in other words

Everything you ever wanted to know about the art market but didn't know who to ask
Special Issue: Analyzing the November New York Auctions

Supply and Demand

The top takeaways from the New York sales

BY Charlotte Burns
executive editor of In Other Words

AND Allan Schwartzman
co-founder of AAP & chairman of Sotheby's Global Fine Arts

RESEARCH BY Julia Vennitti
editorial assistant

Published
In Analysis

This season, we’re focusing our biannual auction analysis on the top takeaways and general trends, as well as looking specifically at certain artist’s markets. For more discussion, download our latest podcast in which we talk to Nicholas Maclean, co-founder of Eykyn Maclean gallery, about last week’s New York sales.

Solid performance

Concerns that the art market might be circling the drain were allayed by this recent bout of sales, during which more than $1.4bn was spent on Impressionist, Modern and contemporary art at Sotheby’s, Christie’s and Phillips.

The sell-through rates were uniformly high and the day sales—which often reveal more about the health of the market than the starrier evening events—were extremely robust. What was missing this season was the fanfare that has accompanied previous auction seasons, largely because no major estates or single stratospherically-priced works were on offer. Simply put, sales were solid.

But expect the nerves to continue…

Nonetheless, some disquiet is likely to linger. The globe is in the grips of unspooling mass anxiety, caused by the continuing disruption of the established world order. Much of the social and political tumult has been triggered or enabled by an ongoing technological revolution that is as seismic in impact as the first Industrial Revolution. The old world is giving way to the new, in more ways than one.

No sector is untouched by the changes, including the art world, which is being reshaped profoundly—from the auction houses to the international galleries; from the media to museum boards. For an industry that has functioned in essentially the same way for decades (if not centuries), the shock waves are unsettling.

Expect more from us on this subject in early 2020. But, suffice to say, the art world does not live in a vacuum and we can expect more upheaval to the status quo for the foreseeable future.

Change comes at you fast

A few short years ago, a sale season that generated more than $1.4bn would have been considered jaw-dropping. Now, it seems somewhat ho-hum. Special attention used to be paid to works estimated at more than $10m. Now, those prices seem like fairly small potatoes.

Our sense of normal has been transformed after years of runaway prices, which makes it easy to forget that there is more money in the market than ever and more people interested in buying art. The issue is not demand, but supply (and the appetite for risk).

Building a sale without an estate is a much more arduous process

Dry supply?

It has been widely noted that this season’s sales were down on May’s, which is a consequence of shrinking supply. The secret to any successful auction soufflé is everyday human misfortunes: death, debt and divorce. The Grim Reaper did not help much this season, since no major estates came to market. And building a sale without an estate is a much more arduous, piece-by-piece task.

The difficulty in coaxing consignments was compounded by a recent change in US law. Since the Trump administration killed the 1031 exchange last year—a mechanism by which people could defer payment of capital gains tax on works of art by putting the proceeds from a sale into a different purchase—it is now more complicated and costly for sellers to become buyers in the same sale season.

The reality of expectations

Interestingly, in a season lacking a slew of nine-figure lots, it became clear that the parts of the market attracting real depth of bidding were not necessarily at the higher end. Overall, collectors are exercising restraint—easily deterred by aggressive estimates but better enticed by more conservatively priced works.

The auction houses had clearly worked hard in the days and weeks leading up to the sales to gauge the mood of the market—and had evidently worked equally hard to convey this to their consignors. Many of the lots on offer sold below the low estimate, suggesting that consignors had been encouraged to re-evaluate their expectations.

The market for works by Kerry James Marshall has settled onto higher ground. Vignette 19 (2014) flew over its $7.5m high estimate to sell at Sotheby’s for $18.5m, with fees

In fact, the majority of works in four of the five evening sales hammered below their low estimates: 40% of Christie’s Impressionist and Modern; 50% of Sotheby’s Impressionist and Modern; 45% of Phillips 20th-century and contemporary; 48% of Christie’s Postwar and contemporary.

The exception was Sotheby’s contemporary art auction, which felt more buoyant— largely because only 22% of the lots (ten works) hammered below the low estimate, with more than half —46% (21 lots) above the high.

Selling out

Another revealing—and related—set of statistics are the sell-through rates. Expectations may have been lowered, but this allowed the houses to do a good job in getting the works sold: across the evening auctions, the sell-through rates ranged from 84% to 95%.

In the contemporary evening sales, Christie’s sold 48 of 54 offered lots (89%) for $325.3m total; Phillips sold 40 of 42 lots (95%) for $108.1m; and Sotheby’s sold 46 of the 50 lots (92%) for $270.6m. In the Impressionist and Modern evening sales, Sotheby’s sold 42 of 50 lots (84%) for $209m total while Christie’s sold 52 of 58 lots (90%) for $191.9m. 

Surprising success in the day sales

Meanwhile, there was verve to the day sales and depth of bidding. The performance against individual estimates was quite different from the evening events: here, the majority of sold lots hammered above their high estimate. This suggests a health and depth to the market that is encouraging.

Phillips set a new company record with its combined day sales, totaling $37.6m through the sale of 300 of 378 works (79% sold). In both of its day sale sessions, the majority of works went for above their high estimate: 45% in the morning and 55% in the afternoon.

A high price at a day sale: Joan Mitchell’s Terrain Vague (1965) sold for $4.5m at Christie’s (hammer price $3.7m; est. $2.8m-$3.5m)

Christie’s surpassed its May $92.97m total, making a combined $117.1m in its two sessions, at which 255 of 285 lots sold (90%). Most of the works hammered above their high estimate: 132 of 285 (46%).   

Sotheby’s totaled $100.7m by selling 267 of 305 lots (88%). Here too, the majority of the works hammered above their high estimate—more than half the sale (56%, 150 lots).

The trend held in the Impressionist and Modern day sales (though perhaps less decisively and with lower sell-through rates). Christie’s was fairly evenly split in terms of hammer price versus estimate, with 42% of the lots hammering below the low estimate (74 lots of the 178 sold) and 43% above (77 lots). The sale totaled $24.2m overall, with a sell-through rate of 76%. Sotheby’s sold the majority of its works above the high estimate (44%, or 116 of the 263 sold). The sale totaled $53.3m overall, and was 71% sold by lot.

How the houses are distinguishing themselves

The different strategies each house brought to building their contemporary sales reveal something about what distinguishes them.

Each of the houses is under somewhat new management. Phillips—which has been led by ex-Christie’s CEO Edward Dolman since 2014 and owned by Russian retailers the Mercury Group since 2008—has been rebranding. Once mainly known for selling work by hot, young artists, it now stages “20th-century and contemporary” sales that bring together a sometimes eclectic mix of works from the past 120 years. This season, for example, it sold work by artists ranging from Norman Rockwell, the chronicler of early-20th century American culture, to Jean-Michel Basquiat, the New York prodigy of the late 1970s and 1980s, and Julie Curtiss, a young French artist living in Brooklyn whose art is the subject of rapid and recent market speculation. 

An unusual addition to a contemporary sale, Norman Rockwell’s Before the Shot (1958) hammered within estimate at $3.9m (with fees, $4.7m. Est. $2.5m-$4.5m) at Phillips—part of the company’s push to bring in more 20th-century works

The key difference between Phillips and the two others, though, is how value is derived in its sales: there are fewer expensive works. Two lots sold in the $5m to $10m range (for a combined $15m, 14% of the total value) and one for more than $10m (Jean-Michel Basquiat’s The Ring (1981), which sold for $15m against an estimate of $10m to $15m). Most of the sale value at Phillips came from works sold in the $1m to $5m range: 28 lots for a total $72.1m (67% of total value).

By contrast, Christie’s—owned by François Pinault through Artemis S.A and, since 2017, led by Guillaume Cerutti—has usually focused its attention on the mega-lots: those that garner most column inches and appeal to trophy collectors at the high end. This season was no different (though there were fewer of these lots than usual). More than half of the total sale’s value, 53%, or $170.9m, came from eight lots that sold for more than $10m. Thereafter, the bulk of the value came from the 28 lots that sold in the $1m to $5m range (28 lots for a total $86.5m, or 27% of the value) and the nine lots in the $5m to $10m range that sold for a total $65.5m (20% of the sale’s value).

Sotheby’s—which, since September, has been a private company owned by Patrick Drahi and led by Charles Stewart—has been focusing on bringing a more diverse group of artists into its evening sales and establishing a sense of “best of” at different price levels since around 2016. The strategy is beginning to become embedded in the way the house organizes its sale: this season, for example, beginning with a work on paper by Charles White, the artist who was a great influence on Kerry James Marshall, two of whose works also performed above estimate further into the sale.

The bulk of the sale’s value came from the six works that sold for more than $10m, totaling $120.7m. Thereafter value was fairly evenly split between the $1m to $5m range (27 lots selling for $72.8m, or 27% of the value) and the $5m to $10m range (12 lots selling for $76.3m, 28% of the sale’s value).

Great opportunities

There were examples of works by artists that could or should have reached fuller prices. A work by Kara Walker, one of the most significant artists to have emerged in the past three decades, was offered at Christie’s. The piece, Being the True Account of the Life of the Negress (1996) is a cut-paper work from a notable date, but it failed to attract a bid and stalled at $380,000, below its $400,000 low estimate.

Joseph Cornell, Soap Bubble Set (1948) sold for $1.7m (est. $1.8m-$2.5m) at Sotheby’s

In the same sale, a work by Alma Thomas, A Fantastic Sunset (1970) hammered at $2.2m (est. $2.2m-$2.8m) to make a total $2.7m with fees. One of the most important historical African American artists, her work rarely comes to auction because it is so sought after on the private market (when we conducted our data study into the representation of African American artists in 2018, many museum curators complained that they could not buy a work by Thomas—though they greatly desired to do so—because the prices were too high). The work sold, but it felt like it could have gone further.

Joseph Cornell is an artist whose work has always been a mainstay of the contemporary sales and the recent spike in interest in the market for Surrealist works would suggest there is a place for him there as well. And yet his works seem to only just get by. Sotheby’s had a great piece, Soap Bubble Set (1948), representing one of Cornell’s signature subjects (the soap bubbles) and larger than many of his works, giving it real presence. The work has a strong exhibition history and was estimated at $1.8m to $2.5m, but hammered at $1.4m (making $1.7m with fees).

Sturtevant, Johns Painting With Two Balls (1987) sold for $680,000 at Phillips (est. $500,000-$700,000)

Many in the trade expected the market for work by Elaine Sturtevant to rise after her retrospective at MoMA in 2014-15. But this season showed that there is still real opportunity. Phillips had a great work based on a very important painting by Jasper Johns. Entitled Johns Painting with Two Balls (1987), the work was estimated at $500,000 to $700,000 and hammered at $550,000 ($680,000 with fees).

Phillips had another work in its day sale, Stella Getty Tomb (First Study) (1988), which also sold squarely within its estimate of $400,000-$600,000 and hammered at $460,000 ($572,000 with fees), while two works based on Warhol’s flowers in Christie’s day sale, both estimated between $200,000 and $300,000 failed to sell. There is more value to come in this market.

Great work, great price

This season there were some significant prices for great work by important artists. One such example is Ellsworth Kelly, a significant artist whose auction prices have nevertheless tended to be more generic than singular. Here is an instance when an exceptional work, Red Curve VII (1982), found a lot of enthusiasm and sold for a substantial price. Offered at Christie’s with an estimate of $5m to $7m, it hammered at $8.4m—making $9.8m with fees: a record for the artist. Some artists fade away after their moment of initial glory but Kelly, who died in 2015, is an artist whose work keeps looking better and better.

The most expensive lot of the season was an exceptionally important painting from a key body of work by a much respected artist: Ed Ruscha’s Hurting the Word Radio #2 (1964). The market has been waiting for that moment when a historical work that is fresh to market and has excellent provenance might come to market and bring the big price that Ruscha deserves. This was that moment. The work was estimated between $30m to $40m at Christie’s, where it hammered at $46m, making a record for the artist at $52.5m once fees were added.

Let’s see if the success trickles throughout the Ruscha market or remains focused on singular masterpieces (as was the case after the $110.5m sale of a skull by Jean-Michel Basquiat at Sotheby’s in 2017). Aside from the record painting, there were 22 works by Ruscha on offer this sale season across the houses. All but one sold, but there were few fireworks: estimated between a combined $16.2m to $22.7m, they hammered towards the low end, at $17.4m ($21m with fees). Certainly these are healthy results but they were not evidently boosted by the record sale.

Debuting in the evening sales, the 20th-century master Charles White, whose Ye Shall Inherit the Earth (1953) flew past its $700,000 high estimate to hammer at $1.5m ($1.8m with fees) at Sotheby’s

Opening Sotheby’s contemporary evening sale was this extraordinarily expressive drawing by Charles White. Entitled Ye Shall Inherit the Earth (1953), the work was estimated attractively between $500,000 and $700,000. After a bidding battle it hammered at $1.5m, making $1.8m with fees.

White, who chronicled African American life in the mid-20th century, was overlooked for decades. His reputation was revived in no small part through the efforts of Kerry James Marshall, who wrote a moving testimony to White in the Paris Review in 2018, ahead of a traveling retrospective that was launched at the Art Institute of Chicago and toured to MoMA and Lacma.   

Meanwhile, the market for work by Marshall—whose Past Times (1997) sold for a record $21.1m at Sotheby’s in May 2018—has settled into higher ground. There were two notable works in the evening sale at Sotheby’s that both performed well over estimate: Small Pin-up (Lens Flare) (2013) was estimated between $2.5m to $3.5m and hammered for $4.6m ($5.5m with fees) while Vignette 19 (2014) flew past its $6.5m to $7.5m estimate to hammer at $16m (making $18.5m with fees).

Neither of these were of the largest scale, nor necessarily from the artist’s most desired bodies of work, but both were highly sought after. For a long time, the artist Peter Doig was in a category of his own as a painter younger than Jasper Johns whose work was adored by museums and market. Now, Kerry James Marshall has joined him in this small club.