Chelsea's future in question after New York flood map is redrawn
The district's art galleries face spiralling insurance costs or may find it impossible to buy coverage
By Laura Gilbert. Art Market, Issue 245, April 2013
Published online: 03 April 2013
The future of Chelsea is in question. Most of its galleries, which number around 200, now sit squarely in one of the worst flood-hazard zones in New York City, according to a new map released by the Federal Emergency Management Agency (Fema). This is expected to cause a steep rise in insurance costs—if flood insurance is available to these galleries at all—while property values could also be hard hit.
Fema’s previous flood map dates to 1986, before Chelsea became the centre of New York’s art market. It categorises most of what would become the art district (the area from 18th to 28th streets and west of 10th Avenue) as outside the flood-hazard area. Now, 27 years later, the new flood map’s assessment nearly engulfs it. Being in the flood zone means that each year there is a 1% probability of major flooding from a storm. Though referred to as a “100-year flood”, such an event could occur annually, says a Fema spokeswoman.
The cost of insurance coverage is set to skyrocket. “We are certainly living in a post-Sandy world,” says AXA president and chief executive Christiane Fischer, referring to the superstorm that struck New York at the end of last October. “If you are in a high-risk flood area, it will either be impossible to buy coverage or it will just be really expensive,” she says. “We have not had big storms in the north-east for several years, and now we’ve had two storms in two years [Hurricane Irene in 2011 and Sandy in 2012]. We always thought a certain amount of water could accumulate in Chelsea, but the amount was around twice what we expected after Sandy. We now know that a gallery on 24th Street could get six feet of water above ground.”
She estimates AXA’s insurance claims post-Sandy at around $40m, but total loss could be several times that. “It is a big number—years of art insurance profits will be wiped out. Everyone is paying attention. Of course there will be higher rates.” Fema’s business insurance programme offers little help, as it pays no more than $2,500 per damaged work.
Fema, which is a government agency, recommends that buildings in the flood-hazard area be 11ft above sea level. The real estate broker Faith Hope Consolo, the retail group head at Douglas Elliman, says that some galleries may move to higher floors while others may move out of the neighbourhood altogether.
Down in the flood
“It’s a new reality for galleries,” says Jeff Bailey, whose eponymous gallery was closed for more than two months after Sandy. Gallerist Zach Feuer won’t know how his gallery will be affected “until premiums come up”. In the meantime, he has moved his art storage off-site and uses his ground-floor space for exhibitions only.
The Jack Shainman gallery is “repurposing the downstairs that was for storage for short-term installations and to meet with clients”, says associate director Elisabeth Sann. The gallery has moved much of its art to upstate New York, where it is building an exhibition space. It is also temporarily moving some work to a higher floor of its West 20th Street location.
Most art dealers contacted were unsure what they would do should their insurance policies rise in cost or have a flood-exclusion clause introduced. “I like my space,” Feuer says. “Besides, I have seven or eight years left on my lease.”
Insurance companies are expected to announce their new premiums in the second quarter, says Consolo. “We’re speaking to lots of galleries—everyone wants to know what’s going to happen.”
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