance through the National Flood Insurance Program (N.F.I.P.).
  • Congress created the N.F.I.P. (the National Flood Insurance Program) in the late 1960s
  • The N.F.I.P. was intended to encourage safer building practices
    • The N.F.I.P. offers insurance coverage, some of it subsidized, to communities that meet floodplain-management requirements;
    • People that want to buy a house in a flood-prone area are required to buy N.F.I.P. insurance coverage.
    • The N.F.I.P. provides grants for mitigation projects, like elevating houses, meant to reduce flooding damage.
  • Critics of the N.F.I.P. observe that N.F.I.P. flood insurance, by bailing people out repeatedly and by spreading the true costs of risk, incentivizes people to build, and stay, in flood-prone areas instead of encouraging safer building practices.
  • As storm damage becomes more costly, the N.F.I.P. is getting deeper and deeper (in the order of tens of billions of dollars) into debt. The expense of insuring coastal properties is increasing. Taxpayer-subsidized premiums are not able to meet the costs of insuring the coastal properties.
  • In 2012 and 2014, Congress responded to the N.F.I.P.’s troubles with bills known as Biggert-Waters and Grimm-Waters.
  • The Biggert-Waters bill of 2012 cut subsidies and phased out grandfathered rates so that premiums would start to reflect the true risk that properties face, achieving “actuarial soundness.”
  • Prospective buyers are disturbed less about the risk of high waters and more about the certainty of high premiums.
  • Insurance provides stability, both financial and mental, in an uncertain world, and implies “mastery of risk”.
    • As waters rise, flooding in low-lying places without sea walls will become more and more common.
    • The presence of water will become less about chance and more about certainty.
    • Few insurers are willing to bet against a certainty.
  • The math of the “collective hedge against helplessness” (insurance) in the face of climate insecurity will get harder.
  • AIR Worldwide models the risks of catastrophic events for insurance companies and governments.
  • According to AIR Worldwide, $1.1 trillion in property assets along the Eastern Seaboard lie within the path of a hundred-year storm surge.
    • $1.1 trillion represents only the risk on the East Coast under current sea levels.
  • According to a 2008 analysis by Risk Management Solutions (R.M.S.) and Lloyd’s of London, annual losses from storm surges in coastal areas globally could double by the 2030s.
  • In 2015, the N.F.I.P. asked R.M.S. and AIR Worldwide to update its modeling of financial exposure from possible storms to properties it insures across the country
  • In 2016 and 2017, the N.F.I.P. transferred some of its risk to large, private companies known as reinsurers (insurance for insurance companies)
  • A vote to reauthorize (or not) the N.F.I.P. is scheduled to take place in September of this year
  • Some believes it is time to start limiting coverage for properties that are flooded over and over.
    • Multiple losses “should force us to shift our position where we make an offer of mitigation to a homeowner, and if they do not choose to take it, we don’t renew their policy.”
  • Flooding is the most common, and most expensive, natural disaster in the United States.
  • Private insurers have long declined to cover flood risk.
  • Some private insurers are beginning to show an interest in covering flood insurance for the first time.
    • Again, prospective buyers are disturbed less about the risk of high waters and more about the certainty of high premiums.
    • The end of subsidized coverage and the possibility of higher premiums encourages private insurers
    • As flood insurance premiums increase,
    • private insurers have a greater incentive to compete.
    • Private insurers can seek and obtain private underwriting from companies such as Lloyd’s of London and A.I.G. subsidiaries.
  • More accurate risk analysis, with powerful computers running more simulations that include more variables, also incentivizes private insurers
    • Premiums from private insurers can now cost 30 to 35 percent less than those policies bought through FEMA
    • Yet, private companies issue such policies in the belief that the outcomes against which risk is covered will not occur
    • Private insurance is “of course” not interested in covering severe-repetitive-loss properties or buildings whose exposure is higher than what can be recouped in premiums.
  • Mike Vernon, an insurance agent in the Hampton Roads area of Norfolk/Virginia Beach, gets most of his business from referrals from real estate agents. He observes
    • “We’re often actually making the building worse to bring down premiums,” filling in basements, or preparing a house to let water flow through it instead of keeping it out (yes, the house may be damaged by moisture, but at least it won’t be pushed off its foundation). “Or we’re eliminating something good, like a sunroom on a slab.”
    • “People are getting killed. To an appraiser it’s still worth $300,000, but to the real world it ain’t worth nothing, because it’s not going to sell.”

See:

“When Rising Seas Transform Risk Into Certainty” | Brooke Jarvis, The New York Times, 18 April 2017

The National Flood Insurance Program (N.F.I.P.) | FEMA

“Biggert-Waters Flood Insurance Reform Act of 2012 Timeline” | FEMA

“H.R. 3370 – Homeowner Flood Insurance Affordability Act of 2014” | 113th Congress, Congress.gov

#realestate #risk #riskmanagement #propertyvalues #floodrisk #insurance #NFIP #FEMA #resilience #smartluxury #art #collections #collectionsmanagement

 

 

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art storage & protection @ $1+ billion globally

The global art market generated sales of about $65 billion in 2016 according to the TEFAF Art Market Report 2017.

The growing, global network of facilities to store art now generates revenues of over $1 billion a year. Many of these spaces serve multiple objectives – including security, environmental protections, and trade: Sto

  • security
    • video surveillance
    • retinal scanning
  • space | collectors have too much to keep at home
  • protection
    • climate-controlled environments
    • fire-resistant walls
    • air-filtration
    • flood control
    • LEED and BREEAM building certifications
  • investment purchases
  • tax benefits
  • tax-suspended transport to and from galleries | as long as works of art return to storage no duty is payable, even if ownership of the art has changed
  • “1031 exchange” friendly
  • gallery inventory between shows and art fairs
  • storage of art taken by banks as collateral against loans
  • viewing rooms that can be rented on a more permanent basis | in-house, private sales and transfers of ownership
  • passport free access (freeports within airport perimeters)

Simon Hornby, the president of Crozier Fine Arts, estimates that 80% or even more of all the world’s art is in storage at any one time.

The art storage business has doubled in size in eight years and continues to grow.

“Until about ten years ago, Modern and contemporary art collectors were mainly made up of art enthusiasts and amateurs, they had a real passion, spending their money on what they liked; they collected in order to simply enjoy the work in their home environment. Today you have to work with an increasing number of art funds or speculators buying art for investment. Art buying has become accessible to a much larger audience than before and is considered an asset. The result of this is that more work sleeps in warehouses rather than hanging in collectors’ homes.”

Stephane Custot, Waddington Custot Gallery, London

“In the last year, I only physically saw one piece of art that I negotiated. Everything else was bought and sold via jpegs and remained in storage. It was all for investment.”

New York dealer and appraiser

In order to protect the assets, moreover, built environment investment is attempting to keep up with the evolution of demand, including security and environmental protections.

A state-of-the-art storage facility with “foreign trade zone” (FTZ) status (a freeport), ARCIS Fine Art & Collection Care, is under construction on Manhattan’s West 146th Street. Developed by Cayre Equities, the project has taken two years and over $40 million. Executive Director Tom Sapienza and Tom Lay, both formerly with Crozier Fine Arts, were recruited by art collector, real estate developer, and Crozier founder Ken Cayre to manage the project.

The five-story, 110,000 square foot is scheduled to open next month (July 2017).  ARCIS is Latin for “fortress”. The facility is designed and engineered to provide and enhance both environmental and security protections.

With the objective of constructing a museum-quality, sustainable, state-of-the-art secure building, Sapienza and Lay took crash courses in thermal dynamics and consulted with the professional services branch of the Van Gogh Museum in Amsterdam. Works of art will be scanned as they move through the building. State-of-the-art air filters are installed; air will change three to six times an hour.  LEED and BREEAM certifications are to be achieved for the building.

See:

“TEFAF’s 2017 Art Market Report” | Marion Maneker, Art Market Monitor, 6 March 2017

“TEFAF Art Market Report 2017” | Prof. Dr. Rachel A.J. Pownall, TEFAF Chair in Art Markets, The European Fine Art Foundation, March 2017

“Where does all the art go after a fair?” | Georgina Adam, The Art Newspaper, 16 June 2017

“Picasso Finds Possible Digs in Harlem $2.5 Billion Art Port” | Katya Kazakina, Bloomberg, 2 March 2017

“Will New York Get Its Own Freeport for Art? ARCIS Plans a Tax Haven in Harlem” | Eileen Kinsella, Artnet, 2 March 2017

“One of the World’s Greatest Art Collections Hides Behind This Fence” | Graham Bowley & Doreen Carvajal, The New York Times, 28 May 2016

“About Foreign-Trade Zones and Contact Info” | U.S. Customs and Border Protection, U.S. Department of Homeland Security

#realestate #resilience #smartluxury #art #LEED #BREEAM #finance #investments #artcollections #artmarket #VanGoghMuseum #museums

 

 

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real estate investment & climate change futures ・ the next dry neighborhood

If there’s anything more complicated than the global forces of thermal expansion, ice sheet melt and ocean circulation that contribute to worldwide sea-level rise, it might be the forces of real estate speculation.

Real estate investment may no longer be just about the next hot neighborhood, it may also now be about the next dry neighborhood.

“‘That’s it, it’s that simple. To be on the beach and to be on the water costs a lot more money, and the cheaper parts of town were furthest from the beach — but it just turns out that the cheapest parts of town farthest from the beach are the highest elevation, and now they’re worth a lot more than they used to be.'”

Jesse M. Keenan, Harvard Graduate School of Design

“‘The real issue is: Are people making real estate decisions based on climate change futures, rather than sort of normal speculation?'” observes Hugh Gladwin, an anthropologist at Florida International University in Miami. Gladwin’s specialty is using geographic information system mapping to understand large, diverse urban settings.

Jesse M. Keenan is a lawyer who teaches climate change adaptation at Harvard University’s Graduate School of Design. Mr. Keenan formerly served as the co-founder and research director of Columbia University’s Center for Urban Real Estate (CURE). His family roots are in Miami and he owns a house and has an office and parking space in Miami. He thinks people are making real estate decisions based on climate change futures.

Using survey data, Mr. Keenan is beginning to see see evidence that middle-income people are leaving Miami Beach and other places with nuisance flooding. Such flooding makes  it difficult to get around at high tides or insure a car.

Mr. Keenan observes, “‘Everybody I know that is a small owner of real estate that isn’t within the billionaire class — average middle-class, upper-middle-class Miamians who have real estate on the beach — is in the process of selling their properties and moving to the mainland.'”

Sea-level rise is exacerbating the effects of coastal flooding in South Florida. A 2016 University of Miami study finds that coastal flooding is accelerating. The coastal flooding is coinciding with an accelerated rate of sea-level rise in South Florida. The average rate of sea-level rise jumped from an increase of 3 millimeters a year before 2006 to an increase of 9 millimeters a year on average after 2006. Over the course of one decade, from 2006 to 2016, that’s about 3.5 inches of sea-level rise.

Sam Purkis, a marine geologist at the University of Miami, observes,

“‘What will happen, more than likely, is that you’ll have one big hurricane, and you’ll get a big inundation into the city. And that will serve to rot out the infrastructure — the sewer lines, the electricity, the telecoms. Everything that’s under the road. That becomes very costly to keep replacing every time this happens.'”

“‘That’s it, it’s that simple,'” says Harvard’s Jesse Keenan.

“‘To be on the beach and to be on the water costs a lot more money, and the cheaper parts of town were furthest from the beach — but it just turns out that the cheapest parts of town farthest from the beach are the highest elevation, and now they’re worth a lot more than they used to be.'”

Local governments are considering  what sea-level rise means for all those mortgage holders who pay taxes.

Coral Gables released an analysis of how it would pay for infrastructure investment in the face of a shrinking tax base if people leave.

“We’re concerned about it, we’re planning for it, we’re spending money on vulnerability studies trying to know what our vulnerabilities are in terms of our essential infrastructure, and planning to build up and save our communities as long as we can,” Jim Cason, Mayor of Coral Gables, said.

See:

“High Ground Is Becoming Hot Property As Sea Level Rises” | Erika Bolstad, ClimateWire, 1 May 2017, re-printed from ClimateWire by Scientific American with permission from E&E News

Hugh Gladwin, Steven J. Green School of International & Public Affairs, Florida International University

Jesse M. Keenan, Harvard University Graduate School of Design

Center for Urban Real Estate, Columbia University GSAPP

Sam Purkis, Professor & Chair, Department of Marine Geosciences, Rosenstiel School of Marine & Atmospheric Science, University of Miami

#realestate #realestatedevelopment #realestatespeculation #art  #ArtBaselMiamiBeach #Miami #MiamiBeach #climatechange #sealevelrise #resilience #Harvard #Columbia #FloridaInternationalUniversity #UniversityofMiami

 

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Blackstone Real Estate is optimizing art as a targeted value-add initiative for its NY real estate portfolio

Blackstone Real Estate is optimizing art as a targeted value-add initiative for its real estate portfolio throughout New York City.

Blackstone is initiating a partnership Hunter College to recognize talented emerging artists while concomitantly giving visitors to its building portfolio throughout the city access to unique works of art.

Last week Jon Gray, Global Head of Real Estate at Blackstone, introduced a new exhibition featuring artwork by students currently enrolled in the Hunter College Master of Fine Arts program: Talia Levitt, Madhini Nirmal, Leonard Reibstein, and Andy Van Dinh.

These works of art, both paintings and large-scale works on paper, will be displayed for a year in the lobby of 5 Bryant Park.

Blackstone is the world’s largest real estate private equity firm with $102 billion of investor capital and $200 billion of gross assets under management.

Blackstone seeks to acquire high quality investments at discounts to replacement cost. The company improves the properties through hands-on management and targeted value-add initiatives.

The breadth of Blackstone’s real estate portfolio provides valuable real-time proprietary market data. Blackstone believes this information enables the company to identify mispriced and/or out-of-favor asset classes more rapidly than its competitors.

Blackstone real estate also operates one of the leading real estate finance platforms, including management of the publicly traded Blackstone Mortgage Trust (NYSE:BXMT).

See:

“Blackstone Partners with Hunter College for Student Art Exhibition at 5 Bryant Park” | Blackstone Blog, 12 June 2017

Blackstone Real Estate

#art #realestate #finance #risk #collectionsmanagement #portfoliomanagement #HunterCollege #HunterCollegeMFA #NewYork #Manhattan #Blackstone #privateequity #riskanalysis #risk management #collections

 

 

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New York’s Metropolitan Museum of Art changes leadership structure

New York’s Metropolitan Museum of Art announced yesterday that Daniel H. Weiss, who has served as president and chief operating officer of the Met since 2015,  will now serve as president and chief executive.

This appointment, decided by the Board of Trustees, represents an organizational shift for the museum.  In prior years the director has served as chief executive.

As both president and chief executive, Dr. Weiss will lead the administrative operation of the museum and will have the “worry about day-to-day matters like security, restaurants and maintenance.”

The next director will oversee the museum’s “core mission functions” –  curatorial focus, acquisitions, exhibitions, publishing program, conservation efforts, and library – and will report to Dr. Weiss, the chief executive.

Both chief executive and director will serve on the Board of Trustees. They will establish the museum’s priorities together.

See:

“In an organizational shift, Met president Daniel Weiss takes over as chief executive” | Pac Pobric, The Art Newspaper, 13 June 2017

“Met Museum Changes Leadership Structure” | Robin Pogrebin, The New York Times, 13 June 2017

#MetropolitanMuseumofArt #theMet #art #museums #DanielHWeiss #collections #NewYork #realestate

 

 

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Andrew Goldstein on Great Art @ Art Basel

Andrew Goldstein, Editor-in-Chief of Artnet and formerly of Artspace, pronounces on “the ten best artworks at Art Basel 2017.”

Included are Francis Bacon’s painting “Study from the Human Body – Figure in Movement” (1982), offered by the Marlborough Gallery, New York, for $25 million and  Christopher Wool’s sculpture”Untitled” (2014), offered by Luhring Augustine, New York, for $2.2 million.

Mr. Goldstein observes that Bacon’s “Study from the Human Body – Figure in Movement,” obtained by the gallery directly from Francis Bacon just before he passed away,  features

“marquee elements of a major Bacon—the spooky transparent box (evoked memorably in the new “Twin Peaks”), vigorous coloration, and mutant figure in apparent agony—the painting advances Bacon’s interest in the body in movement, a subject he often painted from photos in sporting magazines.”

Of Christopher Wool’s “Untitled,” Mr. Goldstein recounts the inspiration that led the artist towards “a new way to translate his painterly aesthetics into sculpture”:

“some years back, the artist Christopher Wool was walking the wide streets of Marfa, Texas, when he came across an unusual tumbleweed that had formed in the desert out of barbed wire. Looping and gnarly, it reminded him of his abstract paintings …”

See:

“The Best 10 Artworks at Art Basel 2017” | Andrew Goldstein, Editor-in-Chief, Artnet, 14 June 2017

#art #contemporaryart  #artcollections #artmarket #FrancisBacon #ChristopherWool #MarlboroughGallery #LuhringAugustine #Artnet #Artspace #collections #collecting #realestate #ArtBasel

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楊詰蒼 | Earth Roots @ Ink Studio, Beijing

Beijing’s Ink Studio presents Earth Roots, a survey of Yang Jiechang’s One Hundred Layers of Ink series.

Born in Guangdong Province in 1956 and a 1982 graduate of the Chinese Painting Department of the Guangzhou Academy of Fine Arts, calligrapher Yang Jiechang (楊詰蒼) was selected to participate in the 1989 group exhibition Les  Magiciens de la Terre at the Centre Georges Pompidou in Paris.

Yang Jiechang arrived in Paris in April 1989 without works to show, however, as they had been detained at the Chinese border. So he responded extemporaneously.

Retaining his native medium, he distilled all that he knew and experienced into a simple procedure: the repeated application of ink with a brush on paper, day after day and layer upon layer, until the fibrous surface hardened into a thick, densely textured relief with a metallic sheen. As blackness turned paradoxically luminescent, it gained the dimensions of space and time, becoming a record of his actions and being. 

The resultant One Hundred Layers of Ink series departed strikingly from traditional ink paintings and resembled rather color fields and other modernist idioms,

but for Yang it was calligraphic practice in its bare essence, and was grounded moreover in the multilayered polychrome court painting of the Song Dynasty (960-1279).

Four large rectangular works were exhibited at Les  Magiciens de la Terre at the Centre Georges Pompidou.

Artsy describes Yang Jiechang’s multimedia works as combining  traditional Eastern and Western modes of representation, a confluence he calls “Eurasian.” Based in Paris and Heidelberg, Mr. Yang states, “Eurasia is the land I experience everyday in my life: I am from Canton, China, my wife is from Germany, our children are Eurasian. We feel this land; this disposition and lifestyle bear a lot of possibilities and power.”

Works from the One Hundred Layers of Ink series are in the permanent collections of the Brooklyn Museum; Cantor Center for the Arts, Stanford University; Deutsche Bank; Guggenheim Abu Dhabi; Hong Kong Museum of Art; M+, Hong Kong; and University Museum and Art Gallery, University of Hong Kong.

Other of his works are in the collections of Berkeley Art Museum, Berkeley; François Pinault Foundation, France; Fukuoka Art Museum; Guangdong Museum of Art, Guangzhou; Ministry of Culture, France; Rockefeller Foundation, New York; and World Bank, Washington, D.C.

See:

“Earth Roots” | Yang Jiechang Paintings, 1985-1999, 10 June – 12  August 2017, Ink Studio, Beijing

Yang Jiechang | Artsy

#YangJiechang #InkStudio #Beijing #calligraphy #Artsy #artcollections #collectors #art #artmarket