B U I LD E R S





[)) AND







Vol. CII.





NEW YORK, SEPTEMBER 14, 1918





No. 11





Order to Breweries Will Affect Real Estate





Loss of Revcnue, Computed by
Advance Tax Rate Many Points

THE prol)able efifect on real estate in New York City
of the recent order of the National Fuel Adniinis-
trator prohibiting the manufacture of beer after
December 1 and the sale of that commodity after July
1, has occupied the minds of realty interests this week
probably as much as it has those interested iii the sale
and manufacture of beer, especially as to the efîect it
will have on realty values and rentals and the further
fact that thc closing of saloons and other places where
beer is sold will mean a falHng off in the revenue of the
city.

Just what the sale of beer in the City of New York
means in the way of inconie may be conceived from the
following figures compiled in the office of Comptroller
Craig. In 1915 the city derived from liquor licenses
$5,248,040.94, which represents fifty per cent. of the
total amount received by the state. In 1916 the city's
portion was $5,202,881.38, in 1917, $6,147,870.60, and this,
year under a new provision of the Liquor Tax Law the
city will receive a revenue slightly in excess of fifty
per cent. and to date has received $464,374.29. As liquor
licenses are issued from October 1, the total figures
will not be known until that time.

There are in the City of New York approximately
9,673 saloons, hotels and cafes where beer is sold, and
the opinion prevails that a large majority of these places
will fail to renew their Hcenses on October 1. Colonel
Jacob Ruppert, a member of the board and president of
the New York State Brewers' Association, puts the
number a.s high as fifty per cent. The matter of con-
tinuing in business, however, is up to the brewers, since
the Hcense fees as a rule are advanced by the brewers
and paid by the saloon keepcr in weekly instalments.
Just to what extent the brewers wiU decide to go in
helping the saloon keepers this year is problematical in
view of the order of the Fuel .\dniinistrator, which
practicahy forces the brewers out of business.

The closing of so niany places where beer is sold will
put in the market thousands of stores and apartments
occupied by saloon keepers and their famiHes. It is a
well-known fact that stores used for saloons return
a higher revenue to the owners than do stores used
for other business purposes, so that the argument is
advanced that the vacation of these stores wiU result
in decreased incomes from the properties and inci-
dentally a decreased valuation of the property, since
the income fixes the sehing value of property.

Edward P. Doyle, president of the Society for the
Preventiun of Municipal Waste and the Protection of
Property Rights in New York City, Inc, said yesterday:

"If the saloons close generally on December 1, it wiH
mean between 9,000 and 10,000 vacant stores. These
stores are the most dcsirable, as far as location is con-
cerned, and have earned large rentals. There will prob-
ably be a loss, in rcntals alone, of $9,000,000 yearly. This





Comi)trollcr   at   $6,000,000,   WiU
—Property May Regain Value

capitaHzed at 8 per cent. woukl mean a capital loss of
$112,500,000.

"It will be claimed that many of these stores will be
rented to merchants now occupying interior locations,
but'if so, they wiU be rented at a lower rate and the
interior places left vacant. At present there are more
vacant stores in the greater city than has ever been
known before and the vacancies are increasing. Nine
thousand vacancies will not only mean a loss of rents
for the new vacancies, but by largely increasing the
number of unoccupied stores it wiH mean a lowering of
rents generally through competition.

"In my opinion the closing of saloons on Deccmber 1,
1918 will niean a loss of at least $10,000,000 directly and
indirectly in rentals throughout the city, or a capital
loss of $125,000,000, and an increase of taxes through
loss in assessed valuations of $3,000,000 and a loss in
revenue through the abandonment of licenses ôf $6,000,-
000. This woukl add between eleven and twelve points
to the tax levy of 1919.

"I have already called attention to the fact that the
coniing levy would reach the constitutional liniit. This
woukl carry the levy beyond the limit and make it
unconstitutional and invalid imless new sources of
revenue are formed."

Charles F. Noyes states it would be idle to deny that
prohibition would not, temporarily at least, result in
a serious reduction of the income secured from many
of the prominent locations, and would adversely affect
real estate including apartments in which are located
stores used for the cafe or liquor business.

Without attempting to go into the seriousness of the
drastic and sudden edict that breweries must close
December 1, and the fact that already many of the cafe
proprietors have expressed an opinion that they will
suspend operation on October 1, Mr. Noyes states:

"While the adverse effect on real estate will unques-
tionably be serious if we have prohibition, or if cafes
and saloons are forced to close their doors, yet as time
goes on this space will probably be made use of by other
lines of business, and eventually—although it will be
many ycars distant—I believe the income conditions
will return to normal.

"New York City is growing rapidly. and when one
takes into consideration that most cafe stores are in
promincnt locations, and such locations are in demand
for eating pkices, shoe stores, haberdashery shops, cigar
counters, etc, my opinion is that thc blow will not be
fatal, although exceptionally serious. It will be unfor-
tunate to real éstate interests to have 1,000 stores at
prominont points close their doors at once."

WiIIiam H. Shackford, of Daniel Birdsall & Co., Inc,
said:

"I can see no detriment to realty values because of
(Continued on page 294)