REAL ESTATE
AND
NEW YORK, MAY 27, 1916
CAUSE AND EFFECT IN APARTMENT HOUSE
CONSTRUCTION IN NEW YORK CITY
By REGINALD PELHAM BOLTON
Author of "Building for Profit"—"Power for Profit"
PART TWO.
THERE are several very practical
questions that present themselves
upon an examination of the statistics and
facts of tenement house construction.
How many apartments are required to
be provided each year? Whence comes
the supply of direct occupants? What
are the controlling factors, personal and
financial, that make the demand and
affect the success of apartment house
buildings?
If we had answers ready for such in¬
quiries, the path of the investor, the
builder and the owner of real estate
would be much clearer and less bounded
by precipices of failure than is the case
at present.
The statistics of the Tenement House
Department shed at least some light on
the subject. As the list of new con¬
struction is examined, the inquiring mind
cannot avoid asking just how and why
these ventures were undertaken—with
what security of facts and definite cir¬
cumstances the enormous investments
were made.
What Influences Builder?
How is it that, with a light heart, the
builder risks huge sums of money in a
fixed construction of a certain class or
type in a certain locality? In any other
line of business the investor would seek
some determination of the actual demand
for his product.
The average manufacturer can more¬
over remove his goods to suit his
market; he can, if a certain locality
fails to respond to his proposals, try an¬
other with his wares. He can perhaps
create by advertising an artificial demand
by stimulating people's ideas of what
they think they ought to possess, or sug¬
gest things they may not need at all, but
would like to own. But no such latitude
is possible with the builder of apartment
property. The location is fixed in ad¬
vance; neither it nor the building can be
altered in that respect. The building is
planned before a tenant is found, and if
the plan is unfortunately conceived, the
tenants may not materialize, or may only
be secured by "concessions" with which
we have been for the past ten years only
too familiar. These concessions are the
equivalent of forced sales at a loss, of ex¬
cessive discounts and preferential rates
in other lines of trade.
"Follow Your Leader."
The manufacturer and dealer in habit¬
able space therefore operates under con¬
ditions of liability not prevalent in other
trades, and requiring a peculiar degree of
sound information upon all the facts
and elements affecting his business. But
so far as one can see by general observa¬
tion nothing of the kind is done in this
direction. Builder B follows the lead of
Builder A. Builder A may have built for
any one of a number of reasons, even be¬
cause he was forced to do so against his
will and judgment. Builder A's specula¬
tion inay, in itself, be lucky in meeting a
particular dematid for space, and if his
were the only venture of its kind, it
might pull through successfully. But
Builder B is becoming a blind follower
of the blind, has nothing solid to go
upon but is taking a blind chance in a
blind pool.
And for the fact that there is, some¬
where in the growth of the city's in¬
habitants, a certain sure and increasing
demand for habitable space, the blunders
of design and locality could have met
only with disaster. But somehow or
other, the intense pressure of population
forces people into accepting residence in
spaces they do not want and of design
they do not like, and in localities they
object to. So that a sort of fetish has
been created, in which the builder can
place faith, to the efifect that do what you
may and build what you like, tenants
will be found in the end. Usually this
desirable end comes only after a trying
period of vacancies and concessions.
Building Erratic.
Thus, it is not surprising to find in the
statistics of the Department evidence
that the construction of apartments in
New York has proceeded in a very erratic
manner, unrelated to any ascertainable
facts, and evidently lacking a systernatic
method of determination. The addition
of new buildings has varied very widely,
both as to character, design, location and
quantity. Taking the last point first, we
find the construction of new buildings
has provided the following number of
separate apartments during the past ten
years, in the whole city:
1906, 54,884, the highest annual rate;
1907, 45,800, followed by 1908, 20,384, the
lowest annual rate, and 1909, 21,941, at
practically the same fi,gure; 1910, 32,113,
a sudden increase of 50 per cent.; 1911,
32,673, almost the same rate, followed
by 1912, 26,763, a drop of 20 per cent, in
a year, and 1913, 28,038, about the same,
followed by 1914, 20,576, the lowest an¬
nual rate again, and 1915, 23,617, a 15
per cent. rise.
Why the Variation?
The yearly average over these ten
years was 30,678, while the average for
the past five years is but 26,333. Why
should the rate of increase vary in this
way?
The rate of increase of the population
between 1910 to 1915 has averaged 97,400
persons per annum. As it may be as¬
sumed that about 86 per cent, of the total
population are apartment dwellers, it
would seem that there has been an avail¬
able increase of occupants for apartment
houses of about 83,700 persons a year,
who at the average rate of 4.5 per
apartment could be accommodated in less
than 20,000 new apartments per year.
Therefore, the supply of new apartments
in 1906-1907 and in 1910-1911 was largely
in excess of the visible source of de¬
mand, and the result of that over-pro¬
duction is shown by the sharp fall of
annual output, in the years succeeding
those periods. Of course, the supply of
the new apartments was somewhat ofTset
by the removal of old buildings, but an
examination of this feature, merely in¬
creases the irregularities.
The average effect during the past five
years is that only about 19,000 apartments
were added to the total. As stated at the
average occupancy of 4.5 persons per
apartment, a supply of 19,000 apart¬
ments a year would parallel the growth
of population. But the rate of produc¬
tion has varied annually from 15.000 to
21.000, showing lack of any co-ordination
of these facts.
SUMMARY OF APARTMENT CONSTRUCTION
AND INVESTMENTS IN CITY 1902—1915.
Tene- Apart-
Year ments ments
1902 102 1.042
1903 .503 0.734
1904 9.50 14,289
Estimated
Booms Co'it
7,706 ?3,401,700
35,700 14,213,400
63,400 29,726,770
1905 2,221 32,387 142,515 63.158,400
1006 3,774 54,884 221,600 103,236,400
1907 3,471 45.800 190,KK1 89,743,900
1908 1,4,30 20,384 97,9.33 48.771,700
1909 1,076 21,941 104,.3S2 49,077,400
1910 2,698 32,113 147,.569 86,341,750
1911 2,934 32,673 141,859 82,159,150
1912 1,885 26,763 113,152 63,134,213
1913 1.794 28,038 119,891 70,008,940
1914 1,242 20,576 87,327 48,406,300
1915 1,365 23,617 96,514 49,372,300
Upon consideration of the figures, it
also becomes evident that mere increase
of the number of the population does not
in itself constitute the cause for ad¬
ditional housing spaces. That increase
consists largely of infants. The increase
is actually the result of the excess of
births, of immigrant settlers and the
arrival of new resident families, over and
above those removing and lost by deaths.
.A.S the deaths are about 75,000 a year, the
gross annual e.xcess of the three classes
named is about 172,000 souls, a nuinber
which, if they were all in the form of
separate families, would just fill the ac¬
commodation afforded by the average
annual number of 30,000 apartinents
which have been constructed during the
past ten years.
But since these additions to the popula¬
tion do not account for the circumstances
it is evident that closer e.xamination of
the details is required to ascertain the
true source and rate of demand.
Increase of Population.
Eliminating the infant increase, the
supply of new tenements must come
from the adult settlers, or from the ex¬
pansion of existing families by mar¬
riages. Families are constantly arriving
and taking up their abode in the city, but
on the other hand, the sad experience of
property owners establishes the proba¬
bility that quite as many leave New York
for residence in the suburbs or elsewhere.
On the other hand, a large proportion
of the tenants of newly constructed
apartments are evidently newly married
couples, who must find, if they remain
in the city, a new home. They not only
choose a home but they select a new
location for it. But here again we are
confronted witli an unexpected feature
in that the annual supply of such couples
is much greater than the net number
of apartments provided, as shown in the
following comparative table:
Apt's lost
6,1/ changes Net apt's
Year Marriages or demolition added
1912 ,5.8.444 11.4.37 15,326
1913 58.990 6,481 21.537
1914 60,986 3,480 17,096
1915 59,646 1,968 21,649
Averages, 59,500 5,841 18,900
This indicates a large excess supply
of new home-seekers which should con¬
stitute a demand far in excess of the past
prevailing supply of apartments, if there
were no modifying circumstances. But it
must be assumed that the marriages are
not wholly those of present or pros¬
pective residents in the city of New
York, If, as seems to be probably the
case, less than one-half settled in the
city as residents, about 30,000 couples
would require to be provided with homes.