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What is driving the soaring demand for art storage?

27 June 2017

With the number of art galleries increasing at a rapid rate, more collectors entering the field, collectors building substantial holdings, and museums expanding, the demand for fine art storage has increased, too.
Art-storage firms typically offer fireproof buildings, trained security personnel, surveillance cameras, motion detectors, and transport. Crating, shipping, customs, and condition reports are among the other services they offer. Clients can store their artworks either in rooms that accommodate the holdings of other clients, or in private rooms. Viewing spaces where dealers, as well as art advisors, can display the art works they have on offer to clients are also a feature. Private collectors also use viewing spaces on a short-term basis.

‘I think that from 30 to 50 per cent of major collectors use our viewing rooms where they can take their friends to see their other collections,’ says Simon Hornby, president and CEO of New York-based ‘art logistics’ firm Crozier Fine Arts. (The company was founded in SoHo in 1976 and acquired by the information management company Iron Mountain in 2015.)

Before joining Crozier, Hornby served as senior vice president and executive director of Global Risk Partners, an international risk-control and loss-prevention firm specialising in fine art and valuables. Twelve years ago, Hornby was instrumental in the development of the Global Risk Assessment Platform (GRASP), a method by which insurers can evaluate warehouse and museum facilities.

In 2016, Crozier increased its number of storage facilities, adding 250,000 square feet of art-storage space with two new locations in Newark, New Jersey and New Castle, Delaware. Earlier this year, it acquired Cirkers, an art-storage firm in New York, which was founded in 1873. In all, Crozier now controls approximately 750,000 square feet of storage across eight facilities in six locations along the east coast: Manhattan, Brooklyn, New Jersey (where there are two), Connecticut, Delaware, and Southampton. Plus, it has expanded both its Chelsea headquarters and Southampton warehouses. Approximately 40 per cent of its clientele are private collectors, 40 per cent institutions, 10 per cent individual artists and designers, and 10 per cent are art advisors.

The London-based firm Cadogan Tate now offers 13 storage facilities, with four in London, three in New York, three in Los Angeles, and one in each of Miami, Paris, and Nice. Its clients are dealers, collectors, art museums, interior decorators, and auction houses, including Christie’s, Sotheby’s, and Bonhams. The firm opened its first Miami facility last year and will open its fourth New York storage facility, conveniently located between New York City and the Hamptons, in August. ‘Now, we are currently exploring opportunities for state-of-the-art storage facilities in Chicago and Dallas as well as internationally, in particular Hong Kong,’ Graham Enser, global managing director of fine art at Cadogan Tate, says. ‘With yet more art fairs, galleries and new dealers sprouting up in Manhattan, Brooklyn, and Queens, we have seen a growth in customers looking to store pieces destined for art fairs,’ he adds.

And although it has been seven years since Cadogan Tate opened a new storage facility in the UK, it has greatly expanded its existing facilities in that time. Indicating the strong demand for art storage, in the last five years, Cadogan Tate has upped its storage space from 348,025 square feet to 511,677 square feet worldwide. (In the UK, its square footage has increased by 135 per cent; in France, it has increased by 69 per cent and the firm is actively searching for a larger facility in the country.)

In addition to traditional art-storage firms, collectors and dealers are also choosing duty-free warehouses – freeports – to store their holdings because of the tax advantages they offer. In Swiss freeports, goods can be stored without the payment of customs duties or VAT, until they leave for their destination country. In the United States, the Crozier complex in Delaware takes advantage of the fact that the state has no sales taxes. Dealers and art advisors can complete a sale in the state and then transport the artwork to a collector’s home without incurring any sales tax. In July this year, Arcis will open an 110,000-square-foot new art-storage facility in Harlem, New York, that is insured to hold artworks up to the value of $3 billion. All art, sculpture, antiques, and design will be exempt from US duty and excise tax until they exit. However, New York State sales tax may apply.

The requirements of insurers drive much of the demand. ‘Artworks are no longer acquired simply to enhance homes, but are purchased for investment purposes and need safe storage,’ says Dorit Straus, who has served as Chubb Group of Insurance Companies worldwide fine art manager and now sits on the board of directors of AXA Art Americas Corporation.

The sheer size of some works of contemporary art is also a factor. Last year, Christie’s sold Jean Michel Basquiat’s acrylic on canvas Untitled (1982), which measures more than 16 feet across, to the Japanese entrepreneur and art collector Yusaku Maezawa for an astonishing $57,285,000. Since Maezawa has plans to open a private museum in his home town of Chiba, the Basquiat painting is in storage. And since large-scale works like the Basquiat would dominate an entire single wall in a private residence, collectors with several works of a considerable size frequently rotate their paintings and sculpture in and out of storage.

Extreme weather is also becoming a major issue for collectors and insurers. The tipping point in the States was when on 29 October 2012, Hurricane Sandy hit Chelsea, home to some 300 galleries, and flooding from the Hudson River left a path of devastation. The hurricane was dubbed ‘Frankenstorm’ and Michael Bloomberg, then Mayor of New York, called it ‘the storm of the century’. In Chelsea, power and telephone lines went down and some galleries were flooded with a staggering four feet of water. For dealer Zach Feuer, whose gallery operated from 2000–16, the devastation was daunting; his gallery was flooded with five feet of water. Nearly all of his holdings were damaged in some way, with only two per cent of his stock surviving unscathed.

Cadogan Tate has experienced a heightened interest from clients’ insurers asking far more questions about the geographical location of storage facilities, demonstrating a heightened degree of anxiety around natural disasters such as flooding. Fires are also a critical concern. In 2004, an east London warehouse belonging to Momart, a highly regarded UK storage firm, was consumed by fire. Charles Saatchi lost more than 100 works including Tracy Emin’s controversial tent Everyone I Have Ever Slept With 1963–95.

According to Vivian Ebersman, director of art expertise at AXA Art Americas Corporation, there are a number of criteria art collectors, dealers and museum directors should focus on when selecting a fine art storage firm. First and foremost are humidity- and temperature-controlled storage spaces. Other considerations include the security of the warehouse, the training and background of the employees, and the internal procedures for checking and maintaining the storage spaces. Such vigilance seems likely to be more necessary than ever since, as Dorit Straus puts it, ‘With new art fairs, new private museums, museum expansions and ever more batches of collectors, fine art storage is bound to keep up with the pace.’

From the June issue of Apollo. Preview and subscribe here.

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