The recent closure of CLEARING Gallery after 14 years of operation has sparked renewed debate about the precarious financial realities facing contemporary art galleries. Founded by French artist-turned-gallerist Olivier Babin, CLEARING's journey from a visionary artist-led space in Bushwick to an internationally respected program illustrates how the art world's relentless demand for growth and expansion can strain even the most imaginative dealers, particularly those who prioritize artistic vision over profit margins.
Babin moved from France to the United States as an artist without significant financial backing or art world connections. Working from his Bushwick studio, he began organizing small exhibitions, pairing his own work with that of other emerging artists including Harold Ancart and Jacob Kassay, both of whom now command far higher prices than the under $10,000 offered at the time. Recognizing his talent for presenting art rather than creating it, Babin transitioned into the role of gallerist while maintaining the naive, visionary spirit that initially drove his artistic practice.
The gallery's breakthrough came in 2011 when Babin secured the legendary space at 396 Johnson Avenue, which became both a proving ground for CLEARING and a cornerstone of the Bushwick art community. A year later, he opened a second location in Brussels, reportedly to gain entry into Liste in Basel. During this period, he began representing some of the most compelling artists of a new generation, including Ancart, Marguerite Humeau, Korakrit Arunanondchai, Jean-Marie Apprieu, and Meriem Bennani. These artists brought vision, edge, and ambition, soon attracting institutional attention.
The vast industrial space in Bushwick proved instrumental in CLEARING's success, allowing the gallery to stage museum-quality exhibitions before major institutions caught on to these emerging talents. As the artists gained fame and recognition, the gallery grew alongside them. At its peak, annual turnover reached $15 million, according to Babin's statements to Artnet's Katya Kazakina. However, this rapid growth would eventually contribute to the gallery's downfall.
In early 2024, CLEARING announced it had outgrown its Johnson Avenue home and was relocating to Manhattan. A few months later, the new address was revealed as a two-floor space at 260 Bowery. The transition proved problematic, as the gallery remained tied to the Bushwick lease for another year and struggled to find a tenant. Babin eventually found Swivel Gallery to take over the space after some behind-the-scenes negotiations.
The move to Manhattan marked a turning point for CLEARING. The Bowery space never captured the same energy or attracted the same crowds as the original Bushwick location. It lacked the raw quality that had allowed the gallery's vision to flourish and brought new financial pressures. The relocation appeared to be influenced by external factors rather than Babin's personal preference, possibly involving pressure from investors or collectors. Within a year of the move, Babin parted ways with his longtime partner Ludovico Corsini, who had been with the gallery since the Brussels opening. Corsini subsequently launched his own gallery, taking part of CLEARING's roster with him.
The expansion to multiple locations, including a Los Angeles space that opened in 2024, stretched CLEARING's resources thin. Reportedly, once established in Manhattan and Los Angeles, Babin was paying $75,000 per month in rent alone. The gallery had scaled up operations to resemble a mega-gallery without the necessary infrastructure or financial backing to sustain such growth. By July 2024, the Manhattan space had been converted into a fashion showroom, and the closure was softly presented as a shift in focus to their seasonal Basel project.
In his final Instagram and press statement, Babin wrote, "With no viable path forward, we are closing today because we can no longer operate at the standards we've always held ourselves to—for our artists, our teams and our entire community." Until the very end, he had hoped to turn the corner, but the financial mathematics simply didn't work. Several artists have since reported on the gallery's social media profiles that they are still waiting for payments, which now seem unlikely as the gallery filed for liquidation.
The closure of CLEARING prompted industry observer Josh Baer of the Baer Faxt to offer a candid reflection on gallery economics. He noted that galleries, especially those focused on primary market work, operate on razor-thin or nonexistent profit margins despite working with margins up to 50 percent for inventory they don't have to buy, invest in, or manufacture. He compared this unfavorably to supermarkets, which run profitably on much lower margins of around 2 percent.
However, industry professionals have pushed back against Baer's supermarket comparison, arguing that it oversimplifies the complex realities of gallery operations. Graham Wilson, founder of Swivel Gallery, pointed out that galleries are fundamentally different from supermarkets because art is not a necessity like food. Unlike supermarkets that operate on daily, repeating cycles for mass consumption, galleries often show what they believe in rather than what they know will sell. This approach involves significant financial risk, as exhibitions may only sell a fraction of the displayed works while still incurring substantial overhead costs.
The comparison also assumes guaranteed sales, which is far from reality for most galleries. Wilson illustrated this with a practical example: "You can do a show with 10 paintings at $10,000 each, but if you only sell two, and your overhead is $25,000, then you've just lost $15,000. Still, you believed in something, and you committed." This highlights the fundamental tension between artistic vision and commercial viability that defines much of the contemporary gallery ecosystem.
Industry experts have identified several factors contributing to the fragile economics of art galleries. Most galleries aim to offer luxury-level presentations while operating on supermarket-level gross margins. A Parisian gallerist noted that sustaining premium locations, beautiful spaces, and curated experiences requires luxury-level gross margins of four to five times cost, not the traditional 50 percent markup many galleries work with. The disconnect between operational costs and pricing structures creates an inherently unstable business model.
For galleries representing emerging artists, the challenges are particularly acute. Unlike established mega-galleries with deep-pocketed backers, many innovative galleries are built on passion and vision rather than clear return-on-investment models. They often contribute significantly to production costs, covering expenses like framing, shipping, installation, photography, and catalogues. These costs quickly erode the theoretical 50 percent margins, especially when combined with high rent, salaries, art fair participation fees, travel expenses, insurance, and the carrying costs of unsold inventory.
The art fair circuit has become both essential and financially draining for many galleries. Dooyong Ro of CYLINDER in Seoul describes being "stuck in the fair loop, constantly thinking about preparing the money for the next fair." He worked alone for four years to control expenses and recently hired an assistant but finds himself working more than ever as the system demands constant scaling and acceleration. The pressure to participate in multiple fairs annually to reach collectors has created a cycle where galleries depend on fair sales to fund their next fair participation.
Despite these challenges, many gallery professionals argue that the art market fundamentally cannot and should not operate like traditional businesses. Ben Lee Ritchie Handler of Nicodim emphasizes that galleries are "selling magic, spirituality, higher consciousness—things you don't find in the produce aisle." The artist-gallery relationship is characterized as sacred, often involving personal sacrifices and investments that go far beyond conventional business relationships. This includes lending artists resources, covering production costs, and providing long-term career development support with no guarantee of immediate returns.
The role of galleries extends beyond simple sales transactions to encompass long-term artist career development, curatorial expertise, and cultural positioning. Galleries invest in shaping how artists are perceived, ensuring works reach appropriate collectors and institutions, and ultimately securing places in art history. This comprehensive approach requires sustained investment often spanning years or decades, making it fundamentally different from businesses focused on quick transactions and immediate returns.
Younger galleries are experimenting with new models to navigate the changed market conditions. Elizabeth Johs of JO-HS, which operates spaces in Mexico City and New York, emphasizes strategic collaboration with other galleries and explores intimate exhibition formats in domestic settings. Felix Rödder, formerly of David Zwirner, is opening a new gallery in September that deliberately embraces residential viewing spaces rather than the typical white-cube model. These approaches represent attempts to maintain quality programming while controlling costs through innovative presentation formats.
Geographic diversification is also emerging as a strategy for sustainable gallery operations. Laura Burton moved from New York to Houston, where lower rents allowed her to open her own gallery called Laura. She notes that Houston's rich cultural fabric, shaped by institutions like the Menil Collection, combined with more forgiving operational costs, has enabled her to show artists she believes in without competing directly with established galleries in traditional art capitals.
International perspectives on gallery economics vary but share common themes of financial pressure and market oversaturation. Dr. KK Chan, a Hong Kong-based collector, argues that the fundamental problem is oversaturation, with too many artists and galleries competing for limited buying power. He predicts continued consolidation as the market undergoes what he describes as a painful but necessary adjustment period.
Chinese galleries face similar challenges while operating in rapidly growing but still developing markets. Lucien Tso of GALLERY VACANCY in Shanghai and Sarah Qing Markovitz of Hive Center For Contemporary Art emphasize that gallery work involves "countless hours of unremunerated coordination and communication" aimed at creating meaningful outcomes for artists and their work. They describe gallery operations as collaborative enterprises sustained by mutual trust and long-term vision rather than immediate profit calculations.
The changing collector base presents both challenges and opportunities for galleries navigating current market conditions. While traditional collectors who once traveled extensively for art weeks are aging and reducing their activity, data confirms a rising global base of younger collectors. The challenge lies in reaching these new audiences and converting their interest in contemporary art into active collecting and gallery support. Many potential collectors remain unaware of galleries in their own cities or assume these spaces require appointments or special access.
Ricardo Diaque of GENERAL EXPENSES in Mexico City offers a philosophical perspective on recent gallery closures, attributing them to burnout rather than simply rising costs. He advocates for sustainable business models that founders actually enjoy, noting that "anyone who gets into art solely for business is bound to face some form of exile." This viewpoint emphasizes the importance of maintaining passion and personal satisfaction as essential components of long-term gallery sustainability.
The collaborative spirit among younger dealers across international borders offers a hopeful counter-model to mega-gallery dominance. Many emerging galleries are building networks based on cooperation rather than competition, sharing resources, artists, and exhibition opportunities. This approach represents a potential evolution toward more sustainable and mutually supportive gallery ecosystems.
As the art world grapples with these economic realities, CLEARING's closure serves as both a cautionary tale and a testament to the passion-driven nature of contemporary gallery practice. Babin's journey from artist to internationally recognized gallerist demonstrates both the possibilities and the pitfalls of building a gallery on vision and commitment rather than financial backing. His final decision to close rather than compromise quality standards reflects the values that made CLEARING significant while acknowledging the harsh mathematics of contemporary art market economics.
The broader implications of CLEARING's closure extend beyond individual gallery failures to questions about the sustainability of current art market structures. As galleries face increasing pressure to scale operations while maintaining artistic integrity, the tension between commercial viability and cultural mission continues to intensify. Whether the next generation of dealers can develop new models that balance these competing demands remains an open question that will shape the future of contemporary art presentation and distribution.
