January 6, 1906





RECORD   AND    GUIDE





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Vol. LXXVII.





JANUARY e, 100(5-





No. 1973





INDEIX TO DEPARTMENTS.
Advertising Section.

Page,                                                Page.

Cement.....................xxv   Law.......................xi

Clay Products..............xxiv   Machinery....................iv

ConsuUing Engineers..........v   Metal   Work................xxl

Contractors   aud    Builders___viii   Quick  Job   Directory.........xxi.K

Electrical    Interests..........vi   Real   Estate.................xvi

Fireproofing..................ii Roofers and Roofing Materials, .x

Granite....................xxvl   Stone.....................xxvi

Heating....................xxii  Wood Products...........xxviii

Iron   and   Steel..............xx





REAL ESTATE AND BUILDING IN  1905.

1905 As Compared to Other Years.

In order to understand the true significance of the existing
activity in real estate, the transactions of the past year must
be compared not merely with those of the preceding year,
but with the general course of real estate business since 1S97.
The years from 1897 to 1900 were not prosperous years for
real estate broilers, operators and owners. Consolidation had
resulted in large increases of taxes, which for the time being
were paid exclusively by the owners of real estate. The land¬
lords were unable to recover from their tenants this heavy in¬
crease in taxation, because the builders of tenement and apart¬
ment houses were putting an over-supp'y of living accommoda¬
tions on the market. Building was indeed very active on the
lower East Side, on the West Side and in Harlem, but its
activity was not restrained by any careful calculation of tire
current demand for new habitations. The upper part of tlie
city was full of tenements which were only partly filled and
whose owners were offering inducements to tenants to occupy
their buildings, and this description applied to comparatively
expensive as well as to cheap flats. A large number of
seven-story elevator apartment houses were btiilt under the
old law in 189S and 1S99, their builders being encouraged by
their ability to obtain electric power from the street, but they
were hard to rent and harder to sell. The only section of the
city in which real estate was strong and active was on the lower
East Side, which was being filled up by the gathering body
of Jewish immigrants. Throughout the rest of the city values
were practically stationary, and trading was dull—partly be¬
cause the revival of general business had not yet affected real
estate, partly because of the increase in- taxes, and partly be¬
cause the growth of the city was stunted by wholly inadequate
means of transit.

Of course, the most crying and exasperating deficiency of all
was the wretched means of interborough transit, and it was
during these years that preparations began to be made by the
city for new bridges to Brooklyn and a subway from City Hail
to the Bronx. The beginning of better times, however, was
brought about by causes independent of rapid transit, which
would have had their effect, subway or no subway. It wns
almost entirely the result of general business prosperity. This
prosperity, demanding as it did much financial reorganization,
and bestowing as it did an increased importance upon New
York in the financial organization of the country, only affected
those parts of the city, in which large business affairs were
transacted, and in which rich men lived and amused them¬
selves. By stimulating the demands for offices, it encouraged
the erection of "sl^yscrapers" in the financial district, and
caused large increases in real estate prices south of IVIaiden
Lane. By increasing the number of rich men who lived for
greater or shorter periods in New York, it brought about a
lively demand for property adapted to expensive residences and
hotels. Finally it also had the effect of raising values on those
thoroughfares, such as Fifth avenue and middle Broadway,
whose places of business cater to the needs and amusements of
well-to-do  people.     Throughout  1901   and  1902   the   conditions





briefly described above dominated New York real estate and
served to enrich the owners of expensive property in the mid¬
dle districts of IManhattan; but they exerted practically no effect
upon the much larger areas occupied by the residences jf
people who were poor or only moderately well to do.

In the meantime, however, causes were also at worlc which
were destined to have a corresponding effect on low-priced resi¬
dential property, and these causes were such as both to in¬
crease the demand for new residential accommodation and
temporarily to diminish the supply thereof. The demand was
increased, because the general prosperity increased the em¬
ployment of all grades of labor and because the volume of
immigration was reaching unprecedented dimensions. At the
same time the enaction of the new Tenement House Law placed
a temporary check upon, the construction of tenement houses.
The consequence was that soon after the speculation in high-
priced property diminished in 1903, a speculation in low-priced
property began. In the first place, the more stringent provi¬
sions of the new Tenement House Law gave an increased value
to the older types of five-story fiats and encouraged their pur¬
chase by speculators- In the second place, the enormous immi¬
gration, particularly of Polish and Russian Jews, filled the
lower Bast Side to overflowing, and the overfiow gradually
flooded the East Side of Harlem. In this way Harlem itself
soon became overcrowded, particularly as very few new tene¬
ments had been built, and similar causes diminished the va¬
cancies on the West Side. The landlords of tenements and
apartment houses soon found their incomes substantially in¬
creased: and, w:th the improved renting conditions, it was
natural that the construction of new dwelling accommodation
was begun on a large scale. It so happened that just about the
same time the new subway began to have its effect, and opened
up large areas of vacant land in Harlem, on Washington
Pleights and in (he Bronx, which had been inadequately pro¬
vided with means of communication. A violent speculation
on unimproved property was the result, and an enormous in¬
crease in the construction of tenement houses.

The speculation in vacant property had largely spent its
force by the spring of 1905, and the real estate and building
operations of the past year have been devoted largely to a
less precarious kind of transaction. The activity during the
past year has been enormous. It has surpassed that of any
previous year in the history of New York real estate by a
large percentage- But it has at the same time been exceptionally
well distributed and wholesome. There has been no violent
speculation in ai:y part of Manhattan, but there has been a
sustained and her-ltby demand for real estate, both for use and
for investment- Wherever the current condition is tested it
shows similar characteristics. In the financial district there
has been no such increase in values as there was during 1901
and 1902, but buildings have been well rented, and a fair amount
of new construction has been undertaken—more than during
any year since 1302. At the same time there is a sensible
tendency shown to erect new skyscrapers on the cheaper land to
the west of Broadway. In the new wholesale district a very
large amount of rew construction has been undertaken between
Fourteenth and Twenty-third streets; and it has been made
manifest that within a few years the wholesale trade will begin
to occupy the area between Twenty-third and Thirty-fourth
ctrccts. Along Fifth avenue there has been steady progress,
looking chiefly tov/ards the control of Fifth avenue property by
the business men who use it, and towards the occupation of
the adjacent side streets. In the residential districts there
has been a revived demand for high-priced houses, and at the
same time the largest volume of new tenement accommodations
projected that has ever happened in New York. As we shall
see presently, this new construction is well distributed through¬
out the different districts in the northern part of Manhattan.
Real estate is being sold and new houses projected in all parts
of the city, and in response to a substantial business demand.

The net result, consequently, of the real estate history of the
past five years is the complete rehabilitation of real eSlate as
a form of investment. During all these years, while one class
of real property after another has been restored to favor,
there has been no increase of taxes. The landlord has reaped
the fruits of the improved conditions. He is prosperous, as he
has not been for over a decade, and he has no reason to fear
that the bottom of his prosperity will suddenly drop out It is,
after ail, founded on the fact that an enormous increase has
taken place in the demand for land in Manhattan by people who
must use it, and owners can rest assured that this demand will
become even more imperative. The truth is that the improve¬
ment of the past few years, great as it has been, is merely a
suggestion of the vaster improvement which will be brought
about hereafter  by  the   accelerated means  of communication