May 8 (Bloomberg) -- The slump in demand for contemporary art has claimed two more victims among London and New York’s dealerships.

Albion Gallery, a hi-tech space designed by Norman Foster on the banks of the river Thames, will close in June, after shutting its site on Upper East Side of Manhattan, Michael Hue- Williams, its director, said last night. An unrelated gallery, The Approach, in the U.K. capital’s Fitzrovia district, also announced yesterday that it will shut next month.

“We’re retrenching right back to a smaller operation in London,” Hue-Williams said in a telephone interview. “This kind of gallery isn’t sustainable in the current environment. It’s a very tough climate. No one has experienced this before. Everyone is under enormous pressure.”

London and New York galleries have started to close as sales dwindle. Contemporary-art prices have dropped 30 to 50 percent at auctions and fairs since the collapse of Lehman Brothers Holdings Inc. in September. Wealthy clients have refrained from making purchases after the onset of the global financial crisis.

In London, Fitzrovia dealer Alexandre Pollazzon’s gallery closed in December. Yvon Lambert, who runs galleries in Paris and New York, pulled out of Hoxton Square in March after just six months. Allsopp Contemporary, based in the Notting Hill district, confirmed last month that it was giving up its exhibition space.

Albion’s 15,000 square-feet gallery in a Battersea building has hosted shows by James Turrell from the U.S.; Ai Weiwei and Xu Bing from China; and Andy Goldsworthy and David Adjaye from the U.K.

Sales Surge

The museum-style gallery opened in 2004 at the beginning of a period in which total auction sales of contemporary art more than quadrupled, according to the France-based database Artprice.

Albion will relocate to a smaller, more central site in London’s West End in the autumn. The gallery, in an as-yet unidentified location, will be designed by Adjaye, Hue-Williams said.

“We’ve got to be in a 2009 mentality,” he said. “We’re having to come off asking prices by a minimum of 20 percent to close a deal.”

The inaugural show in the new gallery will feature five works by the Paris-based Algerian artist Kader Attia, whose scheduled May exhibition at Albion has been postponed. They will include the 6-foot-diameter disco-ball sculpture, “Big Bang,” with an asking price of 95,000 euros ($127,000).

Hollow Foil

Attia’s 2007 work, “Ghost,” an installation of more than 100 hollow aluminum-foil women kneeling in prayer, is currently on display in “Unveiled: New Art from the Middle East” at London’s Saatchi Gallery.

Albion’s New York branch opened in May 2008 at 17 East 76th Street and shut two months ago, Hue-Williams said.

East London dealership The Approach, founded by Jake Miller, opened its gallery in Fitzrovia in November 2007. The current exhibition of works by Cris Brodahl will be its last in the West End, though the dealership will maintain its space in the east of the city.

The Approach will continue to exhibit at the Art Basel and Frieze art fairs, and this October will be showing for the first time at the Foire internationale d’art contemporain (FIAC) in Paris, director Emma Robertson said yesterday.

“We took out a short lease in the West End. We found it was a bit too much to do two programs,” Robertson said in a telephone interview. “It makes more sense to consolidate.”

(Scott Reyburn writes about the art market for Bloomberg News. Opinions expressed are his own.)

To contact the writer on the story: Scott Reyburn in London at sreyburn@hotmail.com.

Last Updated: May 7, 2009 19:00 EDT