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REAL i ESTATE
BUILDERS
AND
NEW YORK, MARCH 28, 1914
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CENTRAL REAL ESTATE IN LARGE CITIES
Importance of Having a Thorough Knowledge of the Properties — Long Term
Leases—Shops on Second Floors—Rentals Rising and Store Spaces Contracting.
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By JOHN H. SINBERG, of Philadelphia*
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D ECAUSE central real estate has been
my specialty during the past ten
years, I shall confine myself to central
real estate and try to tell you some of
the things which in my opinion are nec¬
essary for success in that very important
branch.
First and foremost I place thorough¬
ness. The broker must know the deal
which he is working from beginning to
ei'id; know the property, its size, its as¬
sessrnent, its location, its incumbrances,
its value as compared with other proper¬
ties in the same block and with similar
buildings in the immediate vicinity. He
must study the history of the property
and its enhancement or depreciation in
value. In other words, he cannot know
too much about any plot of real estate
that he is trying to sell, buy or lease.
Second, a central real estate broker
must have a wide acquaintance among
men of affairs and a general knowledge
of merchants, their business methods
and reason for their success. He must
be a student of human nature as well as
a close observer of the tendency of the
times. He must study neighborhoods,
watch the growth and improvements of
various neighborhoods in the city, so as
to give proper advice to his clients to
take advantage of enhancements in value.
Salesmanship a Boon.
If the real estate broker has the knack
of salesmanship, he is sure to succeed.
The shrewd broker is he who studies the
wants of his clients and submits proper¬
ties that he knows should attract them.
.\ great many real estate buyers have
what I would call real estate tempera¬
ment. They have intuiti.ve confidence in
brick and mortar or vacant land and
prefer it to other forms of investment.
The real estate broker who is thor¬
oughly posted on central leases can fre¬
quently make a big profit by reason of
his knowledge. Tenants of large prop¬
erties are sometimes short-sighted. They
let their leases run too close to the end
of the term before taking up negotia¬
tions for a renewal. Occasionally they
begin such negotiations too late. Here
is an instance:
About ten years ago the lease on one
of the biggest specialty stores in the
central part of Philadelphia had five
years to run. An enterprising firm had
occupied the building for a number of
years and it Jiad become a well-estab¬
lished and popular store. A real estate
broker kept in touch with this lease and
when he learned that it had but a short
time to run he purchased the property.
He then told the tenant of his purchase
and served notice on him to move at the
expiration of his term. You can readily
see what happened. The tenant could
not afford to go elsewhere, as moving
would practically have meant going out
of business. He was obliged to buy the
property from the broker and pay him a
big profit. Had the tenant employed
a broker seven or eight years prior to
the expiration of his lease, to buy the
property or negotiate a new long-terrii
•From an address delivered before the
students ot the University of Pennsylvania.
lease, he would have saved himself a
small fortune.
Exclusive Listing.
Just as soon as owners realize that it
is for their best interests to place the
handling'of their property in the hands
of one exclusive broker, that much
sooner will the sale and rental of prop¬
erties increase everywhere. At the pres¬
ent time a great many owners prefer to
place their properties in the hands of
several brokers. Under this system, the
usefulness of the real estate broker is
greatly reduced, and real estate often
becomes a drug on the market and its
value impaired because of lack of com¬
petent methods of bringing the buyer
and seller or lessor and lessee in touch
with each other. The trouble -with a
great many real estate brokers lies in
the fact that they have not backbone
enough to back up their opinions. One
intelligent, hustling broker is worth a
dozen poor ones.
When an owner brin'-'s a property to
a broker, the broker should refuse to put
it on his list at an exaggerated price.
After he accepts a piece of property to
sell, he should sell it. He must have a
thorough knowledge of all properties for
sale on his list, and he ought not to un¬
dertake at one time to handle more
properties than he is sure he can sell or
give honest effort towards selling.
The broker should occupy the same
position towards the owners of property
as does a lawyer. He should be trusted
as implicitly as a lawyer. Some people
have been known to employ two or
three lawyers to do the same work, but
have usually been sorry for it.
An owner of property who wishes to
sell it should not have a number of
brokers working at cross purposes, each
making concessions in the hope of clos¬
ing a sale before some competitor. My
experience has shown that the owner
who makes one broker his exclusive
agent for the sale or renting of his prop¬
erties invariably gets satisfactory re¬
sults.
Central Leases.
The subject of central property leasing
is one that needs a great deal of dis¬
cussion in Philadelphia, because the
brokers have overlooked its vital impor¬
tance to the development and prosperity
of the real estate business. It is a well-
known fact that central leasing in New
York, Chicago, many Western cities and
in Europe is a special branch of the real
estate business and many brokers make
a good living by confining themselves
to it. The broker who does not know
rental values of central properties, par¬
ticularly in lar.ge cities, where values
are constantly changing, is not well
equipped to make sales, because he de¬
pends almost entirely on the values set
bv past sales and on hearsay informa¬
tion for his basis of values. He is not
sure of his position because he knows
nothing of the earning power of prop¬
erty through his own experience.
In Philadelphia, long leases were un¬
heard of until about ten years ago and
the tenant who secured a term_ of five
years' seemed satisfied. It required the
coming of progressive merchants from
other cities to Philadelphia to awaken
the native business man to the impor¬
tance of long leases, and now the de¬
mand is for terms of ten years and more.
Frequently, it is necessary to go out¬
side of Philadelphia to bring the right
kind of tenants for central properties.
It is the old story of the prophet in his
own country. Many merchants fail to
appreciate the value of vacant stores in
the central portion of the city. It has
been my personal experience that by
going to New York and other cities, I
have succeeded in bringing good tenants
to Philadelphia. Among others, let me
mention the Bedell Company, depart¬
ment store of New York, to whom I
leased the entire five-story building at
the southwest corner of 12th and Market
streets, which for a great many years
was occupied by one of the oldest and
best known clothing firms. This is one
of the best corners in Philadelphia. Yet
it was vacant for seven months. Phila¬
delphia merchants could not see its real
value. I went to New York, brought'
Mr. Bedell over, and he instantly real¬
ized its value and signed a long term
lease at what many merchants probably
consider a high rental. Yet he feels that
he has secured full value for his money.
In addition to getting big merchants
from out of the city for central proper¬
ties in Philadelphia, I find it quite profit¬
able to go after smaller storekeepers as
well.
Leasing Second Floors.
The Boston Shoe Market Company
has made a new departure in retail mer¬
chandising in Philadelphia. Upon learn¬
ing that this concern was looking for a
location, I went to Boston and inter¬
viewed the â– president. When he heard
the prevailing central rents, he was
astounded and made up his mind to stay
out of Philadelphia. However, when
he explained to nie that he was selling
sample shoes at what seemed to me
ridiculously low prices, I ventured the
suggestion that a second floor might
prove profitable. Like the up-to-date
business man that he is, he decided to
experiment and signed a five-year lease
with an option to vacate at the end of
the first year if business did not warrant
his staying longer. He took a second
floor in Market street which had a
frontage of 70 feet and a. depth of 200
feet. He had two stairways and an
elevator. He advertised in the news¬
papers that by reason of his second
floor location and consequent low ren¬
tal he was able to give good value at
reduced prices. The shopping public
came and saw—the Boston merchant
conquered. He is now in his third year
and has made a big success.
To my mind, that is the solution of
second floors of central properties and
it i.« only a question of time before own¬
ers will appreciate this fact and improve
their second floors in such a way as to
enable merchants to do a retail business
in them..
A great many men. who ought to
know what they are talkin.a: about, have
repeatedly said that Market street val¬
ues have reached the limit; that rents
are too high; that there will be
many failures and that the landlord