In 2020, the city’s galleries have fallen victim to an insoluble crisis.
Their requests for rent reductions to cope with the consequences of Covid-19 have fallen on deaf ears, and for good reason: a study by law professor Tim Wu, reported in Artnet, shows that landlords have no interest in doing so. According to the US tax code, if a landlord cuts a gallery’s monthly rent from $20,000 to $10,000, he cannot benefit from any tax breaks, whereas if he leaves the space vacant, he can declare a loss and deduct it. Wall Street also bears a share of responsibility: big banks are increasingly securitizing mortgages. If a landlord already in trouble signs a lease with a gallery for an amount lower than the minimum rent declared in the mortgage, the bank can seize the property. It is this kind of practice that caused the market to crash in 2008, with well-known consequences.