A MESSAGE FROM BREGUET

Now, the main event…

David Schrader, the soon-to-be former head of private sales at Sotheby’s, waxed reminiscent about last month’s impressionist day sale at the Breuer Building when I caught up with him recently, and he marveled at the sheer number of buyers in the day sales and the volume of business getting done. “The room was full,” he said, acknowledging the obvious: It had been a very long time since a day sale for impressionist and modern works had a room buzzing with quite so many bidders and buyers.

We’ve reached an inflection point in the market, as buyers finally cycle from discovering young painters to ferreting out historical artists. Indeed, the demand for historical works now seems to be deeper than anyone imagined even a few months ago—and it has emerged quite suddenly, up and down the price spectrum. Last month, only seven of the top 50 artists by market share (or dollars spent) were alive—a big shift from recent years when Gerhard Richter, George Condo, Yayoi Kusama, and Yoshitomo Nara populated the list. Among the living, Christopher Wool ranked highest, at 21, but was outranked by Piet Mondrian, René Magritte (despite his surprisingly slow season), Max Ernst, John Singer Sargent (!), Agnes Martin, Joan Mitchell, Marc Chagall, Fernand Léger, and Edvard Munch, among others. And that litany of names doesn’t even crack the top 10.

A MESSAGE FROM BREGUET

The market pivot explains why Schrader, dealer Emmanuel Di Donna, and Pace’s Marc Glimcher will be going into business together next year as Pace Di Donna Schrader Galleries—a union announced last night in The New York Times. (For those of you following along at home: This probably explains those rumors, from back in March, about Sotheby’s and Pace getting into business together.) PDS, as the principals are already calling it, aims to fill a void in the secondary market as historic art returns to the forefront. In a market where timing is everything, theirs couldn’t have been much better.

To his point, Pace has 40 directors working out of offices in New York, London, Berlin, Tokyo, Seoul, Beijing, Geneva, and—even though there’s no longer a Pace gallery space there—Hong Kong. PDS will help those directors source and sell secondary-market works. It will also have access to Pace’s 65-year sales history as well as the artist estates that the gallery represents.

Which is where Schrader comes in. A former salesman for J.P. Morgan, Schrader already spoke the hedge fund managers’ language and understood their mindset well enough to sell them art. In the nine years since he joined Sotheby’s, he learned the art dealer’s worldview, as well.

He also showed he could activate a large and loosely organized sales force, harnessing hundreds of relationship managers who didn’t report to him. In his new role, he’ll continue feeding the client-facing folks at the auction house (and tap into their collectors’ supply) just as he plans to work with the Pace directors. At Sotheby’s, many of his counterparties for deals have been other dealers.

In fact, what’s surprising about the international art market is that there is nothing like the public or private exchanges that exist for financial instruments like bonds. And since one of the prime directives of the art market is that no one wants to buy anything that’s already for sale, it makes sense to build an exchange privately, through word of mouth. “I believe volume begets volume,” Schrader told me. “If you have enough of it, not everything needs to be a huge margin deal.” The current market’s “cost structures were built for a different moment in time,” he observed. What’s needed now is a “green field approach.” All it requires is a willingness to make sure everyone gets what they need. And if that means inventing a commission structure that makes more sense for these loose networks, Schrader will do so.

PDS will open its own gallery space on the Upper East Side some time next year, after Di Donna puts on his much-anticipated Salvador Dalí show. But even once that space is up and running, using the infrastructure of Di Donna’s gallery staff initially, PDS will leverage Di Donna and Glimcher’s relationships with collectors and artists to expand its offerings. It’s no secret that there are many large collections that are, to put it delicately, reaching term. Another group of superfriends—Ed Dolman, Brett Gorvy, and Patti Wong—was announced earlier on the advisory side. PDS isn’t an advisory, but it aims to address the same opportunity. There’s a ton of art in private hands, and now there’s an appetite in the marketplace for acquiring it. Let the games begin.