It’s interesting to see this Arcis Art Storage real estate project get so much press. That’s the magic of the term Freeport. But what seems to be going on in Harlem at the just-announced Arcis facility is that a sharp real estate player with a big position in other types of storage facilities—Ken Cayre, who also happens to be an art collector—is making the most of some incentives for redevelopment.
From the stories, it isn’t really clear that the tax advantages are going to be great here. The professionals who qualify as galleries and dealers already have status to avoid paying taxes. Are there enough private collectors who cannot ship the work to another home in, say, Florida to avoid paying local taxes?
Here’s the Wall Street Journal on the new facility:
The shippers, Tom Sapienza and Kevin Lay, plan to open a 110,000-square-foot facility, called Arcis, that can store as much as $2.5 billion worth of art duty-free. Collectors will be able to buy art in New York, or anywhere in the world, and store it in Arcis’s four-story warehouse indefinitely without having to pay local or state taxes—although taxes will be due once the art leaves the site. Moving new purchases into storage can give collectors and dealers time to save up to pay the taxes later rather than right away—or time to resell the work while it’s in storage and thereby pass on the sales tax to someone else. Collectors can also choose to ship their work internationally and avoid paying local taxes altogether.
A New Tax-Free Way to Store Art (WSJ)