Like living together instead of getting married, Washington, D.C., art dealer Christopher Addison sees leasing works of art instead of just buying them as "a way of putting off making a decision." Maybe, maybe not. It certainly is an increasingly popular and less expensive way for corporations and some individuals to bring art into their workplaces and homes; it doesn't hurt artists or their dealers either, who are able to generate some income from works that haven't sold yet.
Artwork rentals can be arranged through a variety of sources, starting with the creators themselves. A New York City real estate developer, for instance, leased a wall sculpture from Jeffrey Brosk for the lobby of the Fifth Avenue apartment building he had erected "in order to give the place cache for prospective tenants," according to the artist. I seemed to work, as the building filled up and the developer decided to purchase the sculpture.
Art dealers and corporate art advisors also arrange rentals and leases for clients who may want to try works out for an extended period of time. Dealers often allow prospective buyers to take art home for up to 10 days for free to see if it "works," but they can devise rental agreements for collectors who take longer to decide or whom they would like to cultivate as long-term clients.
"Some people need a breathing space of time in order to consider the purchase, and renting can allow that," Addison, owner of the Addison-Ripley Gallery and head of the Washington Art Dealers Association, said. "More than half of the people who rent end up buying the work, partly because of laziness -- they've grown accustomed to the work."
A number of art museums around the country, too, have established sales and rental galleries that permit collectors to buy or lease works in a variety of media. With certain institutions, such as the Wadsworth Atheneum in Hartford, Connecticut or the Whitney Museum of American Art in New York, works of art from the institution's own collection have been loaned to large contributor corporate museum members, but the objects in most sales and rental galleries are separate and distinct from the museums's collections.
Both the Baltimore and Philadelphia museums of art sales and rental galleries have paintings and works on paper on consignment from local galleries and those in New York City, affording a mix of lesser-known and well known (such as Jennifer Bartlett, Jim Dine, Jenny Holzer, Sol Lewitt, Robert Motherwell and Louise Nevelson) artists. Other sales and rental galleries, such as those at the San Francisco Museum of Art and the Springfield (Massachusetts) Museum of Fine Arts, consign pieces directly from artists, most of whom are likely to be of the lesser known variety. The art rental field is generally one for younger, lesser-known or "emerging" artists as the more famous creators are likely to have waiting lists for their work and would have less incentive to let pieces go out on rental. Being associated with a museum, even though iut is with the sales and rental gallery of the institution, does attach to the artist a museum imprimatur that adds stature to the creator's work.
Fees for renting (usually short-term, one to four months) or leasing (up to two years and including the option to buy with payments applied to the sale price) are usually based on the market value of the art, ranging between two and five percent a month, although it can go as high as 15 percent. Discounts for leasing more than one piece at a time can be negotiated with dealers, and sales and rental galleries frequently have discounts for museum members.
Some rental agreements also stipulate that the renter provide insurance for the work for the entire term of the lease as well as pay for crating and shipping. In addition, the method of payment, perhaps paid monthly or in total up front, may be negotiated or set out in a fixed contract.
Leasing has generally become more attractive to businesses since the enactment of the 1986 Tax Reform Act, which lengthened the period of depreciation for office equipment that a company buys. "Leasing preserves a company's cash flow, and it doesn't tie up a credit line at the bank as purchasing does," said one corporate art advisor.
Art has usually been lumped in with "property, plant and equipment" for business accounting purposes, viewed as office decoration rather than a separate category of investment. The Internal Revenue Service has increasingly disallowed deductions based on a depreciation of corporate art (art, the IRS claims actually increases in value over time and isn't subject to wear and tear), and the new, slower payback resulting from the 1986 law's extension of the period of depreciation overall has compelled companies to look more favorably on leasing telephones, automobiles and a host of office-related equipment.
"With leasing, a company can deduct all of the expenses now instead of waiting for years," Janice M. Johnson, partner at the accounting firm of BDO Seidman, stated., "Leasing lets you get around the depreciation problem. Leasing works of art instead of buying them also solves other problems: How long will the company managers have the same tastes? Some people just like change. How permanent are the company's facilities". Maybe, the company will move in a few years and will want different art. There's also the issue of the quality of the art -- you may rent cheap stuff now while saving up to buy something more substantial later."
Not all art dealers and advisors are pleased to let work out on a rental basis, however. It can be a bookkeeping and inventory headache for dealers who must keep track of lease peyments, establish rental agreements, protect these pieces from damage, insurance coverage and arrange for the work to be returned at the end of the rental period.
"It's much easier just to sell the stuff," Henri of the Henri Gallery in Washington, D.C. stated, noting that she had leased works of art both directly and through museums in the past. "It's all in and out. You don't have to arrange for insurance or retrieving or the other little details. You also don't have to worry about the work getting damaged when it's a straight sale."
She added that the "facilities people" at many companies have no idea how to care for artwork and may place pieces where employees smoke or where there is inadequate vbentilation. Vandalism and theft are also concerns.
Because they are not buying it, the corporation is more apt to view the art as mere decoration and not protect it from damage in the same way as something the company owned, several art advisors said. "If it were investment-grade art, then they would want to buy it," Henri noted. Other dealers and art advisors have also mentioned that artists aren't as likely to lease their best work. These and other considerations led the Corcoran Gallery of Art in Washington, D.C. to discontinue its rental gallery almost 20 years ago.
"There are questions you have to ask," Jeffrey Brosk said. "Who is renting it? Where is it going to go? How will it be protected? You have to be more selective when you're renting a piece but, if you are more selective, you can give better quality work."
For artists, there are a number of very clear benefits and practical concerns with renting and leasing their work. Their pieces may be seen by a different group of people than those who ordinarily would see them at art galleries, such as those working in office buildings or looking to buy or rent space from a real estate developer, and some of those people may turn into future collectors.
Stephen Rosenberg, a New York City art dealer who has consigned work to the Philadelphia and Delaware museums of art, noted that "people have come in here when they're in New York to see the work of some artist they saw through a rental arrangement somewhere else. I've had quite a few sales that way."