NEW YORK (BLOOMBERG).- Fifteen years after Magdalena Sawon moved her Postmasters Gallery to Manhattan’s Chelsea district from SoHo, the art dealer is heading back downtown because her rent is about to double.

“This is my last season here. I am unwilling to pay $30,000 a month,” said Sawon, whose 3,800-square-foot gallery occupies a ground-floor space on West 19th Street.

The midsize art galleries that helped transform western Chelsea from a dead area adjoining the West Side Highway into New York’s major art hub are being squeezed out of the neighborhood by booming real-estate development and rising rents.

“The mid-range galleries are going to just vanish from Chelsea,” said Sawon, who expects that “anything radical or experimental” will become rarer as dealers seek to cover expenses by staging more-predictable shows that do well commercially.

Anchored by the elevated High Line walkway and park, the area between 10th and 11th avenues is attracting technology and fashion companies that present tough rivals to contemporary-art galleries.

“Every developer in the city wants to be in West Chelsea,” said Stuart Siegel, senior vice president at CBRE, who has worked with many galleries as a commercial broker in western Chelsea since 1993. “The galleries that don’t own their spaces will be under pressure.”

Cold Castle
Several fashion boutiques, a CVS store and a yoga studio have moved into the area recently. Hewlett-Packard Co. has leased the building formerly occupied by the Chelsea Art Museum.

A building known as Cold Castle, where dozens of artists had studios, will be razed to make room for a 19-story residential tower.

Landlords are asking from $80 to as much as $120 a square foot for ground-floor space between 10th and 11th avenues, compared with a range of $55 to $75 in 2010, Siegel said.

Shroeder Romero recently closed its space on West 26th Street. Partners Lisa Schroeder and Sara Jo Romero said they will experiment with other models of operation, including pop-up shows and online sales.

“Like a lot of our middle-tier colleagues, we were feeling overlooked,” Romero said. “We can’t compete with David Zwirner and we are not a fresh new space anymore.”

No Deals
Larissa Goldston had to leave a ground-floor space on West 21st Street just nine months after relocating her gallery there from West 25th Street. Since October she has been managing the careers of her 17 artists from a small office in Chelsea.

“I am desperately looking for a space I can afford,” said Goldston. “But there are no deals to be had.”

A West 29th Street building that housed the Sean Kelly and Peter Blum galleries before they moved has been purchased by the development company Black House, which plans to construct a 13- floor luxury condo tower on the site, according to Sean Ludwick, a principal at Black House.

Christopher D’Amelio closed his gallery on West 22nd Street after 17 years to join David Zwirner’s growing empire as a partner.

“If you are a midsize gallery and want to survive, you have to keep growing,” said D’Amelio. “Otherwise you would shrivel and disappear.”

The pressure on midsize galleries comes as the big players keep getting bigger. Zwirner, with headquarters on West 19th Street, doubled his presence in Chelsea by adding a 30,000- square-foot, five-story building on West 20th Street.

‘Priced Out’
Hauser & Wirth gallery opened a branch in the former Roxy disco club on West 18th Street. Many established galleries, including Larry Gagosian, Pace and Barbara Gladstone, own their spaces in Chelsea and are expanding globally.

“You won’t find much experimentation if the rents continue to escalate, because those kinds of galleries won’t be here,” said Chelsea gallerist Casey Kaplan. “They’ll be priced out.”