Au,E^tist 7, 1909





RECORD  AND   GUIDE





253







to&IEB TO RB^LESTArE.BuiLDIllG AFSP^ITEeTURE.KoUSEHOlDDEQfBlJTMlt

Bi/siifcss Ali) Themes OF GEfJERsl iKnfifST^

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C. W. SWEET

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By THE RECORD AND GUIDE  CO.

President,   CLINTON  W.   SWEET                      Treasurer,  F.  W.  DODGE

Vice-Prea,  Sc Genl,  Mgr,, H.  W.  DESMOND        Secretary. F. T. MILLER

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Copyrighted.   1000.   by   The   Record   Sc   Guide   Co.





Vol LXXXIV.





AUGUST 7, 1909.





No,  21G0





WITH the excep.tioii of brick the majority of the mate¬
rials entering into the construction ot" urban build¬
ings liave been steadily increasing in price this spring and
Slimmer; and if these materials are pushed much farther
the cost of building will be returned to somewhere near
the level of 1907. It is very mucli to be hoped that such
will not be the case. When building becomes very expen¬
sive it ceases to be profitable to anybody but the mechanic,
and he usually takes his profit in the form of a license to
diminish with impunity the efficiency of his work. It fre¬
quently happens in New'York and the other large American
cities that high prices do not have their natural effect of
cutting down construction, because under certain abnormal
but frequently recurring conditions, builders can see a profit
even in erecting excessively costly buildings, but whenever
this occurs it means that conditions have become unwhole¬
some and that the excess of one year will be followed in
another by a very lean season. The recent increases in
materials are not exorbitant; and they mean merely that the
producers are becoming able to assert their right to fair
profits; but if they go much farther they shouJd be followed
by a decrease of demand that would check any additional
increase. Such years as 1906 always bring such years as
1907 and 190S. It wil] be far better to have a succession of
years like 1909, In which activity did not mean infiation, and
in which economy of production was not sacrificed to tem¬
porary and partly fictitious profits. As a matter of fact, it
is probable that in 1910, while real estate may be more
active than in 1909, building will be less so. The large
amount of construction planned during the current year has
consisted mostly of loft buildings, flats and apartment
houses. The work of providing accommodations for the
wholesale trade north of Twenty-third street will be con¬
tinued in 1910, but it can hardly maintain the pace whicii
has recently prevailed. Elevator apartment houses also
cannot continue to be erected in the same numbers, wbils
the improved means of transit under the Hudson and East
rivers will diminish the demand for flats. Thus, while the
impending changes in business population will justify a
large amount of real estate speculation, there is bound to be
a certain diminution in building, at least in Manhattan, This
diminution, whatever its .ill-effects, should at least have the
desirable result of preventing a runaway market in building
materials.





THE explanation given in the last issue of the Record and
Guide by well-known authorities for the activity
in building on Twenty-sixth and Twenty-seventh streets dur¬
ing the present year, is extremely interesting. Assuming in
the first place that the time had come for the construction
of loft buildings west of Broadway, between Twenty-third
and Thirty-fourth streets, the question was where should a
beginning be made? The streets in the vicinity of th.e Penn¬
sylvania station were ruled out because property is being
held on these streets at too high a price for the wholesale
trade, and Twenty-eighth and Twenty-ninth streets were
not available because the horse car lines on those streets
interfered with the loading and unloading of trucks. Twen¬
ty-seventh street, consequently, was the nearest street to
Thirty-fourth street well adapted to immediate improvement
with loft buildings, and seven structures of this kind are
being erected in that street. The movement has also spread
to Twenty-sixth street,  in which a  number of buildings are





also, being erected; and it is confidently predicted that with¬
in the next few years Twenty-fifth and Twenty-fourth streets
will be similarly transformed. The interesting aspect of
this account of the causes of the activity on Twenty-seventh
street is the reason given for the discrimination against
Twenty-eighth and Twenty-ninth streets, A surface rail¬
road even when horses are used as a motive power is usually
supposed to beneflt a street through which it passes; but
in this case it has been a disadvantage to the owners of
property in Twenty-eighth and Twenty-ninth streets, and
the disadvantage would not be removed in case trolley cars
were substituted for the absurd old horse cars. Trolley
cars run more frequently at higher speed would, of course,
interfere even more with the trucks than do the horse cars.
The fact is, of course, that a surface railroad, while it is
beneflcial to a street, which is lined with shops is merely a
nuisance to a street improved with loft buildings, and a
similar rule applies to avenues. Sixth avenue, for instance,
which is narrow and which has both an elevated and a sur¬
face railroad ou it is wjiolly unsuitable to loft buildings,
and must remain a shopping thoroughfare. On the other
hand, Seventh avenue, even though it has a surface rail¬
road, is so wide that it affords trucks plenty of room, and
it is. consequently, more likely to be improved with loft
buildings. Of course, it is possible that even on Seventh
avenue retail trade will predominate, but as a rule the broad
thoroughfare is better adapted to wholesale business and the
narrow, easily-crossed thoroughfare is better adapted to re¬
tail business.





THE subway has now been in operation about five
years—that is for one-flfteenth of the term included
in the lease. During the year ending June SOth last it
earned nine per cent, on the original $35,000,000 capital
stock of the Interborough Company, and something over
three per cent, on the ?50,000,000 preferred stock of the
Interborough-Metropolitan Company. A small part of this
proflt was derived from the earnings of the elevated roads
over and above the rental; but these earnings do not affect
materially the total result. What the figures really mean is
this: At the end of four and one-half years the subway
is earning enough money almost to double the value of its
original capital stock, while at the same time to leave an
additional profit of about $25,000,000. The Interborough-
Metropolitan preferred is now selling at about 50; and the
value it represents would be worth a still higher price were
it not for the unnecessary responsibilities assumed by the
Interborough Company in connection with the Metropolitan
merger. Moreover, the subway still has a considerable mar¬
gin for an increase in earnings. On Washington Heights
its tracks run through a district which is only partly settled,
and which is rapidly increasing in population. In the Dyck¬
man track and in the Bronx it is now carrying only a very
small part of the traffic which will eventually be developed.
Finally, the business development of Fourth avenue and its
neighborhood will largely increase its more profitable local
traffic. The cars required for the accomhiodation of these
increased passengers wil! be obtained by the improvements
now being made at Ninety-sixth street, by the introduction
of side doors on the expresses and by the lengthening of the
trains. There can be little doubt that in another five years
the original $35,000,000 of Interborough stock will have
become equivalent to somewhere near $100,000,000, and at
the end of another five years $25,000,000 may have been
added to the original value. Thereafter the possible increase
in profit will be small, because the system will have reached
the limit of its carrying capacity, and because it will have
to face competition along its whole route; but there can be
little doubt that in the end the net profit of the Interborough
Company on the original lease will be almost, if not quite,
$100,000,000,





THE INTEREST of these calculations consists partly in
the fact that hereafter the companies operating sub¬
ways will have to share these profits with the city. Take
for instance the case of the Broadway-Lexington avenue
tunnel. That subway will cost more per mile to construct
than did the one leased to the Interborough Company. The
initial charges set aside to cover this interest and sinking
fund requirements may well be fifty per cent, more per
mile than they are in the case of the existing subway. On
the other hand, the Broadway-Lexington avenue tunnel will
probably develop a denser traffic than any other single route
in Manhattan, The east side lines of the elevated roads
carry a good many more passengers per mile than the west