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Vol. LXXXVIII





JULY 29, 1911





No. 2263





RENTS   IN   DOWNTOWN   OFFICE   BUILDINGS.

Space   Above   the   Ground   Floor   Brings   from   $1   to   $5   a Square
Foot   a   Year^Keen   Competition for Tenants and Small Net Profits.





THE modern offlce building is a purely
A_merican type. It is not so much
the development ot an architectural
style as it is an engineering accom¬
plishment, and owes its existence, .pri¬
marily, to engineering indentions. It is
the product of many brains, and the
architects' contribution has heen m^ainly
in   connection   with   the  exterior  design.

The offlce building of forty years ago
was generally five stories high, and only
four floors had any commercial value, th-
fllth being used for janitors' quarters or
for s tor a-e The invention of passenger
SevaSr^ralsed the practical height of
buildings under the masonry form of con¬
struction to about ten stories. Economic
.considerations .prevented a &«-ater n_
■crease in heisht. For each story added
under the old building methods a S'-eatei
thickness of walls vvas required, and the
sSce  obtained   in   the   upper   stories   was

Offset   by   the   loss   of  &^-<'""^l-«r',.f/Tn
which   was 'by   far   the   most   valuable   in

the building.                                 ^     ,  ^i   ;„

The introduction of iron and steel n
the construction of buildings entire y
changed these conditions and practical^
removed height limitations. The flrsc
building Of this type was construe ted of
cas,t iron, in 1SS9, at 50 Broadway. Most
of the subsequent huildings were of steel.
The latter material is much more suit¬
able, and is now exclusively used.

The greater part of the early tall office
buildings were constructed by 'arge coi-
porations. The possession of a tall huiia
ing which would be more or less of a
landmark was considered good advertis¬
ing and the income derived from the
renting of the extra space not occupied
by the corporate owner produced, as a
rule, a fair return on the cost of the
structure. In the case of national hanks
and fire-insurance companies, the con¬
struction of tall office buikhngs afforded
the only means permitted hy law of in¬
vesting a large amount of their capital
or surplus in the ownership of real estate.
With the great increase in population
and the consequent expansion of busi¬
ness, the demand for good offlce space in¬
creased to such an extent tha-t operators
and investors were drawn into the held.
Companies were formed, with expert op¬
erators at the head, and buildings rang¬
ing from twenty to forty stories in height
were constructed on a purely commercial
or investment hasis. In the case ot
buildings erected by financial institutions,
including insurance companies, the most
valuable space was occupied by the owner,
■(\-hile in buildings erected by operators
and investors, the space is nearly all
rented, the owner retaining only such
oiBce space as is necessary for the proper
management of the building. This latter
class of office buildings has for the most
part been the better producer of net
revenue on the capital invested.

The main office touilding section at pres¬
ent includes nearly all of the lower part
of Manhattan, south of Chambers street,
tout is roughly divided into three dis¬
tricts. The financial district centers at
Wall and Broad streets. Here are largely
housed the interests connected with the
stock exchanges and other large financial
concerns. The fire-insurance interests
have largely located on Nassau 'and Wil¬
liam streets, and the hlocks 'between,
from Wall to Fulton. This distiict is
comparatively new, the tendency of the
insurance interests to concentrate in
office buildings within a small area hav¬
ing developed in recent years The third
and most notable district is on Broadway,
from Duane street to Bowling Green. This
section caters to no particular class, but
recruits its tenants from all lines of busi¬
ness.

The rents in the various structures
vary according to the construction of the
'building, the efficiency of management
and the class of occupants. Light and air
have come to be the main determining
factors in fixing rents, hut in many build¬





ings the presence of som« particularly
strong financial or other institution is
sufficient to attract tenants whose interests
lie along similar lines at rentals greater
than they would be obliged to pay else¬
where. In the Wall street distri-ct offlce
rents average from ^2 tO' $2.2o a square
foot, but vary somewhat from year to
year. When Wall street is particularly
prosperous, rents are apt to rise. In
periods   of   depression   there  is   a   curtaii-







(Copyright by F. W. WoohvortU.)

Cass Gilbert, Architect.

THE  WOOLWORTH  BUILDING.





ment of expenses, and owners frequently
take less rent rather than lose tenants.
In the insurance center, the 'better build-
'ings bring an average of $1.T0 to $1.75
a square foot, and the rents are not so
liable to fluctu^ate.

On Broadway, it is more difficult to
strike an average. Rentals here run as
high as .1;4.00 a foot and as low as ff-1.
Plenty of good space" is available on
Broadway to-day at $2 a foot, hut s'ome
of the best buildings bring an average oC
Sf2.ii0 for all space above the ground
floor. At the corner of Wall street and
Broadway a few offices are said to rent
for ^5  a  sciuare  foot.

The net return upon the investment in
the different structures varies with the
rent and the demand for space. Many
skyscrapers are not producing over 2^A
to .S per cent.; others show a return of
G per cent, A fair average would prob¬
ably be 4 per cent. In the case of some,
such as the Singer Building, it is extreme¬
ly difficult lo arrive at any just estimate
of the producing power of the building,
as much of its worth is charged to the'
intangi'ble account of advertising. Others,
owned by stocii-sell ing corporations, are
con.'sidered as being strong assets, irre¬
spective  of  their productive power.

So much  of  the  earning  capacity of a
skyscraper   depends   on   the   management
that to-day ithe handling of one has be¬
come  a specialized  branch   of  real   estate
work.       The    'buildings    are     usually     in
charge  of  some  man   who  has  had  long
experience   in   this   field,   and   under   him
is a corps of trained assistants.    In these
days   of   fierce   competition,   every   detail
must   be   carefully   watched.     Inattention
on  the part of an employee or the care¬
less running of an elevator is often suffi¬
cient to drive away a prospective tenant.
Almost    every    luxury    that    the    modern
hotel   provides is  furnished .by  the  office
building   landlord.     Indeed,   so   similar   is
construction    of    the    office    building
and  the  hotel  that  the  addition  of
bathrooms   and   a   little   rearrange¬
ment of partitions would transform
a skyscraper into a first-class  hos¬
telry.

Until recently the most noted of
the downtown buildings have been
constructed on Broadway, but as
the most attractive sites there have
been already improved, and as land
on Broadway has increased so enor¬
mously in value, this thoroughfare
is not looked upon to-day as a prof¬
itable location for new projects of
this nature. According to expert
opinion, an office which is to pay
better than it per cent, must be
built on cheaper land than can be
obtained on Broadway, and must
enjoy such natural advantages as
will make it more than ordinarily
attractive.

An example of this is furnished
by the Whitehall Building, on Bat¬
tery place. The original building
was so successful that a large an¬
nex was recently added, making
the Whitehall Building one of the
largest commei-cial structures in the
world. The site olfers exceptional
features in that it has light on four
sides and commands a magnificent
view of the river and bay. Rents
ai'e not so high here as on Broad¬
way, averaging only about .'?1.70 a
square foot, and yet the building is
proving to be one of the best in¬
vestments of its kind in the city.

The operating expenses of the
skyscraper vary from 35 to -5.'j per
cent, of tile gross income, but a
fair average would be 40 per cent.,
and a building that is producing
from Is to SO per cent, of its
possible earning capacity is con¬
sidered to be in a satisfactory
condition. Considering the many
conveniences which are afforded
the tenants, and the time saved
in    the    transactions    of    business,