At the end of January, Sebastian + Barquet, a New York gallery specializing in postwar and contemporary furniture, celebrated the grand opening of its second Chelsea space. Among the pieces on display was a prototype of Aussie designer Marc Newson's Lockheed Lounge, an amoebalike silver chaise made from fiberglass and riveted sheet aluminum.

The prototype had surfaced the previous June at a Sotheby's sale, where there was "insane demand" for it, says James Zemaitis, head of the auction house's 20th-century decorative arts and design department. The last lounge to come to market sold for $105,000 in 2000. This one brought $968,000, the highest price ever paid for the work of a living designer at auction.

The anonymous private collector who purchased the prototype of the much-revered lounge placed it with Sebastian + Barquet, which trotted it out at Design Miami, one of the satellite fairs orbiting Art Basel in Switzerland and its counterpart in Miami. The gallery did not necessarily intend to sell the piece, but it put a price on the lounge anyway: $2.5 million, two and a half times what it had gone for six months earlier.  

Steep as that markup was—especially on a record-setting auction price—the current market for design is so hot, it's not beyond the imagination that a collector might pony up the sum. Several record prices for contemporary design have been smashed in the past couple of years.

At a now legendary 2005 Christie's sale, energy entrepreneur Thomas Scott Kaplan paid $3.8 million for a rare oak and glass table by the mid-century Italian designer Carlo Mollino. The presale estimate was $150,000 to $200,000, and Kaplan almost doubled the previous auction record for a piece of 20th-century furniture. George Nakashima's redwood and madrone burl Arlyn Table sold for $822,400 at Sotheby's in December, shattering his previous auction record, set only six months earlier, by more than $600,000. The fact that the table had been blessed by the Dalai Lama did help account for the substantial price difference. But the figure also shows that collectors are willing to pay for a table approximately what one would pay for, say, a Basquiat painting.  

Indeed, the rise of design is linked to the rapid upward trajectory of the contemporary art market. The same dealers who have been selling Warhols and Hirsts have found they can market design as they do fine art: By showcasing limited editions and generating waiting lists, they create cachet and thereby stimulate demand. And, most postwar and contemporary furniture is still less expensive than fine art from the same time period, making it seem like a bargain when placed on the gallery floor.  

Contemporary art collectors who are comfortable dropping a million dollars, give or take, for the work of an art-world superstar are among the biggest buyers in the design market. New York real estate developer and contemporary-art collector Aby Rosen owns pieces by Newson; Miami property developer Craig Robins, also a collector of contemporary art, helped create Design Miami and owns pieces by Ron Arad, an Israeli contemporary of Newson, and Italian mid-century designer Gio Ponti.  (See more in the slideshow.)

On the same night that Sebastian + Barquet christened its gallery space, Larry Gagosian opened an exhibition of new limited-edition pieces by Newson steps away. It was the designer's first show with Gagosian Gallery, known for its stable of blue-chip contemporary artists, including Damien Hirst, the British bad boy whose pickled shark was sold to hedge fund manager Steve Cohen in 2004 for a ballpark figure of $8 million. The shark was originally commissioned by Charles Saatchi in the early '90s for less than $100,000, a rate of appreciation that design collectors may want to watch.