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August 28, 1909
RECORD AND GUIDE
381
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Published Every Saturday
By THE KECOrtD AND GTJIDE CO.
President. CLINTON W, SWEET " Treasurer, F, W, DODGE
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Copyrighted, 1909. by The Record & Guide Co,
Vol. LXXXIV.
AUGUST 28, 1909.
No. 2163
IN considering the prospects of the real estate and building
market for the coming year, it looks probable that an
increasing activitj' in real estate would be accompanied by a
lessening activity in huilding; and the reasons on which this
prediction are based are both obvious and convincing. The
year which is now drawing to its close has witnessed a re¬
markable and in its amount a wholly unexpected revival in
building. The plans filed for new consti'uction to be erected
in Manhattan and the Bronx call for an expenditure of over
$125,000,000, against a projected expenditure of only $63,-
000,000 during the corresponding period last year. The
Brooklyn flgures for the same period are about $38,000,000
for 1909, against $19,000,000 for 1908. Thus, in the three
largest boroughs, twice as much money is being invested in
bnilding as there was a year ago. Still more remarkable is
the fact that the figures named above are larger than those
for the corresponding period of 1906, and are about equal
to those of 1905, which was the biggest year in the history
of the city. On the other hand, real estate has shown no
corresponding increase in activity. The number of convey¬
ances of Manhattan and Bronx real estate recorded up to
date show an augmentation of only about seven per cent, over
the flgures for the corresponding period in 190 8. and in
Brooklyn the proportion of increase is still smaller. The
totals, instead of being about equal to those of the record
year of 1905, are only about half what they have already
been. Hence, it wili be seen chat the revival of activity has
taken place rather in building than in real estate, and there
are good reasons for believing that conditions during the
coming year will tend both to a large speculative and invest¬
ment business in real estate and a somewhat smaller volume
of new construction.
THE reasons which lead one to expect a diminishing vol¬
ume of building lie upon the surface. The huge
amount of new construction undertaken during the current
year was due to a combination of favorable general and local
conditions. Money was plentiful, after a prolonged period
of stringency. Building materials were cheap. Contractors
early in the year had comparatively little to do, and were
willing to make low bids merely for the purpose of keeping
their business alive. Then there had been a couple of year^
of comparatively moderate building. There was room on
Washington Heights for a large number of new flats; and
there was a demand in the new wholesale district for a large
numher of new loft buildings. The more expensive grade
of apartment houses were also renting well and could be
erected in considerable numbers. During the coming year
many of these favorable conditions will be modified. In all
probability money will still be abundant, but it may not be
quite so abundant as it has been recently. Building materials
are increasing in price, and as a consequence of the general
constructional activity may well go higher. Contractors have
plenty of work, and will no longer underbid, in order to get
a prospective job. The cost of building, consequently, will
probably be some ten or flfteen per cent, higher, while at
the same time the local opportunities for profitable specula¬
tive enterprises are likely to be smaller. A very large pro¬
portion of the new construction now ynder way is going up
between Twenty-third and Forty-second streets. During the
coming year there will be a diminotion of building in this
section. The movement will not, of course, entirely cease;
iDut the enormous coming increase' In rentable 'space will
have to be partially occupied and digested by business before
builders will feel justified in proceeding as rapidly as they
have done in the past. A somewhat similar condition will
determine the amount of new construction undertaken on
Washington Heights. That section will have to submit to the
increasingly severe competition of New Jersey and Long
Island- This competition will not be sufficient to put a stop
to new building on the Heights, because there is no other
district in Manhattan in which any room exists for improve¬
ment with med ium-priced flats; and the Heights, conse¬
quently, gets the beneflt, not only of whatever increase in
population iManhattan is retaining, but also of the process
whicii is taking place in certain parts of Harlem of crowding
out higher-priced tenants by an inferior class of settlers.
Hence, there will undoubtedly be leeway for a good deal of
new building on the Heights and at Inwood; but not for as
much as has been projected in 1909. Altogether it is prob¬
able that the amount invested in new building projects may
well be smaller by a quarter or a third than the sum now
being spent on new construction.
THE reasons which make an increase in real estate activ¬
ity very probable are equally obvious. As we have
already seen, the current year has been a comparatively dull
one in real estate. The buying which has been undertaken
for building purposes on Washington Heights and in the
new wholesale district has not been accompanied by any con¬
siderable revival of speculation. On the contrary, purely
speculative purchases of real estate have uot been very numer¬
ous, and speculative advances in price either widespread or
considerable. The professional operations have'been content
to sit tight and to hold ou as best they could. But during
the coming year many of them will be supplied with funds
by their ability to refund their mortgages on better terms;
and the general atmosphere of prosperity will tempt them to
look around more sharply for real estate that has some
chance of increasing in value- Moreover, we believe that
.they will be encouraged to do so by an increasing investment
demand for improved properties. The Record and Guide
pointed out last week some of the reasons which made such
an increasing investment demand very probable. Well im¬
proved real estate looks like a better income-producing form
of property than good stocks and bonds. This present
week the papers report that business men have been selling
stocks purchased at lower prices, because they needed the
money to meet the demands of an increasing business. If
any further rise of prices takes place in the fall, as may w-ell
be the case, many investors will adopt a similar course; and
real estate is bound to get the beneflt of the release of this
capital. Of course, nothing of the kind is to be expected in
case there is a break in the price of good securities, or in
case the rates for money go up. In the former event the
shrewd investor will wait for the better price, which he is
pretty sure to get, and in the latter case, he will probably
expect that cash may be more valuable than either stocks or
real estate- But assuming a moderate advance in the price
of securities next Fall and continued ease of money, a very
considerable investment deiuand for real estate is most prob¬
able. It is a curious fact but true that at no single moment
since the business revival of 1901 have the conditions been
favorable for the widespread purchase of real estate merely
as an investment. As soon as prosperity came in 1901 and in
1905 the capital of the country was immediately required to
finance its business expansion. Real estate was purchased
largely for use, and great increases in prices have taken
place for that reason; but conditions have never been favor¬
able for a large investment demand. It is at least possible
that they will be more favorable than for many years during
1910, and iu any event there is sure to be a considerable
expansion of purely speculative activity.
TN a current magazine article Controller Metz predicts that
A New York will have a population of 4,700.000 in 1910
and of over 6,000,000 in 1920. It seems to the Record and
Guide that these flgures are rather an underestimate than
an overestimate- They are based on the percentage of in¬
crease in population which New York attained during the
decade between 1890 and 1900; but the ten years between
1900 and 1910 will be years of greater industrial activity
aud urban growth than the ten preceding years. Assuming
that the population of the whole country will augment at
about the same ratio as it did during the preceding decade.