In the last week, MoMA has added space on West 53rd Street by buying the American Folk Art Museum’s building. The Metropolitan Museum of Art has added space by taking over the Whitney Museum of American Art’s Upper East Side building for eight years starting in 2015. The Whitney will add space by building a new Renzo Piano design in New York’s Meatpacking District. And who could forget that the Guggenheim previously announced that it wants to add space… in Finland? [Image: Looking down West 53rd Street, New York. Via Flickr user 917press.]
What’s behind all this Monopoly-like mobility at NYC’s big museums? The museums say that their collections have grown and they need the space to show more art. This is partly true. None of New York’s major museums does a good job of showing as much of its collections as it could or should. That three of NYC’s four biggest museums are finding ways to address that is a significant plus.
But that’s not the key factor here. This is: After years of mismanagement and improper and possibly illegal behavior that led to both massive losses and failures that eventually required the largest government bailout in world history, the banks are back, baby. In New York, when the financial institutions are back, so is everything else.
New York City’s economy is intensely driven by the financial services sector, in particular by America’s biggest banks. There are 45 Fortune 500 companies based in New York City. Almost half of them are in the financial services industry, and that industry is booming again.
Just a couple years after the bailout, American banks earned about $70 billion in profits in 2010, with better than half of those profits coming from NYC-based banks. Just-announced profits from the first quarter of 2011 have indicated that 2010’s success wasn’t just bookkeeping gimmickry (as some analysts had feared): In the first quarter Citibank earned $3 billion, JPMorgan Chase earned $5.6 billion and Goldman Sachs made $2.7 billion. Over the last decade or two New York’s economy — and its non-profit sector — has become increasingly reliant on the financial services industry. For better or worse, that industry is back to old times. [Image: Julie Mehretu, Mural, 2010, installed at Goldman Sachs. Image via Flickr user Andrew Russeth.]
New York’s second most-important economic driver is its real estate industry, a status underscored by the Metropolitan’s elevation of a real estate executive to its board chairmanship this week. The boards of the Met, MoMA and the Guggenheim are all chaired by real estate executives. In a related story: New York residential rents are up, commercial property vacancy rates are down, and foreclosures are too, all signs that in New York a real-estate recovery is underway.
This is trickle-down economics at work: Big banks and real estate executives are pulling down big profits and big salaries (all of which are little-taxed under America’s increasingly bizarre tax code). A little of that money — a very little — is trickling down to MoMA and the Met, each of which gained about 30,000 square feet of exhibit space in this week’s transactions. In the short term, MoMA apparently spent in the several tens of millions to acquire a neighboring building. Details of the Met’s transaction of the Whitney are unknown. More importantly, all three big Manhattan museums that are adding space will take on millions of dollars more in increased staff and operating costs in the years ahead. All those big banking and real estate profits are giving those museum’s boards confidence that their donor bases will be able to handle that.