SCOTTSDALE, Ariz. – Art gallery owners across the country are finding they have a tough sell these days.

With houses going up for auction, unemployment continuing to rise and the threat of layoffs seemingly ever-present, many gallery owners in art communities such as Scottsdale, Ariz., Santa Fe, N.M., Portland, Ore., and New York City are closing shop, going broke to stay open or drastically changing the way they do business.

"Art is a very discretionary sort of object, and we are in the worst recession arguably in the postwar era," said Jay Bryson, a global economist with Wells Fargo Securities in Charlotte, N.C. "Obviously somebody who has lost their job in a factory in Indiana probably is not buying art."

Even people with plenty of discretionary money aren't spending much on it.

"You're a billionaire and you took a 40 percent hit on your portfolio, now you only have $600 million left," Bryson said. "That's still pretty deep pockets, but 40 percent is 40 percent."

In the gallery district of downtown Scottsdale, at least a half dozen galleries have closed in the past year or are in the midst of closing. Others still are wondering how much longer they can make it.

One recent day, Leslie Levy sat quietly amid the contemporary art she sells in her gallery, which was just as deserted as the streets outside, where the temperature was in the triple digits.

The summers here are always slow because of the heat, but this one is much worse than usual. That's partly why Levy is closing her doors at the end of August after 32 years in business and becoming a private art dealer online.

"I'll tell you what — if I was younger, I'd just keep at it knowing we've not seen times quite as bad as this before," Levy said.

Longtime customer Marylyn Gregory of Bernardsville, N.J., came in the gallery that day to see it one last time and check out what pieces Levy had left of her and her husband's favorite artist. Gregory told Levy she was surprised and upset when she heard the gallery was closing but added, "You're probably doing the right thing."

Gregory didn't end up buying anything that day, saying she needed to check with her husband. Before, she might have been more spontaneous.

"Sometimes you'd go to an opening and have a glass of wine, and you're like, OK," she said. "It's certainly the method to get everyone to open their checkbooks."

But like many other art lovers, the Gregorys are more conservative with their money these days.

Levy understands. "People are watching what they spend — cutting back and spending on the necessities of life. That makes sense to people."

Becky Smith knows that all too well. She owned the Bellwether Gallery in Manhattan's Chelsea neighborhood for a decade, but closed at the end of June after watching her revenue plummet to $80,000 gross in the first quarter of 2009. She had $40,000 net, and $10,000 of it went to rent each month.

The $80,000 figure was down from about $350,000 the same quarter in 2008 and about $600,000 during that period the year before.

"I was really startled," Smith said. "It was the spring of '08 where I saw three shows that should have been blockbusters underperform, and I was in shock.

"Things were booming so intensely a couple years ago and the pendulum has swung so far in the opposite direction, it was impossible to know where I stood," she said. "And I didn't want to be paying for a storefront while I was figuring it out."

In the past two years, at least 24 galleries have closed in Manhattan, mostly in Chelsea, according to New York City-based Artnet magazine, which covers the fine art world. "That's really dramatic," said Artnet editor Walter Robinson.

In Santa Fe, N.M., between 10 and 15 galleries have closed this year, said Christy Walker, managing director of the Santa Fe Gallery Association.

"A lot of people have this idea that running a gallery, the owners make a lot of money, when it's just a lot of effort to make a living off of it," she said. "It's a hard business to be in, and when things are good, things are good, and when times are tough, it's a really tough business to maintain."

Kraig Foote of art one gallery in Scottsdale has done everything he can think of to avoid shutting down.

His house is about to go up for auction because he hasn't made a payment in seven months, he has laid off his two employees and he has resorted to selling his own beloved art collection for a fraction of what it's worth.

"I have given up everything," he said recently in the very empty gallery, which sells work by local high school- and college-age artists.

And still, the threat of closure looms.

"I'm trying to make it to December," Foote said. "I think people will start spending again once they get to the next holiday. They'll say, 'We've saved, let's get something.'"

He paused. "I don't know."






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Sat Jul 25, 4:56 PM ET