As head of Sotheby’s 20th-century design department in New York, Zemaitis, 40, has overseen highs — the sale of Marc Newson’s Lockheed Lounge for $968,000 in 2006 — and lows: the dip in demand for contemporary work, as evidenced by recent sales. Here, he talks with Sarah Douglas about the state of a market that he has helped build while at Sotheby’s and, beforehand, with Phillips de Pury & Company.

Were there early indications of trouble in the market for 20th-century design?

In June we still had some very high prices, especially for George Nakashima. But they resulted from two-person bidding wars — wars without a depth of clients. The last of the trade speculation occurred in that sale. We started to worry. When were these guys going to exhaust their ability to protect certain designers whose work they were using to build their inventory?

How did the Sotheby’s October sale in London fare?

The works that did well were not overpriced in relation to the designer’s value to the design world. Tom Dixon did quite well because he has remained incredibly modestly priced for someone as important as he is. Zaha Hadid did terribly. With Ron Arad, the early work did well, the later work didn’t.

So you were able to adjust expectations, and estimates, for the December auctions back in New York?

Yes. And we cleaned up the various-owners sale. We thought the last thing this market needed, especially with Design Miami right before the auction, is another piece of contemporary design. Enough already.

What are the particular vulnerabilities of your department?

We’ve been hyped as the "what’s next" market. So then there was the problem of increased volume. Unlike other art markets, 20th-century design is a four- or five-auction-house battle. As prices started to rise, around 2002 to 2003, volume shot up.

And the collectors who initially accounted for the steep rise in prices haven’t been enough of a stabilizing force?

The ones who had really driven prices up were a handful of prominent contemporary-art collectors, like the Mugrabis or Peter Brant. But they got their fill. They got the pick of the litter: a Newson piece when it first came to auction, a signature Nakashima, a great Prouvé. Design collecting didn’t trickle down to the contemporary-art-buying group — to the hedge fund guys, for instance — the way people thought it would. Instead, as the floodgates opened, the field of buyers started to narrow.

What role did the trade play as the market heated up?

Speculation. Dealers started approaching me saying, "Listen, I bought this piece at Wright, or Rago, in the spring, and I’d like to flip it with you in the fall." Fundamentally, that shows there is not actually fresh collecting going on. They are just trying to cash in on a scheme that is starting to go down the hole.

Where do the fairs fit in?

For all the hype over them, the market was very auction-driven. Even at the height, design dealers were never selling out their booths the way art dealers were. At the same time that volume increased on the auction market, the number of fairs dedicated to postwar design exploded, and dealers felt pressured to participate in them. Dealers in 20th-century design are not, by and large, as well capitalized as contemporary-art dealers.

What is your biggest concern about the market right now?

I fear what my professional auction-house rivals will do. They have a huge responsibility here. They have to say no to high volume. They have to say no to getting too competitive in their heads — and that’s where it is — even over fresh collections of material in the postwar studio movement, because there’s not the level of buyers there.

Do you feel that you’ve made any mistakes?

At the height of the madness, the auction houses started reaching out to designers directly and saying, "Give us your work to put in our sale." I made that mistake at Sotheby’s and Phillips. Every time we did that, we got good publicity and we might have sold the piece, but the results weren’t that great. Auction houses are ultimately middlemen; our place in the world is to mine the secondary market, not the primary market. Will I continue to work with contemporary designers from time to time? Yes. If, for instance, I think it’s an important piece from the beginning of a designer’s work, absolutely.

You once said your model was the contemporary-art market. Is it still?

I’m shifting to a model closer to the upper echelon of the Old Masters and antiquities markets. It’s more about provenance.

Name a collecting opportunity.

Early modernist chairs are astonishingly affordable but require significant connoisseurship because of the difficulty in determining their provenance, in terms of whether they’re second series, third series. It’s still incredibly easy to put together a great collection of Marcel Breuer or Mies van der Rohe. Gerrit Rietveld is exploding, and Hans Wegner — while many of his chairs are susceptible to mass production, you get great bang for your buck if you understand condition, provenance and age. As for contemporary, in this day and age there are no easy opportunities. That market has become too beholden to the limited-editions vibe.

And what about limited editions?

The problem is no one knows which editions have really sold out and which haven’t. In the limited-editions market, the fair mentality actually drove the auction world, because at the fairs, the dealers were pricing these designers ever more astronomically. I remember going to Design Miami in 2007 and looking around at numerous pieces that were being priced between $100,000 and $200,000 and thinking, "Who are these guys?" These were designers who were not yet ready for prime time.

Despite the market’s flaws, is there cause for optimism?

I still believe that the future is with 20th-century design. We have a larger depth of bidders than, unfortunately, our colleagues in earlier French and English and American furniture do. And I still see exuberant bidding wars over fresh pieces that are hard to find. What’s great about America is there is so much great postwar design that is in the original ranch houses out there and that’s being consigned. Tiffany lamps are being found on the Antiques Roadshow. The fresh material is there, but it’s up to the auction houses to say no to everything else.

"Conversation With James Zemaitis" originally appeared in the April 2009 issue of Art+Auction. For a complete list of articles from this issue available on ARTINFO, see Art+Auction's April 2009 Table of Contents.