Considering art leasing: adding an art leasing option to a gallery’s services can open the door to a new group of clients
India Bandorick got into art leasing almost by accident. “I started leasing when a friend asked me if I would lend him one of my pieces for his grand opening of his restaurant. That started my leasing program,” said Bandorick, owner of Bella-Bella Art Leasing of Ocean City, Md. “He bought the painting after two months of leasing.” That was in 2000, and she has been in the business of leasing art ever since. The company’s target clients are restaurant owners, property developers and event coordinators for venues such as hotels and private homes.
In a search for new revenue streams, many galleries have turned to art leasing, a service that fills a need for certain types of businesses. In general, most art leasing entities lease artwork based on a monthly rate for a set period, and some customers choose to buy the artwork at the end of the period.
For some niche galleries, the most lucrative marketplace is leasing artwork to studios for movies, TV series and commercials, while another less glamorous, though equally profitable, sector exists in the everyday marketplaces of corporate board rooms, offices and hotels. Even some individual consumers find the art leasing option attractive.
For gallery owners or art dealers who are considering adding a leasing arm to their businesses, there are other factors to weigh, including a target market, insurance and inventory issues.
Hollywood Versus the Boardroom
“I started representing artists and curating sets with artwork as a new approach for artists from all over the world to have exposure, money and a new realm of clientele based on the film and television industries,” said Pattee Stayrook, director of art leasing company, Art O’Rama, based in Venice, Calif. Art O’Rama has been leasing art predominantly for film and television for close to 10 years.
Stayrook said the artwork varies from project to project or sometimes even within a project. When curating artwork for sets for the movie “Austin Powers: The Spy Who Shagged Me,” she had to find works that fit into different time periods, as well as “Dr. Evil’s” lair. “The art department was looking for paintings, sculpture, photography and functional objects,” said Stayrook. “It is my position to offer the clients various forms of artwork to create the vibe in each different set. Many times they are looking to re-create a famous artist’s style for the set. I will offer them an artists work that is similar to that style or commission an artist to create a piece that will look like the original without copying it directly.”
Stayrook usually leases art for film shoots by the week, and she requires a certificate of insurance in lieu of a deposit.
While leasing to movie sets is great exposure for artists and galleries, unless a gallery is located near a film production hub, more reliable targets for leasing are corporations and hotels, which are abundant in almost every city. Even Stayrook doesn’t rely solely on Hollywood contracts. “I also work with interior designers, corporate collectors and private clients,” she said. “I am currently working with a more international clientele as an art consultant for large hotels, spa resorts and private estates.”
While the film industry offers an additional opportunity to lease artwork, Lopaca Kimsey, executive director for Webigo, a largely online art-lease entity based in Sun Lakes, Ariz., believes the corporate sector is still strongest. “The film industry was probably the first big corporate lessee of art, but many big businesses are finding it very appealing financially,” Kimsey said. “Corporate heads still do like to surround themselves with fine art as a measure of success without having to spend all the money up front.”
Webigo established its leasing program with the primary goal of providing cash flow for its artists while exhibiting their work in prime locations. “Most of our lease arrangements are with corporate offices, banks, financial institutions, insurance companies, hotels and a variety of very visible locations,” said Kimsey.
Each Webigo lessee has the option to sell the piece it is leasing and, in return, will receive a commission for doing so. The lessee can also choose to have its artwork rotated, and the lease arrangements are on a monthly payment schedule, with the normal lease term lasting one year.
“We have found that the businesses love the arrangement, as they get the write-off while they also get to view new works on a monthly basis,” Kimsey said.
Darren Toombs of TheFinerArts.com located in Saskatoon, Saskatchewan, also rotates leased artwork in corporate spaces. “Since the purpose of art lease, in our eyes, is to ensure that public spaces are kept artistically fresh, rotating artworks is our specialty,” he said. The company will exchange artwork on agreed-to periods or at random at the client’s request.
“Exposing your artists in a corporate setting gives the work more prestige and a feeling of elegance not found in a gallery setting,” Kimsey said. “Art work viewed in a corporate setting is more appealing than art presented in a sales-like atmosphere.”
For TheFinerArts.com, which has been leasing art to larger businesses and doctor’s offices since 2001, Toombs said that artwork with a dark subject matter and style doesn’t work for corporate clients, but landscapes and Western art are popular in his area.
Polly Larson, director of The Cultural Exchange gallery in Scottsdale, Ariz., agreed, saying that “safe” art is the best bet for the leasing market. “By that, I mean landscapes, abstract works, still lifes–any artwork that does not have content that could be offensive, such as religious or sexual,” she said. The Cultural Exchange has operated a leasing program for 25 years targeting “the local corporate market with a concentration on law firms, financial institutions and any company that needs to project an impressive corporate image,” Larson said. “Our program has now expanded to include the residential market, including private homes and real estate agents.”
Inventory and Insurance
“The financial benefits of leasing can be lucrative if you own the artwork and do not have a lot of capital investment tied up in the venture,” according to Larson. In addition to representing 18 contemporary artists from all over the United States, the gallery also takes artwork on consignment from private and corporate clients wanting to sell their art collections, which can include works from the early 1900s to contemporary art.
“Offering a rental/leasing program is prohibitive for most galleries because you need to own the inventory,” she said. Her gallery’s extensive inventory of more than 3,000 works is a great advantage, she said.
Galleries that don’t own large inventories, have the option of partnering with a leasing agency. Lisa Powell’s company, Art Rent and Lease in Portland, Ore., acts more as a broker than a gallery. “Because we’re the rental agency, we inventory no fine art ourselves,” said Powell, who started the company in 2000 to target the hospitality, corporate and healthcare markets. “Our clients choose pieces from our participating artists, galleries and museums, who ship at the time of rental. Tiffs allows us to offer new pieces daily without investing in a large inventory base.”
Art Rent and Lease’s rental agreement is cancelable, provides for an upgrade or exchange of the pieces at any time, has no interest costs and qualifies as a rental for tax purposes. “Our specialty is working with consultants, decorators and designers to provide paintings, sculpture, tapestry, glass–virtually any fine-art product that meets the clients requirements, typically within the $1,000 and $25,000 price point,” said Powell.
And since leasing means putting valuable artwork into other people’s care, working out an insurance plan is of the upmost importance. Whether it comes from the client or the gallery, it’s essential that the artwork is covered in some way.
“I do insure my artwork, and I have an extensive lease that covers all parties, the gallery owner, the artist and the person with the lease,” said Bandorick. But even though she does have insurance for the pieces, if a piece is damaged in any way that her insurance won’t cover, such as by hurricanes or floods, the customer must pay the full retail cost of piece. “It’s just like leasing a car,” she said. “If you wreck a car that you lease, you still have to pay for the car’s damages.”
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