Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 86, no. 2227: November 19, 1910

Text version:

November 19, 1910. RECORD AKD GUIDE 825 MF^ ^ ESTABUSHED ^W MRRpH Sl^ 1668. "bD&lflJp) REJvLESTAjt.BuiLDTf/c ABpKirEeTURE'KoUSEMOlDDEQffli^TBf^ Bifsirtess jutoThemes OF GeiJer^I lliTERf ST., PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Communications should b& a.ddre88edl ttn C W, SWEET Publlsfied EtJerff Saturdag By THE KECORD AND GTJIDE CO. President, CLINTON W. SWEET Treastirer, P. W, DODGE Vlce-Pres & Genl. Mgr.. H. W. DESMOND Secretary, F. T. MILLER Som. 11 to IS East 24tli Street, New York Cltr (Telephone, Madison Square, 4430 to 4433.) "Entered at tiie Post Office at Neio York^ N. Y., as s-rcoiid-class matter." Copyrighted. 1010, by The Eecord Sc Golde Co. Vol. LXXXVl. NOVEMBER 19, 1910, No. 2227. THINGS AS THEY ARE. NOTHING is to be gained by blinking the fact tbat con¬ ditions pj'evitiUng iu the real-estate and building mar¬ kets are far from satisfactory. Nobody had anticipated a very large volume of real-estate trading or buildiug con¬ slruction, but at least so far as Manhattan is concerned the actual developments are inferior to the very modest expectations which were advanced some months ago. Last week, for instance, the conveyaiices recorded in iVDanbattan were only about one-half what they were a year ago. The falling off in the Bronx was almost equally as large, and even in Brooklyn there was a diminution of 33 per cent. The election may have had something to do with tbe un¬ usually poor showing made by the totals of last week, but at best the amount of business transacted is decidedly smaller tlian it was a year ago, and a year ago the totals were nothing to brag about. Unless some quick aud de¬ cisive change takes place, the real-estate year of 1910-11 will be the least active of any year since 1900. It may be as wel! to recognize also that no very sudden or decisive change is likely to take place. The cause of the existing stagnation is threefold. In the first place, the difficulty of obtaining loans on favorable terms tends to restrict botli real estate and building operations. In the second place, there has been overbuilding, both in the business and the upper residential districts of Manhattan and to some extent in Brooklyn. The Bronx and Queens are in a better con¬ dition in this respect, and these boroughs are likely to be relatively more prosperous during tbe current real estate year than are Manhattan or Brooklyn. The Bronx and Queens will be the parts of the-city which will be most benefited by the improvements of the elevated railroads and by the opening of the Steinway tunnel, and as these im¬ provements can be completed soon after they are authorized tbese boroughs have more to look forward to in the way of better means of coinmunication than has tbe rest of the city. But there is one cause of real-estate stagnation which affects all boroughs alike, and tbat is tbe constantly increasing drain upon real estate reventies because of the increase in taxation. During the past four years taxes have been'increased about sixty per cent., while values, except in a few favored districts, have beeu stationary. Neither is there any immediate prospect of relief. It looks as if taxes would continue to increase for some years to come, and undoubtedly this fact tends more to discourage purchases of real estate for investment than does any other single cause. An investor who buys a modern building is sure of an increase of taxes, while the possibility of obtaining a larger net rental from the building is precarious. The con¬ seciuence is that purchasers scrutinize much more closely than they otherwise would the properties offered for their consumption. WHAT THE TRIBOROUGH WILL NOT DO. IN looking around for some change in real-estate condi¬ tions w]iich will tend to stimulate activity, most brokers fasten upon the Triborough route, but If one can judge by the analogy of the existing subway the actual authorization of the new subway system will have little immediate effect either upon real-estate trading or real-estate values. The effect of the existing subway upon the real-estate market was not-JgltiintJl after it was actually in operation, and there is no reason to suppose that the benefit qf the Tri¬ borough route would be reaped any sooner. Moreover, when tbe time comes for its beneficial effects to be gathered in, the harvest will be greater in the outlying boroughs than in Manhattan. Brooklyn will be very much helped, so will the Bronx, although tbe benefit which the Bronx may get will be postponed for seven or eight years, because th? Bronx lines cannot be constructed except under the assess¬ ment plan until after tbe rest of the system is in profltable operaticn. But the benefit to property in Mauhattan will be small. From 42d street down the Triborough route merely duplicates existing means of communication. North of 42d street" it will be a great boon to a very densely populated district, but that district is already so completely filled up, and real-estate values are so very high, that they can scarcely be much increased without driving out many peo¬ ple of moderate means domiciled along the line of Lexing¬ ton avenue. It must be remembered, also, that if the Tri¬ borough route is authorized it will undoubtedly hurt the credit of the city, and the consequence will be a generally unfavorable reaction on property values. Rightly or wrongly the bankers believe that the Triborough route will not pay, and that the city will be obliged to meet an operating deficit. They will, consequently, be loth to lend money to the city for the purpose of building tbe road; and they will charge more for such loans than they would for money which was in their opinion to be profitably spent. There is no telling how much the city may have to pay for these pro¬ posed subway loans. Even now it looks as if the coming issue of city stock would bear interest at 4 ^^ per cent.; and it may well be that during periods of money stringency the Metropolis would be forced to pay five per cent, for the enormous amounts of capital it would be borrowing. If sucb a condition was ever reached, it would constitute an aw-ful drain upon the municipal revenue and would un- questionably damage the value of real estate. At the present time the city is straining its credit, and if it goes on bor¬ rowing at an increasing rate, particularly for a purpose of which conservative financial opinion does not approve, its iMedit may be strained lo the breaking point. THE INFALLIBLE COMMISSION. THE Public Service Commission of the New York dis¬ trict has probably been tbe most criticized railroad commission in the country, but never yet has the commis¬ sion, or any member of it, admitted that it had or could make a mistake. The Chairman's latest defense of the Tri¬ borough route as usual refuses td admit that the plans of the commission are not perfect in every detail. He sticks to the early estimate that the system can be constructed for about $150,000,000, but apparently he still neglects to in¬ clude in his estimate the cost of real estate for stations, or any interest on the investment during construction. And, of course, the estimate does not pretend to include the cost of equipment, which might have to be borne eventually by the city. On the otber hand, -be refuses to predict what the probable trafiic of the new system will be, but he inti¬ mates that inasmuch as the existing subw-ay is now being operated to its full capacity a similar result might be ex¬ pected from the Triborough route—the capacity of the Tri- boroiigb route being 3,000,000 of passengers a day. But in this calculation he leaves out of account the fact of com¬ petition, and the fact that the proposed Brooklyn and Bronx liues would for many years run through very much less densely populated districts. The estimate of the Rapid Transit. Committee of the Chamber of Commerce, which was less than half the maximum suggested by the Chairman, looks like a very liberal calculation. But one consideration should be final about this relation between tbe probable cost of the system aud its probable revenue. If the Tri¬ borough route is going to be as profitable as Mr. Willcox claims, it ought to be easy to procure au operating tenant. If such a tenant could be secured any opposition to the letting of the contract would immediately disappear. The fact that tbe Commission cannot argue away is tbe suspicion with which their plans are regarded by a consensus of expert financial and engineering opinion. SOMETHING IN MR. McDONALD'S PLANS. THERE is something to be said for Mr. John B. McDon¬ ald's idea of a six-track subway along the line of Third avenue and the Bow^ery. It has always seemed to Tbe Record and Guide that the ultimate rapid transit needs of the Bronx and Westcbester w-ould not be satisfied without subway trains which ran as expresses froru the Harlent