Since September, an uncertain mood has prevailed in Chelsea, home to the largest concentration of New York’s galleries. Young and established contemporary-art dealers alike were already bracing for fewer sales when the financial crisis hit, and by the time of Art Basel Miami Beach (ABMB) in December, one gallery that had focused on emerging artists for more than a decade had closed, and rumors were swirling that others would follow.

Recession-related closures began quietly last spring, with the shuttering of Clementine, on West 27th Street. A block away, the eight-year-old Roebling Hall gallery folded in November after $100,000 in deals made at the Zoo fair in London fell through. Roebling cofounder Joel Beck shakes his head: "In the past five years, I can count on one hand the number of sales that were promised but canceled." It was lackluster sales at the Nada fair, during ABMB, that were "the final indicator" for dealer Andrew Leslie, who plans to shut his 10th Avenue space and work from an office downtown. "I can be more effective for my artists without the burden of overhead," says Leslie.

Even the rock-solid PaceWildenstein — which maintains two Chelsea spaces in addition to its midtown and Beijing locations — has trimmed 12 percent of its staff. News of the cuts broke in November, but according to director Marc Glimcher, they had taken place over months. "No matter how conservative you have been," he says, "at the beginning of a financial downturn, you have to do everything you can to prepare." Many dealers at Nada, Pulse, Scope and other ABMB satellites reported sales sufficient to cover their costs of participating. The preceding quarter was uneven, however, with some suffering cancellations even of museum sales, generally considered reliable.

Those intent on staying afloat are paring down creatively. To continue producing catalogues, for example, Scott Zieher, of six-year-old ZieherSmith, often barters art in exchange for printing services and absorbs any additional costs himself rather than passing them on to his artists. "We can’t be as ambitious as we could a year ago," he says. Like other dealers, Zieher is having conversations with his artists about adjusting expectations — modifying existing payment arrangements, say, to accommodate collectors who might take longer to shell out for purchases.

James Cohan says that cutting clients greater slack is "more prevalent today." Collectors are still passionate, but may feel less inclined to buy, says Cohan, "so it’s important to find a way to make it work." Another way is to offer discounts. Goff + Rosenthal is doing this more often, capping the markdown at a modest 15 to 20 percent. But co-director Robert Goff credits the gallery’s steady sales more to its moderate pricetags ($20,000 to $60,000). After a few years of inflated prices for emerging artists, the industry may welcome a return to more reasonable values.

One expense that galleries both large and small are reevaluating is fairs. With a booth costing as much as $60,000 to $70,000, dealers may limit their participation to only the most essential of these frequent events. The next major test of contemporary-art dealers’ budgets is next month’s Armory Show in New York. It has already seen notable defections from its exhibitor roster. One Chelsea stalwart not returning this year is Matthew Marks, who is opting out for the first time since he helped found the event, in 1994; the gallery did not return calls for comment. Lehmann Maupin, another past participant, will also give the fair a pass, says the gallery’s co-founder Rachel Lehmann, who notes that it is exhibiting in the Art Dealer’s Association of America’s (ADAA) Art Show this month and, partly because of the economy, has decided not to do two New York fairs. Bill Brady, of ATM, which was in last year’s Armory, says he was called from this year’s waiting list but declined in favor of gallery programming. Michael Gillespie, the director of Foxy Production, says he didn’t apply to the fair, where he’s had a booth for the past two years. He explains that Foxy, which last summer moved into a larger space on 27th Street and in 2007 participated in five international events, would be overstretched if he continued at that pace.