Los Angeles art dealer Tim Blum, co-founder of the namesake gallery known as Blum, should have been happy with his experience at Art Basel last month.

He arrived with nearly 85% of his sales already done — sold to collectors who had purchased contemporary artworks for hundreds of thousands of dollars each, based on digital images sent to them. Then he capped off the VIP opening with a sunset party at a rooftop bar packed with hundreds of attendees from around the world.

But everywhere he looked, the gallerist saw hollow victories and confirmation that the art market had fundamentally changed since he entered the business more than 30 years ago. It had cost his gallery $450,000 to participate in this year’s edition of the influential Swiss fair, taking into account booth fees, shipping, insurance and staff accommodations. There was little deal-making on the salesroom floor, and despite the crowds, Blum said he searched in vain for serious buyers.

“There was one collector, who pointedly said that he was not there to buy anything — ‘I’m just here to party,’ ” he recalled the client telling him.

On July 1, Blum formally announced that he was closing the gallery’s locations in Los Angeles and Tokyo, and eyeing a potential sale of the Tribeca gallery space he had purchased for $5.3 million about two years ago and was set to open this fall. After subtracting various fees for participating in Art Basel, including the artists’ share of profits, Blum made a small gain on his investment. But it wasn’t enough to continue in a business where shrinking revenue and rising overhead costs meant that he could end next year in the red.

Now, his staff of nearly 50 employees will need to find new jobs; a skeleton crew will spend the next few months winding the business down and helping some of their 60 artists find new representation.

Not since the closing of Metro Pictures — the champion of the Pictures Generation artists — four years ago has such an important gallery decided to call it quits, and it came as a shock to many. Blum’s colleagues took the decision as an omen for the art market’s future, as rising overhead costs and plummeting sales (down about 12% across the industry last year) leave dealers with razor-thin margins.

“It was the defining gallery of its generation in Los Angeles,” said the dealer Jeffrey Deitch, both an admirer and a competitor. “I am sympathetic. The business has become very, very challenging. The expenses are enormous.”

Blum and his original business partner, Jeff Poe, who left two years ago, are largely credited with giving the Los Angeles art scene a global stage and raising the celebrity of Japanese artists including Takashi Murakami and Yoshitomo Nara. They are also widely credited with introducing Western audiences to key figures in Japan’s Mono-ha movement that developed after World War II as a challenge to the country’s traditional notions of art. The gallery also had a knack for recognizing American talent, giving a platform to artists including Mark Grotjahn, Anna Weyant and Henry Taylor.

“The gallery’s closure came as a surprise,” said artist Oliver Lee Jackson, whom the gallery started representing last year. “Their presentation of my work in the Blum exhibition space was like a museum show.”

Blum called the decision “a really arduous task,” adding: “You are having to get artists to confront the fact that my gallery has enabled them — in some good ways and not so good ways — to feel secure forever. And nothing is forever.”

(Blum isn’t the only dealer to close his gallery. Adam Lindemann said Wednesday that he would be shuttering Venus Over Manhattan after 14 years. He was done selling art, though he wanted to continue to buy it. “There will be no pivot to consulting nor private dealing,” he wrote in an Artnet article. “I’m going back to air kisses, handshakes, fist bumps, side hugs, head nods, winks, waves, big smiles, thumbs up, and good vibes.”)

A quarter of all sales last year came from private deals, not the expensive exhibitions it mounted, and nearly a third of transactions were sourced at art fairs, which caused financial problems over the last years as fewer and fewer deals emerged from them.

The pandemic had disrupted the habits of collectors and triggered a speculative boom that ultimately burned a new generation of buyers. Blum said that his clientele started to thin. He reduced the number of annual exhibitions because fewer people were coming to see the shows, yet he continued to pay over $12 million to run his business.

“We had been complicit in building the art market at this unsustainable scale,” Blum realized. “It had become the equivalent of having a large container ship and trying to turn it around in the Panama Canal.”

As the gallery became more difficult to manage, competition also became fiercer in Los Angeles. Despite the arrival of luxury dealerships such as Hauser & Wirth and David Zwirner, which opened locations in the city, there were still only a handful of serious collectors in the region. The megagalleries also ran interference on their own artists, blocking them from working with local dealers.

Increased competition led to a handful of rough breakups with artists that shook the gallerist. In 2019, for example, Blum and Murakami parted ways after nearly 25 years.

“I didn’t understand him any longer,” the dealer said, “though I still think he is a genius and legend.” (Murakami is represented by Perrotin and Gagosian.)

In 2022, the gallery had a fallout with Weyant, who decamped for Gagosian Gallery around the same time that she started dating its owner, Larry Gagosian. (The couple is no longer together but she continues to be represented by his gallery.)

Blum said he was most heartbroken when Taylor announced in 2020 that he was joining Hauser & Wirth because of the gallery’s vast resources.

“It was hard because I was so close to him,” Blum said, explaining that it took the gallery nearly 20 years to build the artist’s market and museum following. “I really genuinely loved him.”

If losing relationships with artists and collectors left him feeling depressed, then attending Art Basel drove home how the art scene had lost its sense of community for him.

With an inventory of more than 500 artworks, he heard himself repeating what so many collectors who were disappearing have said: Why did I accumulate all this stuff?

So the gallerist is downsizing, emptying his 20,000-square-foot warehouse and asking artists to retrieve their artworks, some of which have been stored there for nearly 20 years.

He says he is looking for peace, turning his attention to an unfinished memoir and an ongoing project with his wife, Maria, to create a “place for art and consciousness” in Northern California that will include an artist residency and research into plant medicine that he hopes will serve that local community.

But he isn’t ruling out an eventual return to selling art, though it won’t be through a traditional gallery model.

“You are almost unable to stop,” Blum said. “You must commit to the death.”