New York warehouse storing million-dollar artwork to shut down

New York

MANHATTAN'S first freeport, a windowless five-storey warehouse in Harlem designed to store US$2.5 billion worth of blue-chip art, is closing after two years.

Named Arcis, which means stronghold or citadel in Latin, the building was developed by Cayre Equities at a cost of more than US$40 million and includes 110,000 square feet of space and security features such as retina scanning.

It was built on a lot designated as a foreign-trade zone, meaning that the merchandise inside is exempted from US duty or excise tax.

Executive director Roxanna Zarnegar wrote in a letter to clients, a copy of which was viewed by Bloomberg: "After careful consideration, we have decided to close Arcis permanently."

She did not specify a reason, but asked customers to make arrangements to remove items from storage immediately. The final day of operations will be Oct 31.

Freeports have become essential to the global US$64 billion art trade, creating a legal way for dealers and collectors to avoid paying duties and taxes on artworks, the prices of which routinely run into millions of dollars.

These high-security warehouses operate from Geneva to Delaware to Singapore, and are key to the rich who need to stash their valuables.

The coronavirus pandemic has hit the art industry hard; fairs have been postponed, galleries closed and auction sales have declined dramatically. Organisers on Wednesday cancelled Art Basel Miami Beach, the largest contemporary art fair in the US that had been scheduled for December.

Cayre Equities was marketing the building last year, valuing it at about US$60 million, or US$545 per square foot, Real Estate Alert said in March 2019.

The industry newsletter said the developer would consider proposals for an outright sale, a recapitalisation or the sale of a leasehold interest.

James Coakley, president of Treasure Island Management, another company controlled by the Cayre family, said Arcis is not currently listed for sale, but declined further comment. Cayre Equities specialises in self-storage buildings and retail in New York and New Jersey. BLOOMBERG