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Land, Banks, & Investors: Part 2

Earlier this year, I was in Tokyo working on a new project. I managed to stop by Kyle’s Good Finds, which is rumored to be the best banana bread spot in Tokyo though Kyle himself would argue otherwise. Having lived in Tokyo since the 80s, Kyle has seen so much growth and transition. We chatted for a long time but one part of our conversation stands out to me. Kyle is moving his iconic bakery in the near future because the building where it is located has been sold and is slated for a new residential development. This common occurrence is another case of a system working to find more ‘value’. Japan, like many other developed countries, is going through a demographic crisis with a population that is sharply declining (roughly ~1% net loss yearly) with few new births per capita. Combine an almost insignificant level of immigration and there’s nothing to offset the loss. Kyle noted the extreme price appreciation of urban land as a major factor in that phenomenon. High priced land drives up the cost of housing and business rents, which directly impacts the living costs people encounter. As wages stagnate across the economy, people increasingly lack belief that they can withstand the increasing unaffordability. What other outcome could we expect? If taking care of the basics just ends up making you feel precarious, why would you consider taking on the cost burden of another human?

What does any of this have to do with art and specifically, the price of art? From my perspective, the cost of land and property is the biggest factor impacting the economics of the art business and is therefore the primary thing holding it back. 

If the Earth moved a few inches closer to the sun every year, we might enjoy longer summers, increased sunlight, and other little ‘benefits’ that would pale in comparison to the catastrophic long-term trajectory and eventual immolation of our dear little planet. So, why do we tolerate the same phenomenon when it comes to economics and, specifically, to the business of art? In a system where price appreciation is seen as a good and somewhat inevitable thing, aren’t we really just picking up pennies on the tracks in front of an oncoming train? 

It’s the same as everything else. Our favorite restaurants, our local bars, the flower shop, the bagel spot down the street, the nail salon uptown, and the brewery around the corner all have the same problem. Most of their costs are related to rent, which pushes their prices up. Someone somewhere always has to pay rent or a mortgage with a property tax on top. The artist who works out of their studio as well as the gallery that shows said artist as well as the fair where the artists’ painting will sell and, of course, the auction house when that art is up for secondary sale, all have to pay. Every single aspect of this industry is directly impacted by the cost of real estate. And those costs are exceptionally high. The expectation is that those high costs will continue to grow unabated. In a just world, real estate wouldn’t be an industry but that’s not the one we live in. 

I recently bought a great triptych from Superchief, a local Los Angeles gallery that focuses on street art, graffiti, abstraction, pop surrealism, and generally subverting art world norms. It was gorgeous and worked within my relatively low budget at the time. If you haven’t been to Superchief’s space during an opening, take a look at the photos from their social media. It’s packed. From my experience, the same can generally be said for many galleries around Los Angeles. New York? Another level. Tokyo, Berlin, London, Antwerp, Amsterdam, Shanghai, Paris. How about the museums? Always packed. Art fairs? Busy day-after-day. Where art is happening, there’s always a crowd. A good rule of thumb to consider is that when you see people attending something in real life, you likely have many people who don’t make it because of various obligations, scheduling conflicts, lack of transportation, or another issue. However, the interest is there. All of these people are potential participants in the ‘art market’ as consumers, not just observers. Unfortunately, this ‘missing’ money is also going to landlords and banks. 

How many of us have friends who work as doctors, lawyers, bankers, consultants, accountants, in public service, or some other well-compensated white collar job? Of course, these jobs often require years of school/training that for many inevitably involves incurring crushing debt. The student debt bubble is a crippling economic crisis in motion. How many of these professionals are paying exorbitant rents or mortgages that are nearly double what their own parents were paying (if they’re paying at all) for a place to live? The problem isn’t restricted to New York or Los Angeles or London. It’s everywhere. What about our friends in blue collar work or in service jobs, many of whom are struggling to make ends meet? Aside from the fact that they are never compensated fairly, do you really enjoy living in a society where none of them can afford to enjoy art? Not just going to free museum nights but actually collecting, supporting, and owning it. Perhaps the unspoken assumption is that only the wealthy should be able to afford to collect art. 

Capitalism is not going away in our lifetimes, so maybe we should consider more drastic measures to meet the moment. I don’t discount how incredibly difficult this is. My question is: What can the art world do to control its own destiny when it comes to land and space?

-PB