Sotheby’s was forced to cut back its L.A. branch. Christie’s had to close its local office. But another auction house has begun a nationwide expansion with the opening of a Beverly Hills gallery.
Dallas-based Heritage Auction Galleries, which opened its Olympic Boulevard location earlier this year, plans to add a New York office in September.
“I’ve pushed so hard to have this office open,” said Leo Frese, managing director of the Beverly Hills gallery. “I believe that this office has the potential to propel our auction company to be a billion-dollar company.”
The Beverly Hills gallery is the private auction house’s first satellite branch in the United States; it already ran offices in Paris and Geneva, Switzerland.
Heritage’s push for growth is in stark contrast to what’s happening elsewhere in the auction world: The recession has forced other companies to scale back their operations.
A weak economy hurt sales for auction giants Sotheby’s and Christie’s. New York-based Sotheby’s reported a 25 percent decline in revenue in 2008 compared with the previous year. Revenue declined an additional 30 percent in 2009.
Sotheby’s cut its local staff from nine to four in January and London-based Christie’s closed its local showroom late last year.
Heritage isn’t in the same category as its better-known competitors, however, and that may be why it’s expanding.
“Sotheby’s and Christie’s have primarily focused on fine art, where sales went down,” said Heritage Chief Executive Steve Ivy. “Most of our business is spread out over traditional collectible areas, and that business continues to go strong.”
Collectibles, which include coins, stamps and entertainment memorabilia, earned the auction house more than $700 million in gross sales for 2008 and again in 2009. Online bidders have kept sales consistent for Heritage, Ivy said. The company began online auctions in the mid-1990s and Internet sales now make up 75 percent of the auction house’s business.
The Heritage website receives twice as much Internet traffic as Christie’s or Sotheby’s, according to online traffic tracker Compete.com.
Darren Julien, chief executive of Julien’s Auctions in West Hollywood, which specializes in celebrity estate auctions, said that Heritage has found a successful niche thanks to its online auctions.
“No one will ever compete with Sotheby’s and Christie’s, but they have their place in the marketplace,” he said of Heritage.
Coin conception
Ivy founded Heritage in 1974 as an outgrowth of his personal interest in coin collecting. The auction house specialized in coins and stamps until 2000, when it expanded into rare books, sports and music memorabilia, and natural history collectibles. Heritage’s first European office opened in Paris in 1979. The Geneva location was added in 1984.
Ten percent of its buyers and many of its consignment sellers come from California. Opening an L.A. office has made it easier for Heritage to work with these customers, especially the consignment sellers, Frese said.
“It’s convenient for people,” he noted. “They don’t have to worry about shipping things.”
The Olympic Boulevard building where Heritage opened in February was previously the site of Superior Auction Galleries, an auctioneer of coins and jewelry.
Superior was purchased by Dallas Gold and Silver Exchange Cos. Inc. and moved to Woodland Hills in 2008. Dallas Gold recently announced that it has paid $10.5 million in debt owed by Superior, which has shifted its focus from auctions to sales.
Julien said the sale of Superior wasn’t surprising.
“It was tough for a lot of auction houses unless you had an overseas marketplace,” he said. “Los Angeles as an auction market has not been as strong as what the other markets are.”
Eight employees currently staff the Heritage site. The office will be fully staffed with 20 employees and specialists, including a California art expert, by 2012.
The gallery held its first auction, a sale of rare books, on Feb. 11 and 12. A June 6 natural history auction yielded a $31,000 bid for a dire wolf skull from the La Brea Tar Pits.
Frese said he was surprised by the number of Californians who came to the auction instead of bidding online.
“Some much of the business has turned to the Internet,” he said. “But people in Southern California still like to come to be part of the process, to see the items, hold them and then bid on them.”
