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Real estate record and builders' guide: v. 84, no. 2160: August 7, 1909

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Au,E^tist 7, 1909 RECORD AND GUIDE 253 to&IEB TO RB^LESTArE.BuiLDIllG AFSP^ITEeTURE.KoUSEHOlDDEQfBlJTMlt Bi/siifcss Ali) Themes OF GEfJERsl iKnfifST^ PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Communications should be addressed to C. W. SWEET Published EVery Saturday By THE RECORD AND GUIDE CO. President, CLINTON W. SWEET Treasurer, F. W. DODGE Vice-Prea, Sc Genl, Mgr,, H. W. DESMOND Secretary. F. T. MILLER NoH. 11 to 15 Eaat 24tli Street, Nciv Vork City (Telephone, Madison Square. 4430 to 4433.) "Entered at the Post Office at New York, N- F., as matter." Copyrighted. 1000. by The Record Sc Guide Co. Vol LXXXIV. AUGUST 7, 1909. No, 21G0 WITH the excep.tioii of brick the majority of the mate¬ rials entering into the construction ot" urban build¬ ings liave been steadily increasing in price this spring and Slimmer; and if these materials are pushed much farther the cost of building will be returned to somewhere near the level of 1907. It is very mucli to be hoped that such will not be the case. When building becomes very expen¬ sive it ceases to be profitable to anybody but the mechanic, and he usually takes his profit in the form of a license to diminish with impunity the efficiency of his work. It fre¬ quently happens in New'York and the other large American cities that high prices do not have their natural effect of cutting down construction, because under certain abnormal but frequently recurring conditions, builders can see a profit even in erecting excessively costly buildings, but whenever this occurs it means that conditions have become unwhole¬ some and that the excess of one year will be followed in another by a very lean season. The recent increases in materials are not exorbitant; and they mean merely that the producers are becoming able to assert their right to fair profits; but if they go much farther they shouJd be followed by a decrease of demand that would check any additional increase. Such years as 1906 always bring such years as 1907 and 190S. It wil] be far better to have a succession of years like 1909, In which activity did not mean infiation, and in which economy of production was not sacrificed to tem¬ porary and partly fictitious profits. As a matter of fact, it is probable that in 1910, while real estate may be more active than in 1909, building will be less so. The large amount of construction planned during the current year has consisted mostly of loft buildings, flats and apartment houses. The work of providing accommodations for the wholesale trade north of Twenty-third street will be con¬ tinued in 1910, but it can hardly maintain the pace whicii has recently prevailed. Elevator apartment houses also cannot continue to be erected in the same numbers, wbils the improved means of transit under the Hudson and East rivers will diminish the demand for flats. Thus, while the impending changes in business population will justify a large amount of real estate speculation, there is bound to be a certain diminution in building, at least in Manhattan, This diminution, whatever its .ill-effects, should at least have the desirable result of preventing a runaway market in building materials. THE explanation given in the last issue of the Record and Guide by well-known authorities for the activity in building on Twenty-sixth and Twenty-seventh streets dur¬ ing the present year, is extremely interesting. Assuming in the first place that the time had come for the construction of loft buildings west of Broadway, between Twenty-third and Thirty-fourth streets, the question was where should a beginning be made? The streets in the vicinity of th.e Penn¬ sylvania station were ruled out because property is being held on these streets at too high a price for the wholesale trade, and Twenty-eighth and Twenty-ninth streets were not available because the horse car lines on those streets interfered with the loading and unloading of trucks. Twen¬ ty-seventh street, consequently, was the nearest street to Thirty-fourth street well adapted to immediate improvement with loft buildings, and seven structures of this kind are being erected in that street. The movement has also spread to Twenty-sixth street, in which a number of buildings are also, being erected; and it is confidently predicted that with¬ in the next few years Twenty-fifth and Twenty-fourth streets will be similarly transformed. The interesting aspect of this account of the causes of the activity on Twenty-seventh street is the reason given for the discrimination against Twenty-eighth and Twenty-ninth streets, A surface rail¬ road even when horses are used as a motive power is usually supposed to beneflt a street through which it passes; but in this case it has been a disadvantage to the owners of property in Twenty-eighth and Twenty-ninth streets, and the disadvantage would not be removed in case trolley cars were substituted for the absurd old horse cars. Trolley cars run more frequently at higher speed would, of course, interfere even more with the trucks than do the horse cars. The fact is, of course, that a surface railroad, while it is beneflcial to a street, which is lined with shops is merely a nuisance to a street improved with loft buildings, and a similar rule applies to avenues. Sixth avenue, for instance, which is narrow and which has both an elevated and a sur¬ face railroad ou it is wjiolly unsuitable to loft buildings, and must remain a shopping thoroughfare. On the other hand, Seventh avenue, even though it has a surface rail¬ road, is so wide that it affords trucks plenty of room, and it is. consequently, more likely to be improved with loft buildings. Of course, it is possible that even on Seventh avenue retail trade will predominate, but as a rule the broad thoroughfare is better adapted to wholesale business and the narrow, easily-crossed thoroughfare is better adapted to re¬ tail business. THE subway has now been in operation about five years—that is for one-flfteenth of the term included in the lease. During the year ending June SOth last it earned nine per cent, on the original $35,000,000 capital stock of the Interborough Company, and something over three per cent, on the ?50,000,000 preferred stock of the Interborough-Metropolitan Company. A small part of this proflt was derived from the earnings of the elevated roads over and above the rental; but these earnings do not affect materially the total result. What the figures really mean is this: At the end of four and one-half years the subway is earning enough money almost to double the value of its original capital stock, while at the same time to leave an additional profit of about $25,000,000. The Interborough- Metropolitan preferred is now selling at about 50; and the value it represents would be worth a still higher price were it not for the unnecessary responsibilities assumed by the Interborough Company in connection with the Metropolitan merger. Moreover, the subway still has a considerable mar¬ gin for an increase in earnings. On Washington Heights its tracks run through a district which is only partly settled, and which is rapidly increasing in population. In the Dyck¬ man track and in the Bronx it is now carrying only a very small part of the traffic which will eventually be developed. Finally, the business development of Fourth avenue and its neighborhood will largely increase its more profitable local traffic. The cars required for the accomhiodation of these increased passengers wil! be obtained by the improvements now being made at Ninety-sixth street, by the introduction of side doors on the expresses and by the lengthening of the trains. There can be little doubt that in another five years the original $35,000,000 of Interborough stock will have become equivalent to somewhere near $100,000,000, and at the end of another five years $25,000,000 may have been added to the original value. Thereafter the possible increase in profit will be small, because the system will have reached the limit of its carrying capacity, and because it will have to face competition along its whole route; but there can be little doubt that in the end the net profit of the Interborough Company on the original lease will be almost, if not quite, $100,000,000, THE INTEREST of these calculations consists partly in the fact that hereafter the companies operating sub¬ ways will have to share these profits with the city. Take for instance the case of the Broadway-Lexington avenue tunnel. That subway will cost more per mile to construct than did the one leased to the Interborough Company. The initial charges set aside to cover this interest and sinking fund requirements may well be fifty per cent, more per mile than they are in the case of the existing subway. On the other hand, the Broadway-Lexington avenue tunnel will probably develop a denser traffic than any other single route in Manhattan, The east side lines of the elevated roads carry a good many more passengers per mile than the west