Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 17, no. 430: June 10, 1876

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Mf»il.Wl'-».J»^-lJ4J.J.Vlli«mm!JA..kW.ia.^.8VjAi»t,<«i«^^^^ lifiSiiMiiiBSiSiigSBia Estate Record AND BUILDERS' GUIDE. Vol. XYII. NEW TOEK, SATURDAY, JUNE 10, 1876. No. 430. I^lished Weekly by THE REAL ESTATE RECORD ASSOCIATION O. W. SWEET...............Peesident and Tbeasubeb PRESTON I.SWEET...........Seceetaby. L. ISRAELS........i................Business Manaoeb TERMS. ONE YEAR, in advance....$10 00. CommunicationB should be addressed to Nos. 345 AND 347 Bboadwat. EENTS The National Bank Aefc of 1862, and the Le¬ gal Tender Act of 1863, those etupendons schemes of paper-money, conferred no greater or more lasting benefit upon any class or inter¬ est than upon landlords and rental valuations. The de-preciation iii real esiate that occured in 1861 afforded capitaKsts an opportunity of buy¬ ing properties at prices which were only a frac¬ tion of what rule in the present crisis. And these same capitalists had the gratification of finding in less than two years that, under the impetus of inflation, the rents they were able to secure from this same property amounted in many cases to 25 per cent, or 50 per cent, of the purchase price. These fabulous rents have been maintained with scarcely any shrinkage or decline until within a year or two past. Even the panic of 1873 produced very little effect on ren¬ tal values, on account of the spasm of inflation which attended that event, and the influence of which lasted far into the Summer of 1874, the period of the Grreat. Yeto.. Landlords who had occasion to make fresh engagements in May, 1874, were sustained in their appraisements of rental valuations by the likelihood of additional expansion of the currency. Those leases, made in 1874, where taken by solvent parties, are stiU in existence, and their banefdl effect continues to be felt. Even the present season, in the midst of e^iaustion, depre¬ ciation and stagnation, has found landlords but little inclined to meet. the exigencies of ten¬ ants, on account of their looking forward to the influx of strangers comequent upon, the Cen¬ tennial Exhibition as a means of "bolstering" up their extravagant rents. "We have heretofore adverted to this subject, and.think we can claim to-day a realization of the very state of things which we predicted. The month of May has come and gone. The Exhibition is under full headway, and yet our New ¥ork hotels have met with little or no increase of business, and, with the exception of the most fashionable quarter of the city, and the most prosperous business sec¬ tions, where property is always in demand, and liberal rents cheerfully paid, we see on every hand notices of "to let" and. empty stores, in. dicative of the unprofitable harvest which our overreaching landlords are now reaping. The stubbornness, and . impracticability . of land¬ owners generally are proverbial, but have never received a more striking- iUustratibn..than in the case of onx New York landlords during the present season. We have heard of one promi¬ nent landlord who notified his tenants with amazing condescension that they could retain occupation of his premises at a reduction of ten per cent, from old valuations. The empty housea and stores which are left upon his hands will convince him that "it takes two to make a bar¬ gain," and that landlords are no longer masters of the situation. After enduring thia state of emptiness for six months or a year, these former teoauts, in all likelihood, will in turn notify the landlord of a willingness to reoccupy the old premises at a reduction of 50 per cent, from the former rentals. It Is unde¬ niable that the question of rental valuation enters into and forms a considerable factor in all the ramifications of business and domestic life; and the exorbitant rents, which have been bo persistently maintained during the past ten or twelve years by New York landlords, have re¬ sulted in incalculable injury to our mercantile and family life. The pretensions of landlords to-day constitute the principal incubus which hangs about the neck of our prosperity. The stunted growth of our city, its oblong shape, and the dearth of Kapid Transit, all combine to favor these pretensions; and in default of wide¬ spread building activity, we can look alone to the dire and unmitigated disasters that now rest upon our business interests as the best means of bringing landlords to their senses, and of placing our city in the matter of rental valua¬ tion on a competitive plane with other cities. In the face of a decline in vacant property amoimt- ing to between sixty and seventy-five per cent., and in some cases of ninety per cent., with completed street improvements over nearly the whole surface of our island, together with a reduction in the price of labor of sixty per cent., and of materials forty per cent., itiseasy to fore¬ see that the combination on the part of the land¬ lords to maintain rents will ere long succumb. The rental valuations that landlords are now endeavoring to force upon the public are based on old valuations of property. As new structures spring up, created on the basis of reduced cost of production, new and more enterprising land¬ lords will appear, who will be able successfully to compete with those of antiquated ideas, or with those who have foolishly invested in im¬ proved property at fabulously high prices. All our improved property must be marked do-wn to the plane of the values of to-day, and rental in* comes must be based upon these new values. The shrinkage of invested capital must be charged to profit and loss, and our landlords, in common with all other classes of business men, must accept the situation, and no longer hinder the struggling prosperity of our citizens at large. As high rents contributed in as large a degree as any other cause to i^e creation and maintenauQe of high prices generally, so, at the present time, low rents, within the easy ability of tenants to pay, must be the initial point of the new departure. The rents of all classes of store and dwelling accommodations must be mad« to conform to the new order of things. Thug the necessaries of life will be easily attain- able at reduced figures, and the workingman and the merchant will no longer be cheated out of their hard-earned reward. The long line of untenanted stores on Broadway may be attributed principally to the mulish stubborn¬ ness of landlords. Were the rents of these properties fixed at reasonable and sensible ratee, it is safe to say that they would be eagerly taken, and that but few vacancies would bo found. The Broadway owners, however, hav¬ ing been surfeited, above all others, with ex¬ orbitant rents, are the least willing to conform to the new state of things, and are contented to suffer the loss of many months or years of rent before they will yield to common sense. The natural law of revulsion, however, is in full operation, and will ultimately carry with its force even these unwilling owners. The wisest of them will be the firat to yield. There is an example of one owner who has already kept his stores vacant for seven years, and it is not un¬ likely that some others wUl be foimd of the same mind. We may expect to find a number of stores on that thoroughfare remain idle for five or ten years to come. The condition of affairs in regard to dwelling property is very plainly asserted. Except in th« strictly fashionable quarter, where few vacan¬ cies can be met with, the unrented houses in tuis city may be coimted by himdreds, if not thousands. Houses renting for fifteen hun¬ dred or two thousand dollars, heretofor* considered of the average rate, are without tenants to-day. Many of that class of ten¬ ants, under the pressure of the times, have sought refuge in • the numerous apartment houses that have been erected within the last three years, where' they have found comfort¬ able homeB at one-half or one-third the rates de¬ manded for a whole house. As is often the case, the landlords who hold out most stoutly at first are the ones to give way most hopelessly at last, and within the next two or three years we look for such a settling down of rental valuations as will place a comfortable home within easy reach of the man of moderate means. The prostration of business which is now extending into ita third year has infused the spirit of economy, under the hard rule of necessity, into all classes; and landlords must make up their minds to re¬ spect this spirit, or suffer the penalty of disre¬ spect. -—------------------» -^^^ *--------------------------- Mb. William Little having been suddenly called a^^ay to Canada, we are without the statistics prom¬ ised in last issue of The Eecord on tlie lumber 'Supply, which omission, however, will be supplied next week; '