To passerby, James Gallery in Pittsburgh would seem like a typical art gallery, with a slate of exhibitions and a range of art on offer. But it would be more accurate to describe the building as a “multi-service shop.” That’s the term that art-market economist Clare McAndrew uses to describe a newer breed of gallery that has to do more than just show and sell art in order to survive in a highly competitive art market.

James Gallery, for its part, cannot wait for an artist in its 35-strong stable to make it big, so it needs a variety of related sources of revenue. It will sell you art (a piece at a time or enough to fill an entire building), frame your art, commission artists to create specific works for you, evaluate your existing collection (“asset management”), and even let you throw a party right in the gallery. Such extras might already be rolled into the business of mega-galleries, which have been known to rent out their cavernous Chelsea spaces in New York for Fashion Week and some offer concierge-style services to collectors. But such endeavors are newer for smaller galleries, which are now pursuing them as separate profit-making endeavors rather than extras that a select few billionaire clients have come to expect.

Providing such client services, or “finding additional revenue streams,” as Andrew Schoelkopf, president of the New York-based Art Dealers Association of America, called it, might have been considered gauche in an earlier era. But it has become the new business model for smaller and regional galleries that are looking to compete with the growing quantity of online art sales, other galleries (McAndrew has estimated that there are 296,550 of them around the world), and the hundreds of international art fairs where the elite galleries show their wares. It is a crowded field.

Jacob Burmood’s sculpture for the National Soccer Hall of Fame in Texas. Courtesy of Leopold Gallery.

Boosting the Bottom Line

James Gallery estimates that sales of original art amount to only 20 percent, or $500,000, of the gallery’s $2.5 million annual revenue. Another 32 percent of its earnings, or $800,000, is derived from sales to corporate clients, such as hotels, hospitals, sports arenas, and other area businesses. Then, around 46 percent ($1.15 million) comes from custom framing, which is done in a shop in an adjacent building, and yet another two percent ($50,000) from renting out the gallery itself for parties and weddings—about 20 or so events per year.

“It’s a unique place for an elegant wedding or a boutique event,” said gallery founder James Frederick, “and, because there already is an elegant backdrop of art on the walls, people don’t have to worry about decorations.”

Focusing on providing more services to clients has also helped New York’s Davidson Gallery’s bottom line. It offers art advising, which involves locating and purchasing artworks from other galleries at auctions and in private sales; provides appraisals of clients’ collections; and rents out its gallery space for events. “We rent out the gallery for weddings and parties half a dozen times a year,” said senior director Charles Davidson, adding that the income from these events “is equivalent to one good show.”

This is all the more important considering the unequal distribution of wealth in the art market. The most recent Art Basel and UBS Art Market Report found that art galleries whose annual sales revenue tops $25 million saw their earnings increase 17 percent in 2018 over the previous year, while those whose yearly receipts were under $500,000 saw a decline of 18 percent. “Big galleries have become mega galleries,” Davidson said, “we’re neither mega nor a start-up.”

Some galleries have found that expanding into more corporate work has helped keep the lights on. Paul Dorrell, owner of the Kansas City, Missouri-based Leopold Gallery, claimed that 40 percent of the gallery’s annual income now comes from corporate art advising (another 40 percent comes from sales of artwork at the gallery, with the remainder being online art sales), while Andrew Witkin, co-owner of Boston’s Krakow Witkin Gallery, claimed that private advising amounts to approximately 10 percent.

A view of the Art of the World Gallery in Texas. Courtesy of Art of the World Gallery.

Two Houston, Texas galleries, Gremillion & Co. and Art of the World Gallery, offer a variety of services to clients (consulting, installation, commissions), as well as renting out their spaces for parties. A spokesman for Art of the World Gallery estimated that it hosts two or three paid events each month.

Requests to rent out the gallery for events come fast and furious. Halley K. Harrisburg, director of New York’s Michael Rosenfeld Gallery, noted that “we get numerous requests” to host parties—“cocktail parties, fashion shoots, you name it”—but turn them down, even though they represent “an attractive business opportunity.” Andrew Witkin also described being asked “pretty regularly” to rent out the gallery for parties, which “we won’t do, but I’ll give those people the names of galleries in the area that will.” Dorrell called these kinds of events “too much of a distraction, and we don’t do it anymore,” before recalling that the gallery did host a wedding in May (for a friend of a client).

It’s a tough business if your only option is to wait (and hope) for art to sell. McAndrew noted that gallery owners everywhere are “waiting for the next new business model. Dealers are constantly saying to themselves, ‘There must be some better way to make this work.'”