Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 82, no. 2112: September 5, 1908

Text version:

September 5, 1908 RECORD AND GUIDE .457 m^t^ ESTABUSHED-^ M,AftCH 21ii> 1868. DD^tfl) p RfA.L Estate . BuiLdij/d A,R.cKiTEeTUR.E .Household DEflOEiATioil. BiTsii/ESs AfioThemes of GEffeyil Ir/iEi^Esi. PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Communications should be addressed to C. W. SWEET Pablisfied Every Saturday By THE RECORD AKD GUIDE CO. President, CLINTON W. SWEET Treasurer, F. W. DODGB Vice-Pres. & Genl. Mgr.. H. W. DESMOND Secretary, F. T. MILLER Nos. 11 to 15 East 24111 Slreet, New York City (Telephone, Madison Square. 4iB0 to 4433.) "Entered at the Post Office at New Tork. N. Y., os second-class matter." Copyrighted. lOOS, by The Record & Guide Co. Vol. LXXXII. SEPTEMBER 5, 1908. No. 2112 THE real estate market continues to be seasonably dull, but there are many promises of activity to come. Con¬ sidering the severity of the panic last fall, and the long, continued difflculty of borrowing money on real estate, there has been surprisingly little liquidation. Of course, it was inevitable that foreclosure suits should be more numerous than they were during a period of real estate activity and of easy money, but the number of foreclosures have been few compared to similar periods in the past. Moreover, their effect upon values has been comparatively small. The neces¬ sary liquidation has not been accomplished without a dimi¬ nution in the prices at which certain classes of property have been held; but considering the steady increase in values in almost every part of the city from 1900 to 1907 the subse¬ quent recession has been very slight and has not amounted to much more than the abatement of certain notions as to selling prices which were always excessive. Bargain hunt¬ ers have not reaped the harvest they might have expected, and from this point of view the dullness which afflicts the market is a sign of strength. Better inactivity accompanied by firmness than activity as the result of weakness. The time will come when buyers will regain sufficient confidence to purchase property freely at prevailing prices, and when that time does come the strength which real estate values have recently maintained will count very much in favor of real estate as a form of investment. There can be no doubt that on the whole capitalists who invested their money in New York real estate from 1905 to 1907 have suffered less from the financial trouble and business inactivity than have capitalists who invested their money in any other way, and there can be no doubt that one of the causes which has con¬ tributed most effectually to this result-is the conservative manner in which the business of lending money on real es¬ tate is now being managed. No speculative movement to increase the selling price of any kind of property can suc¬ ceed without the aid of lending institutions, and the panic of last fall was in part the result of the over-abundant facil¬ ities which certain banks had afforded to speculation in stocks during 1906. But real estate values in this vicinity have not of late years been inflated by any excessive leniency on the part of money-lending institutions. The conservatism with which this branch of the real estate business has been handled is largely responsible for the comparative firmness of real estate values. The pace was moderated as soon as there were any signs of inflation; and the consequence was that the reaction did not have to be severe. THE recent foreclosure of au apartment hotel on Madison Avenue, south of 34th Street, calls attention to the pecu¬ liar situation in which apartment hotels in that vicinity have been placed by the business growth of the city. It is only four years ago that the side streets between Sixth and Mad¬ ison Avenues south of 34th Street were very much in favor as locations for apartment hotels; and about twenty-five fireproof buildings of this description, most of them at least eleven stories high, were erected within a few years. The comparative quietness of this neighborhood, and its conven¬ ience to the shops, restaurants and theatres made it seem an ideal location for a good class of private hotels. So for awhile it proved to be, and so in some measure it still is; but according to present indications, it will not continue to be so very much longer. Of late years the tendency of im¬ provement has entirely changed. Large numbers of loft and business buildings have been erected on the very streets on which some of the most expensive of these hotels are stand¬ ing, and these new business buildings have been for the mast part very successful. There can be no doubt that little by little all the side streets south of 3-fth and even 42d Street will be given over to various kinds of business, and that the predominantly commercial character of these streets will make them much less available for residential hotels. Many Ioft buildings on a street means that the roadway is blocked with trucks, the sidewalks cumbered with boxes, and a gen¬ eral atmosphere of bustle and noise. For this reason busi¬ ness structures of this class tend to drive out every sort of residential buildings and tends also to injure a neighbor¬ hood for retail trade. There can be no doubt that in the course of a few years this neighborhood will be far less adapted to apartment hotels than it has been until recently. Transformations of this kiud are continually taking place in New York; but they rarely take place as quickly as they have in this instance. DURING the few weeks of its existence, the Taxpayers' League, recently organized under the leadership of the Allied Real Estate Interests, has already accomplished excellent work. It has aroused public opinion among the owners of real estate in reference to the manner in which their interests are endangered by the steady and enormous increase in the municipal budget. As long as the assessed valuation of real estate was increasing by leaps and bounds, the increase in expenditures did not mean any immediate enlargement of the tax bills; but now tbat a period of smaller increase in real estate values is at hand, the con¬ tinued enlargement of the municipal expenditures will mean just so much money out of the pockets of the taxpayers. Considering the high level of assessed values, the tax rate is already one of the heaviest in the country, and it promises during the next few years to become heavier still. Evi¬ dently, unless the taxpayer of New York does something to protect himself, he will find the value of his property di¬ minished, because of the heavier public burdens which ;t is obliged to bear. The question is. What can he do? The step which it is proposed to take immediately is to appear before the Board of Estimate and Apportionment during the discussion of the new budget and to urge the necessity of economy. This will undoubtedly be a very useful thing to do; and it should be followed by good results. A very strong case can be urged not only in favor of a closer scru¬ tiny of the municipal expenditures, but also in favor of a budgetary reform. The fact of the enormous increase in municipal expenditures, amounting to over 60 per cent, in eight years, is patent; but nobody is in a position to state precisely where the leakage occurs. It is known, of courser in general, that the city does not get its money's worth in its expenditures, particularly in the matter of salaries. Its wages fund is constantly being increased in bulk and in detail; but, at the same time, no economies and reductions are made. During a period of bad business, when business men are economizing to the last penny, the city does noth¬ ing to diminish its payroll. The heads of the departments act as if their chief business was to spend their appropria¬ tions in any event, and try the next time to get as much more as they can. Their estimates and system of account¬ ing conceal, rather than reveal, the details of their disburse¬ ments. The whole system is such that no one, not even the members of the Board of Estimate, are in a position to place their finger on different parts of the city's work and say that there is where the leakage is occurring. No doubt the Bureau of Municipal Research is working along the right lines and will, in the course of time, help considerably to locate examples of departmental extravagance; but it is evident that in the long run the evils of the existing situa¬ tion can be remedied only by some radical changes, both in the financial and the administrative machinery of the city. THE Record and Guide doubts whether anything effec¬ tual and permanent can be accomplished in the way of municipal economy unless co-operation to that end can be secured from the heads of departments. At the present time these gentlemen spend the money appropriated for the running expenses of the city. The budget, as a whole, is the result of their calculations as to the needs of their departments; and in making these calculations they are actuated by only one motive—and that is to secure just as much money as they possibly c^a. They know that in any