No one factor can adequately explain the move of the contemporary art district out of Soho to Chelsea in only 17 years (1990 – 2007). The relocation of so many galleries from Soho to Chelsea in such a relatively short period of time came about by multiple forces coming together, with the end result being the establishment of the Chelsea section of Manhattan as what I think can be fairly described as the contemporary art capital of the world. So how did it happen? Here is what I think are the major factors:
1. Rental rates: Molotoch and Trekson document how Chelsea went from having 16 to 303 galleries, while Soho went from 275 to 104. Their analysis establishes a relatively close correlation between the change in galleries to the change and higher rental rates in Soho, especially for ground-floor rentals. The figures they use in Table 1 on page 524 and the graph in Figure 4 on page 526 show the correlation.
2. The size of artwork: Starting around 1990, “art was getting (literally) bigger” something for which Chelsea was “superior” (Molotoch, 530). Chelsea buildings often had garage door fronts and clear-through floors without columns. As Molotoch and Trekson write, “big space gave rise to big art just as big art demanded big space.” Here is a photo from New York Magazine of a typical store/garage front in Chelsea – many of which have now been turned into galleries. It’s easy to see how this kind of space could accommodate large pieces of contemporary art. 
Here is a YouTube video of the David Zwerner gallery which relocated from Soho to Chelsea. You can get a sense of the type of space needed to accommodate a large exhibit.
3. Zoning: New York City designated art galleries in Chelsea as an “as-of-right” use in what was previously a manufacturing-only zone (Molotoch, 532). Chelsea is experiencing what Elizabeth Currid at USC would describe as the “active cultivation of art as a central part of economic development; ” in other words the city wants to economically develop Chelsea with people, “not smokestacks” (Currid, 368).
4. Small Gallery Opportunities: Chelsea has many elite galleries. In fact, Chelsea galleries made up 63% of all New York galleries at Art Basel 2007 ( Halle & Tiso). But interestingly the “vast majority of Chelsea galleries are small shops offering a series of opportunities . . .” (Halle and Tiso). So for the aspiring artist and aspiring gallery, Chelsea provides a lot of opportunity.
Whether Chelsea will retain its dominance over contemporary art galleries remains to be seen. Even though many thought Soho’s dominance for contemporary galleries would last forever, it didn’t. And because so many (90% according to Saltz) of Chelsea galleries rent their space, there is no telling what will happen as more and more leases come up for renewal.