Elena Scotti/FUSION

Judd Tully is the doyen of the art market; he knows everything and everyone. So last week, when an article of his appeared under the headline “Can the Single-Venue Gallery Survive?”, people listened: I’ve seen it shared many times, always approvingly.

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The article is well reported and tells a tale which anybody who knows a gallerist will easily believe: in today’s go-big-or-go-home art market, the mid-sized single-venue gallery is doomed. Tully’s list of examples is long: Jérôme de Noirmont; Yvon Lambert; Alexander Ochs; Manny Silverman; McKee Gallery; Gérard Faggionato; Valerie Carberry; Esther Schipper; Jorg Johnen; Nicole Klagsbrun; Hollis Taggart; Wallspace; Mixed Greens; Clementine; Bellwether; John Connelly Presents; David McKee; and Taxter & Spengemann. Not all of them have closed; not all of them were single-venue. But all of them support Tully’s thesis in one way or another.

But here’s the thing: a large part of the problem seems to be the way that rents are rising, fast.

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“For a long time,” says Hait, “we were in denial about our finances because we very badly wanted to continue, but at the end of the day, we didn’t want to move into a space that would limit our artists.” Hait adds that even a lateral move to another 2,000-square-foot space would “cost twice as much as what we’re spending, at least.”

She isn’t exaggerating. Commercial rents in New York’s Chelsea district have skyrocketed over the past decade; ground-floor space currently rents at around $125 a square foot annually and upper floors at $65 to $75 a square foot, according to longtime real estate broker Susan B. Anthony. Perhaps predictably, gallery rents on the Lower East Side, where many dealers migrated, are now just as high. “Dialing back 10 years,” says Anthony, “ground-floor space in Chelsea was $40 a square foot and upper floors were $25 to $30 a square foot. I don’t know how people are coping.”

These datapoints are fascinating, because on their face they pretty much undermine Tully’s entire story. Let’s stick with Chelsea, because it’s a pure gallery district. Upper-floor space in a gallery building is only going to be rented by an art gallery, and the high bidder for pretty much any suitable ground-floor space, if its address is five hundred and something West twentysomething, is equally going to be a gallery. That’s how gallery buildings and districts work—they’re the original art fairs. You can go to one place, and see a lot of different art from a lot of different vendors in a relatively constrained amount of time. As a result, gallerists place a premium on spaces which are in those buildings or districts.

In any event, it’s entirely reasonable, to a first approximation, to say that if you’re looking to rent a gallery space in Chelsea, then that gallery space is going to end up being rented to an art gallery, whether it’s you or somebody else.

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And given that assumption, the only explanation for the soaring rents in Chelsea is that demand is going up, not down. Sure, some galleries are closing down, but for everybody who moves out, somebody else moves in, at a higher price. Even Hollis Taggart, name-checked in Tully’s piece, is renting 4,000 square feet on the 7th floor of 521 West 26th Street, for what I assume is roughly $280,000 per year.

Nearly all of the galleries in Chelsea are mid-sized single-venue shops. There are a couple of ground-floor international giants, like Gagosian and Zwirner, but those can be counted on the fingers of one hand. There are just as many of these single-venue galleries in Chelsea and on Madison Avenue as there have ever been—and at the same time many more are opening up on the Lower East Side and in Brooklyn. The numbers don’t lie: for all the galleries that have closed down, there are still far more galleries open today than, probably, at any other point in New York’s history. And they’re paying unprecedentedly high rents for the privilege.

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That sure sounds like a market with a lot of competition, where it’s hard to make money. But it doesn’t sound like a market which is dying—quite the opposite.

And while the calculus in Chelsea is simpler than it is in areas of London or Paris where galleries nestle between upscale clothing stores, the overall phenomenon of more and more art galleries being willing to spend more and more money in rent is a global one.

The truth is, the mid-sized single-venue gallery has never been more popular. That’s a little bit weird, in a world where art is increasingly bought at fairs, but it does make a certain amount of sense: having a decently-sized physical gallery space in New York is one way of persuading collectors (and art fair juries, deciding who gets space in any given fair and who doesn’t) that you’re a serious player.

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What’s more, unlike the tech world, where everybody is always “crushing it” until they fail, struggling galleries tend to be much more vocal about their struggles than successful galleries are about their successes. If you quietly made a couple of million bucks last year, there are a lot of good reasons why you’re not necessarily going to want to advertise that fact.

No one knows how much money, if any, single-venue galleries make in aggregate. It might be a lot; it might be negative. And no one knows how the income is distributed, although there’s probably some kind of power law going on, where 20% of the galleries make 80% of the profits. But one thing is certainly true: if you only look at the galleries which are closing, then you’re going to get a very skewed sample.

So if you want to get a feel for how healthy the art-gallery market is, a simple glance at the rents galleries are willing to pay is likely to tell you just as much as any number of interviews with people who are closing down.