1330





RECORD   AND   Gl IDE





June 28, 1913





BUILDING  MANAGEMENT

Conducted   by   Raymond   P.  Roberts,   Building
Manager for the American Real Estate Company.





ECONOMIC BUILDING HEIGHT.

A  Method  Checking  or  Determining  It
In the  Case of Skyscraper Office

Buildings.-
By C. T. COLEY, M. E., 11 AN'all Street.
•ySTi HEN our Secretary, Mr, Patterson,
y^ asked me to come to Cincinnati
and lead in the discussion on some sub¬
ject, I at once thought of the many
friends that I have made among you,
and realized that Ave were all handling
hard problems, and that should I show
you how I have solved one or two of
mine, the work for you would be easy,
when you are called upon to solve a
similar problem.

I chose the subject, "The Method of
Checking the Economic Height of an
(Jffice Building," both because it is a
problem that is encountered almost
daily, and also because it is one for
which I have not seen a satisfactory so¬
lution, and consequently the develop¬
ment of a solution Avould be a little new
and interesting to you.

First, the  Land Value,

We will consider the erection of one
of the most modern and expensive office
building skyscrapers, the construction
of which must be of the very highest
grade. The plot of ground should be
in the very best location for a building
of this kind. Let us assume a land
value of $300 per square foot of lot area.
The value of a plot of ground is de¬
termined by the best possible use to
which it can be put, or the best im¬
provement that can be made thereon, to
bring in the largest net financial return
per annum, upon the money invested in
the lot.

The value of a plot of ground is there¬
fore dependent upon its net annual earn¬
ing capacity, which earnings are
usually funded at 5 per cent., making the
value of the land about twenty times
the net return per annum earned by the
land.

The annual interest charged on $300
valuation per square foot Avould be $15
with money worth 5 per cent. The New
York City taxes are about $1.83 per
$100 valuation, Avhich on each square
foot of land under consideration AA'Ould
be about $5.50 per year. This added to
the interest cost of $15 makes a total
cost of $20.50 per year for owning one
square foot of land in the best financial
business district on Avhich to stand a
building.

Only 65 Per Cent, of Rentable Area.

If the entire area is not covered by
the building, but say only 95 per cent, of
the total, the balance being used for
li.ght courts, Ave must divide the total
cost per square foot per annum ($20.50)
by 95c.. giving $21.58 the amount that
must be earned per annum on each
square foot of land on which the build¬
ing actually stands. Since only 65 per
cent, of the area is rentable area, to
produce one square foot of rentable
area, we will require one divided by .65,
or 1.54 square feet of floor area, and
consequently the land carrying charge
Avould be increased from $21.58 to $33.23
per  square  foot  of  land  over  Avhich  to

•-A paper read before the National Con¬
vention of Building Owners and Managers,
Cincinnati.





--..u;"i   iiiu-  si|uarc   i-i-'t  'if rentable  floor
area per floor.

The question arises at once, what can
be done to meet this great expense?
One answer is, after looking around to
see that it is suitable for the neighbor¬
hood—build a skyscraper office building.
What will one cost? How high Avill it
have to be, so that the net profit on the
building, Avill equal the expense on the
land? What will the operating and
other expenses be per annum? We will
look  into  the  problem.

An   Office   Building   the   Solution.
Experience shows that office buildings
of the very best type of granite, marble,
bronze and steel construction cost from







C.    T.     COLEY.
AA'ill be the Operating Manager of  the Xew
Equitable   Building.

80c. to $1.00 per cubic foot of building
volume to build. \\"hen the average dis¬
tance between finished floors is 12 feet,
it requires 12 cubic feet of building
volume to produce one square foot of
floor surface, of which past experience
shows that in a well designed building,
about 65 per cent, of the total floor area
is rentable area. Therefore, to obtain
one square foot of rentable area of floor
under consideration, it will be neces¬
sary to build 12 divided by .65, or about
ISyi  cubic  feet  of building volume.

Let us assume that we are to erect a
building about twenty-five stories high
of the tA'pe costing 80c. per cubic foot.
It Avould therefore be necessary to make
an expenditure of 80c. multiplied bv
18^, or $14.80 for 18j^ cubic feet of
building volume, in order to secure one
square foot of rentable area.
Cost of Maintenance,

The cost of maintaining one square
foot of rentable area per annum in a
high class building of this kind is shown
in  the  accompanying table.

-Assume an allowance of 10 per cent,
of gross rents for vacancies and loss of
rent on an average rent rate of $3.50
per   square   foot—3Sc.    This   makes   the





I't-r .sq. ft.
rentable
area.
Engine room lalior,  supplies and

repairs ■.......................18

Coal   and   ash   removal..........  .15

Elevator  labor,   supplies  and  re¬
pairs........................09

Janitor's   labor   and   supplies.....15

Electrician's  labor  and  supplies.  .02

Supervision   and   collections......09

Building   repairs.................15

Insurance    .......................01-1

Water    ..........................02-1

Sundries    ........................01

Sub  Total....................88

Taxes   on   structure   alone........27

Total    ........................1.15





total $1.50. Interest on 5 per cent, on
an investment of $14.80 necessarj' to
produce the required building volume to
secure one square foot of rentable area,
74c. -Allow for depreciation and amorti¬
zation in 50 years about 30c. (Mcmey
worth 4 per cent, compounded semi-an¬
nually.) Total cost per annum, $2.54 per
square  foot  of rentable  area.

Subtracting this cost of $2.54 from the
gross rent rate of $3.50 per square foot
of rentable area leaves a net profit per
square foot of rentable area of 96c. per
floor.

The   Final   Calculation.

In order to equalize or Avipe out the
annual expense of $33.23 for the lot area
on which to build one square foot of
rentable area, we would need to get the
profit of 96c. per square foot rentable
area per floor by repeating the opera¬
tion or building floors upon floors as
many times as 96c. is contained into
$33.23, or 34.6 times, making the build¬
ing 35  stories high.

Hence it will be seen that properly to
develop or improve a plot of land Avith'
the value assumed Avhich Avill pay 5 per
cent, on the investment in the land and
building, and at the same time set aside
a proper fund for depreciation and
amortization, a 35-story building will be
necessary. This Avould be the proper
height for the building, provided that
the plot area was sufficient to alloAV for
the proper shafts up through the build¬
ing to contain pipes, smokestack, stairs
and elevator shafts and still give a rent¬
able area of the assumed 65 per cent, of
the gross area.





WIRE   ROPE   SUGGESTIONS,

Many   Elements   Combine   to   Produce
Satisfactory and Economical Service.

\\'ire rope expense can be greatly re¬
duced by the use of a suitable rope for
every Avork and by its correct handling
during installation and proper care dur¬
ing operation. Working conditions also
require careful consideration and often¬
times changes can be made that Avill ef¬
fect a material saving.

The most satisfactory results are al-
Avays obtained Avith large size sheaves
and drums; the greater the diameter of
the sheaves and drums, the longer the
rope will last.

Experience has demonstrated that Avear
increases Avith speed; therefore, true
economy results from increasing the load