March 16. 1912





RECORD  AND   GUIDE





541





they seem to be. Such properties are
frequontly carried at a loss for many
years before they can be sold at a profit,
and if the profits are sometimes large, the
risks and deductions are also very large.
Here again the successful speculator is
the man who has the* wit and judgment
to buy just at the right time. Such prop¬
erty, when it is held for many years,
often eats its own head off and leaves the
speculator with a small part of the in¬
crease in price. The truth is that .the pre¬
vailing system of land taxation rests
heavily upon the speculator in land val¬
ues and forces property on the market
with sufficient rapidity for all practical
purposes. As a rule a city like New Tork
is always being over-supplied wilh nevv
buildings rather than under-supplied.
The increased taxation of land values
would not in the long run increase the
supply of buildings or encourage improve¬
ments; it would 'merely confiscate a cer¬
tain proportion of the existing price of
real estate. Buildings are now being sup¬
plied faster than they oan be used, be¬
cause every property-owner is given a
hearty interest in converting the latent
value of his properly into actual earning
po.wer.





The Week in Real Estate.

For some weeks past the Manhattan
real estale markel has appeared to be in
a convalescent slate, with prospects for an
entire recovery in sight. This week it
suffered somewhat of a relapse and fell
back to a condition similar to the one it
was in at the opening of the year. A con¬
siderably small number of sales was re¬
ported and the ciuality of business closed
did not measure up to recent standards,

Laek of confidence rather than a short¬
age of money is apparently the main difR-
oulty, and this trouble is likely lo be ac¬
centuated rather than relieved by the un¬
settled political outlook and the world¬
wide industrial uni-est manifested by ex¬
isting and prospective strikes in this and
other countries. Another leature whieh
prevents any great volume of selling, es¬
pecially in the midtown section, is the dis¬
inclination of owners to reduce their ask¬
ing prices to any material extent. Most
of them seem .to feel that they will eventu¬
ally obtain the figures placed on their
holdings and are willing to wait for a
more active season. The subway pi-ob-
lem seems nearer a satisfactory conclusion
than ever before, but there is still much
to be done, and il will probably be several
months before any plans are definitely
settled upon. Not till this occurs will any
real activity develop along the proposed
routes, as operators and investors are not
disposed to lake things on trust any long¬
er and the business man is even more
wary. Altogether, the prospects for an
active spring are not as 'bright as they
were some weeks ago, but it does seem
probable that several important questions
will be settled in the next few months and
that the coming fall will see the start of
a more active real estale market than we
have had  in  several years.

Spectacular deals were not much in evi¬
dence this week. Only one or two trans¬
actions reached the $1,000,000 mark, and
these were exchanges of equities that had
no particular bearing on the market.
South ot 14th street there were very few^
sales, and these were commonplace in
character. The midtown section was not
as active as usual, but succeeding in pro¬
ducing a few transactions of fair propor¬
tion. The Sage Foundation completed ne¬
gotiations for acquiring a new home on
Lexington avenue, just north of Gramercy
Park, the northwest corner of Fourth ave¬
nue and 29th slreel was purchased by an
operator and a speculative lease was made
for a long term of years on the new mer¬
cantile building and 39 and 41 West 32d
street. Another interesting lease was that
of 520 Fifth avenue, taken by A. G. Spald¬
ing & Bros., who recently sold their lease
on 29 to 3;'. Wesl 42d slreet, so that the
property could be used as a part of the
site for Stern Eros, new store. At present
Fifth avenue boasts of only one other
sporting goods store on its entire length.
The preseni lessee of No. 520, has taken a
lease of 10 and 12 West o7th street, and
a new building will be erected tiiere for
his accommodation. No transactions of
any size were closed on the East Side
above 59th street, and there was no ap¬
parent demand for private houses any¬
where.

A few apartment house exchangas were
made on the West Side and a plot on 72d
street, between Broadway and Riverside
Drive, was taken by a building company
as the site for an a.partment house. The
largest deal in this part of the cily was
the one by whieh the Norwood Park Co.





acquired the Glen Cairn apartment house
at Riverside Drive and OOth slreet, in ex-
ehango for its holdings in the West End
section o^f Long Branch, N. J.

Money for mortgage purposes is still
plentiful at 4^,^ and 5 per cent, and the in¬
surance companies are making quite a
number of permanent and building loans
at 5 and 6 per eent, A loan of $2,000,000
was obtained this weelv by the Montana
Consti'Lietion Co. for a new twelve story
apartment on the old Steinway Piano fac¬
tory _site on Park avenue, between 52d
and ■j3d streets. This will be the flrst
apartment house on Park avenue north
of the Grand Central station, and is to 'be
one of the largest buildings anywhere on
the avenue. Plans are being prepared for
a tall structure for the site of Mendelssohn
Hall at 113 lo 119 West 40th street, and
work will probably be starte^d next month.
Plans were also flled for a twenly-flve
.=!tory loft building at 110 and J12 West
40lh street.

A .few vacant plots in the Bronx were
sold to builders, but miscellaneous selling
in that borough continues only in small
volume. It is expected that considerable
building work will be started in the next
few weeks, and several large tracts held
by development companies -will be opened
in the near future. The bill providing for
the creation of a new county out of tbe
borough was advanced somewhat this
week, and it seems likely that it will pass
with a referendum provision.

In Brooklyn conditions fail to show very
much improvement. The district around
the Atlantie avenue subway station is the
only one to display any apparent life, and
bi'okers in all parts are complaining of
the laek of inquiries. Renting conditions
are not good, and this, of course, accounts
in large measure for.the poor selling mai--
ket. Continued cold weather has had a
bad effect on the suburban sections, and
has to a certain extent killed the prospects
for an active spring.

Queens is showing a steady gain in lot
selling and building operations, and all
indications now point to an aetive season.
Building operations .for the past two
weeks have totaled about ■$1,250,000 in
estimated value. The Woodhaven district
seems to be more active than any other,
and the Corona section is also looking up.
Property in and around Jamaica is in good
demand, and the Rockaways are begin¬
ning to show signs of life. Another large
faclory building is planned for Long Isl¬
and Cily, and a block of dwellings is pro¬
jected   for  Douglas   Manor.

The flrst sign of the expected stiffening
in 'building material prices came this week
when with sales of more than 175,000 tons
of Bessemer and basic pig iron the price
of the latter began lo advance. Heavy
melting steel scrap advanced fifty cents to
seventy-five cents a ton and Connellsville
coke for furnace use was bought freely,
even at $2.10, an advance of twenty-five
cents in a little more than a week.

Inasmuch as basic iron is used for steel
making, the significance of this advance is
appjfrent to ultimate consumers of finished
sleel products. That the strengthening is
not confined to one department only, is
shown in the fact that all raw materials
used in building metals are also stiffening.

Another significant faet is that appar¬
ently very few buyers are making eon-
tracts for second quarter delivery in bars,
plates, shapes, etc., in any part of the
country except in the Metropolitan dis¬
trict. 11 shows that equipi-nent companies
are making their supplies go as far as pos¬
sible to prevent undue alarm spreading to
prospective builders.

The State Department of Publio Works
succeeded in breaking through the ice as
far as Newburgh this week, which relieves
the tension in the common brick market.
No report of an advance in Portland ce¬
ment was made, although it was generally
expected yesterday. Most of the mills
now have only two months' supply of coal
and. in the event of a strike at the mines,
it may mean a curtailment of manufac¬
ture.

Spring prices have not been announced
yet in any building materials, as the de¬
mand has not been sufficient to permit an
estimate of probable spring requii'ements.
Wholesalers, however, declare that they
are not as worried over the volume of
business as over their ability to supply
demands, and they are awaiting further
mill advices as to stocks on hand and the
outlook in the event of a general shortage
of fuel, before they announce their lists to
customers. Consumers may take it that
prices will not be free from fluctuations
belween now and the middle of August
and. if anything, the movement probably
will be almost continuously upward.

Despite this probability, dealers are still
continuing the hand-to-mouth policy of
buying, although Dodge Reports show a.
greater volume of prospective building
operations this year than last, and the plan
fllings in the various building departments
are equal, if not in excess, of those of the
same period last year.





Effects of Over   Taxation.
iL'ililor of the Record and Guide:

Here is a short memorandum on the
effects of over-taxation illustrating the
points brought out in your leader entitled
"A Metropolitan Tax" in your issue of
March 0.

The effects of heavy taxation in the
reduction of actual values are not al¬
ways clearly discernible, but the fact is
well known that undue 'assessed valua¬
tions do operate to destroy the value they
apparently indicajte.

An illustration is afforded by an
analysis of the figures of a "loft" build¬
ing recently constructed, one of t'he now
numerous class of mercantile buildings
whieh has been largely developed through
the lower portion of the Fifth avenue
section of Manhattan, and which appear
to appeal to some classes of tenants and
investors.

A 12-story mercantile building on a
plot 02 feet by 100 feet deep is leased for
a long period at a rental of $22,000 per
annum. Tho price is $3oO,000, of which
$2liO,0OO is placed on mortgage at -the rate
of interest of 5 per cent, per annum. This
rental does not include taxes and insur¬
ance.
Taxation   on   the    basis  of  70    per

cent, assessed valuation would be

at rate in 1911...................$4,440

Insurance   ........................      629

Total   ..........................$5,009

This leaves out of total rental___$16,931

Interest   on   mortgage............  13,000

Net  revenue  to investor........$ 3,931

Being a return on the equity of $90,000
of 4,37 per cent.

As such an equity should produce at
least 5 per cent, the real value of the
property on this basis, is less than
$90,000, or $7S,000,

If the assessed value be moved up 10
per cent, the net return would be reduced
to .^3,531, which capitalized at 5 per
cent, results in a reduction of the equity
to $7O,GO0.

So that for each 10 per cent, addition
'to the assessed valuation, this property
would decline $S,O0O.

A similar decrease of capitalized value
Would result frO'm an equal increase of
the tax rate without change in the as¬
sessed valuation. IC the principle of as¬
sessment to full value be applied to such
conditions, the result w-ould be a reduc¬
tion of the equity, by more than 50 per
cent,   to $42,000.

So that an increase in annual taxation
of $1,S30 would decrease t'he actual in-
veslment by no less than $30,000 a.nd
would reduce the entire value of the
property more than 10 per cent.

REGINALD PELHAM BOLTON.
New York,  March 11.

———.----^----.-------.     ^

Legislative Notes.

The Assembly passed the bill of Assem¬
blyman Caughlan, giving the New York
Board of Estimate and Apportionment the
right to permit the extension of a surface
railway line across Pelham Eay Park, in
The Bronx.

By a vote of 29 'to 0, the Senate passed
the bill of Senator Black providing for
the appointment in the First and Second
Judicial departments of official referees,
who should be Supreme Court justices
who had served a full term of fourteen
years.

A committee representing the Under¬
writers' Association of Brooklyn and the
Brooklyn Brokers Association attended a
hearing on Tuesday before the Senate In¬
surance Committee on a number of bills
affecting insurance brokers and under¬
writers. One of the bills provides that
the Superintendent of Insurance may re¬
voke a broker's license for incompetency.
The brokers favor this bill, in part, but
they do not wish to give the Superinten¬
dent too  much arbitrary power.

John W. Paris, the Long Island real
estate developer, has come out strongly
in favor of the Griffin bills to put the
business of selling real estate bonds un¬
der the supervision of the State Banking
Department. Mr. Paris is president of
the Long Island Real Estate Exchange.
He told a committee of the Legislature
at Albany that the only objection he had
to the bills was that they did not go .far
enough: '"We wouid like the measures to
include companies that offer mining
stocks and bonds, oil stocks arid bonds
and other securities that are sold in
great numbers and whieh 'have no sub¬
stantial value."

The Stilwell bill creating the Coun^ty
of The Bronx was passed in the Senate
to-day. The vote was .34 to 0. The meas¬
ure now goes to the lower bouse. The
bill is not to take effect until approved
at a referendum of the citizens of the
proposed   Bronx  County.     Senator  New-