Boom-Time Rent Hike Runs Miller Gallery Out of 57th Street

When Robert Miller opened an eponymous gallery on the second floor of the Fuller Building in 1986, the storybook Art Deco tower on the corner of Madison Avenue and 57th Street was still the uncontested center of the art world. Each Saturday-the day of the week when most art deals are made-Mr. Miller would arrive early to host an onslaught of customers at his second-floor space, the largest gallery in the building. Condé Nast chieftain S.I. Newhouse Jr. was generally the first customer in the door.

All that has changed. Mr. Newhouse no longer comes to the Fuller Building on Saturday mornings, and the Miller Gallery is leaving at the end of April for a larger space in Chelsea, where most of the Saturday art traffic has gone. After a nasty legal battle with the current owner, which is still going on, the gallery is being supplanted by Coach, the leather goods retailer, which will expand its ground-floor outlet into the second floor in May.

The departure of the Miller Gallery-one of more than 30 galleries in the Fuller Building-is the latest manifestation of the pressures of the overheated real estate market, which is closing in on galleries on 57th Street and Madison Avenue and forcing them to the city’s fringes. The black-and-white Art Deco landmark, which opened in 1929 and was a fulcrum of the art market for the past 30 years, sits at the crossroads of some of the city’s highest potential retail rents-a factor that is ultimately more significant than sculpture and painting to the Dallas-based pension fund adviser that inherited the building after the owner defaulted on mortgage payments in 1993.

The owner, L&B 575 Madison Inc., has been aggressively trying to sell the building for the last year, and paid for a $16 million renovation: They’ve steam-cleaned the facade, brightened up the lobby, retooled the elevators and hired Eastdil Realty to market the property. According to Paul Chapman, the firm’s chief operating officer, the building is currently in contract negotiations with a prospective new owner.

Tenants of the building assume that the building finally attracted a buyer because the lower floors are being given over to retail stores willing to pay much higher rents. Betsy Miller, Mr. Miller’s wife, who handles the day-to-day operations of the Miller Gallery, told The Observer that from her first meeting about renewing their lease, which expired in June 1998, she felt that the owner wanted one thing: to get them out of the second floor.

“I went to the office and they had blueprints of other spaces that we could move to,” said Ms. Miller. “They said we have to get a lot of money for this space, and you can’t afford it. I said, well, what makes you say that? You don’t know if I can afford it or I can’t afford it. I’ve always paid my rent on time.”

Sherri White, an agent for Jones Lang LaSalle, which is the leasing agent for the building, said that she tried to work with the gallery to help them negotiate a new lease or find another space in the building. “We would have been happy to have them continue as tenants. But we needed to get more money for the space and they refused to come to the table,” said Ms. White. “We presented them with a new deal and they sat on it. They wouldn’t commit and we were like, we gotta do what we gotta do for the building.… We know the rent is high and if you don’t want to pay it we will go with the retail conversion. When the time came to pay up, they balked.”

Ms. Miller said she was informed at the time of the first renewal meeting that the owners expected a written offer from another tenant at a rental price that was triple the amount the gallery was then paying. They told her it was Coach at first and then they said that it was Tod’s, a shoe store also on the ground level.

“They wanted us to move, but I didn’t like any of the spaces that they showed us,” said Ms. Miller. The gallery represents a number of artists and artists’ estates of large-scale works of art, and they need to be in a space with high ceilings and large rooms to accommodate those artworks. Ms. White said the Miller Gallery was given a new proposal in writing with three different options.

According to Ms. Miller, the proposal was not the question. “They were not willing to negotiate. They just sort of threw it out and said you can’t afford it,” she said. “The fact of the matter is that whatever they may have offered us, they didn’t want us in there. It was pointless to go into it with them.”

Ms. White said that the building would have renewed the Miller Gallery lease for a 10-year period if it had been presented with a viable offer. “We were indifferent as to whether we did Miller or we did a retail deal. It was easier for us to do Miller. They were already there, there were not any transaction costs and they were a bigger tenant. It is an expensive rent and if they had paid it I would have been surprised, but stranger things happen.”

After they reached an impasse, Ms. Miller said she was told that the gallery could remain as a tenant until July 2000. But in January, she received an eviction notice, which lawyers for the gallery are protesting.

‘People Lined Up To See Art’

The 40-story Fuller Building, next door to the new Four Seasons hotel on 57th Street, has been noted for art galleries since it was completed in 1929 for the Fuller Company, a general contractor. It was made of three parts: a black granite lower section with shops and gallery space; a middle section, with horizontal windows, designated for showrooms, and a narrower square tower on top for office space. That same year, the Pierre Matisse gallery opened in the building to show modern art by artists including Henri Matisse, the father of the gallery’s founder. Marlborough Gallery was a longtime tenant, as was André Emmerich Gallery, whom Mr. Miller went to work for in 1964. But from the beginning, there were stores down below and businessmen on the smaller, higher floors.

“The second through eighth floors of the building were built with high ceilings that were designed as showrooms,” explained Mr. Emmerich, who merged his gallery with Sotheby’s in 1996.

James Goodman, who has had a gallery in the building since 1986, said, “People lined up to see art after I moved to Fuller from Madison Avenue between 78th Street and 79th Street.” He said the number of galleries in the building has doubled since then.

The Miller Gallery was not only the largest gallery in the building, in many ways it was the most prominent. With a contemporary art program that poet John Ashbery once described as “seriously trendy,” the Miller Gallery holds regular exhibitions of artists ranging from David Hockney to Louise Bourgeois. Last year, the gallery held a joint exhibition of photographs by R.E.M.’s Michael Stipe and drawings by Patti Smith. Along with Pace and Marlborough, the Miller Gallery has become one of the primary 57th Street galleries that deal in recent art.

“I think that the loss of Miller undermines the standing of the building as a pillar of the art world. It is a great loss,” said Mr. Emmerich.

Virginia Zabriskie, another dealer in the building, said that she has had to move her gallery several times over the past 40 years because the rents were raised. “You can’t blame the landlords who want to get more money,” she said, “They are in business. I am in business. I understand wanting to get what the market will bear.”

L&B 575 Madison Inc. took ownership the same year Miller signed its last lease for $283,346 per year for approximately 7,500 square feet. “They got a very good deal at the bottom of the market,” said Ms. White. Other tenants-all on higher floors-claim to be paying between $30 and $40 per square foot.

The pension fund advisor found himself stuck with a building that no one wanted to buy; there was not a single bid at a bankruptcy auction that was held in 1993 to unload the Art Deco spire. What’s more, the building was occupied by a group of art dealers who had banded together in 1992 and hired a lawyer to represent their interests, claiming that the downturn in the art market had left them without the sales to make their rent, and asking for new leases at lower rents.

Everything But the Windows?

At one point, Ms. Miller discussed the matter of leaving the Fuller Building with Jerry Speyer, head of Tishman Speyer Properties-which owns Rockefeller Center- and a trustee of the Museum of Modern Art. He urged her to stay in the building. “He said, pay whatever they are asking. All you have to do is make one or two big deals a year to make up the balance.”

Then last summer, after the lease had expired and the gallery was renting on a month-to-month basis, Ms. Miller was contacted by Coach, which offered the gallery some of the space that the store leases from L&B. “I was very surprised because it was a very reasonable rent compared to the figures we had been given,” Ms. Miller said. “We went back and forth. They wanted to rent me the space but retain access to the windows facing Madison Avenue and 57th Street. I said, ‘What good is the space if you can’t get to your windows?’ Then they decided to go ahead with their expansion.”

Ms. Miller looked at several spaces in the 57th Street area but couldn’t find anything appropriate. “Several of our clients said they don’t like Chelsea because they can’t get a cab there,” she said, “but I think that cabs will begin to go there if they know there are people looking for them.” She wouldn’t say where the new gallery space is located because the details of the lease are still being worked out.

“For the kind of adventurous program that we have I think that Chelsea is perfect. The whole tone of 57th Street has been so dumbed down that it takes away from the thoughtfulness of what we do. I mean, what is Prada but a store? It’s not like you go in there to buy a painting or a sculpture that requires some thought. It’s just shopping.”

“Even if they were to give us the space back,” Robert Miller told The Observer , “our decision is to leave the area, which has become a pocketbook and lingerie and a flagship shop area which brings in very nice people from the suburbs to buy their Nikes and toys from Warner Brothers.”

On a recent Saturday, the halls of the Fuller Building were cool, dark and quiet. Compared to the crowds that are now found on Saturday afternoons in Chelsea, the building seemed almost hauntingly empty. In several galleries, there was only one visitor. On a couple of floors, there were two people eyeing each other suspiciously as they moved from space to space.

“To have a gallery visible from the street made the building more desirable,” said Jason McCoy, another dealer in the Fuller Building. “No serious gallery wants to be in the Coach building.”