Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 84, no. 2163: August 28, 1909

Text version:

August 28, 1909 RECORD AND GUIDE 381 ESTABDSHED ^ &\RRCH £1'-^^ 10S8. 1D^%DtDRfA,LESTA:E.BulLDI^bi'^R.GKITE^rnJI^E.HolJsnfOU)pEQCa^T^ Bifsn/Ess AifcThemes Of GEyteR^l iKtERf&i.. PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Communications should be addressed to C- W. SWEEf Published Every Saturday By THE KECOrtD AND GTJIDE CO. President. CLINTON W, SWEET " Treasurer, F, W, DODGE Vlce-Prea- Sl Genl, Mgr., H. W. DESMOND Secretary, F, T, MILLER Nob. 11 to 15 East 34tl> Street, Xew York City (Telephone, Madison Square, 4430 to 4433,) "Entered at the Post Office ut New Tork, N. P.. as second-class matter." Copyrighted, 1909. by The Record & Guide Co, Vol. LXXXIV. AUGUST 28, 1909. No. 2163 IN considering the prospects of the real estate and building market for the coming year, it looks probable that an increasing activitj' in real estate would be accompanied by a lessening activity in huilding; and the reasons on which this prediction are based are both obvious and convincing. The year which is now drawing to its close has witnessed a re¬ markable and in its amount a wholly unexpected revival in building. The plans filed for new consti'uction to be erected in Manhattan and the Bronx call for an expenditure of over $125,000,000, against a projected expenditure of only $63,- 000,000 during the corresponding period last year. The Brooklyn flgures for the same period are about $38,000,000 for 1909, against $19,000,000 for 1908. Thus, in the three largest boroughs, twice as much money is being invested in bnilding as there was a year ago. Still more remarkable is the fact that the figures named above are larger than those for the corresponding period of 1906, and are about equal to those of 1905, which was the biggest year in the history of the city. On the other hand, real estate has shown no corresponding increase in activity. The number of convey¬ ances of Manhattan and Bronx real estate recorded up to date show an augmentation of only about seven per cent, over the flgures for the corresponding period in 190 8. and in Brooklyn the proportion of increase is still smaller. The totals, instead of being about equal to those of the record year of 1905, are only about half what they have already been. Hence, it wili be seen chat the revival of activity has taken place rather in building than in real estate, and there are good reasons for believing that conditions during the coming year will tend both to a large speculative and invest¬ ment business in real estate and a somewhat smaller volume of new construction. THE reasons which lead one to expect a diminishing vol¬ ume of building lie upon the surface. The huge amount of new construction undertaken during the current year was due to a combination of favorable general and local conditions. Money was plentiful, after a prolonged period of stringency. Building materials were cheap. Contractors early in the year had comparatively little to do, and were willing to make low bids merely for the purpose of keeping their business alive. Then there had been a couple of year^ of comparatively moderate building. There was room on Washington Heights for a large number of new flats; and there was a demand in the new wholesale district for a large numher of new loft buildings. The more expensive grade of apartment houses were also renting well and could be erected in considerable numbers. During the coming year many of these favorable conditions will be modified. In all probability money will still be abundant, but it may not be quite so abundant as it has been recently. Building materials are increasing in price, and as a consequence of the general constructional activity may well go higher. Contractors have plenty of work, and will no longer underbid, in order to get a prospective job. The cost of building, consequently, will probably be some ten or flfteen per cent, higher, while at the same time the local opportunities for profitable specula¬ tive enterprises are likely to be smaller. A very large pro¬ portion of the new construction now ynder way is going up between Twenty-third and Forty-second streets. During the coming year there will be a diminotion of building in this section. The movement will not, of course, entirely cease; iDut the enormous coming increase' In rentable 'space will have to be partially occupied and digested by business before builders will feel justified in proceeding as rapidly as they have done in the past. A somewhat similar condition will determine the amount of new construction undertaken on Washington Heights. That section will have to submit to the increasingly severe competition of New Jersey and Long Island- This competition will not be sufficient to put a stop to new building on the Heights, because there is no other district in Manhattan in which any room exists for improve¬ ment with med ium-priced flats; and the Heights, conse¬ quently, gets the beneflt, not only of whatever increase in population iManhattan is retaining, but also of the process whicii is taking place in certain parts of Harlem of crowding out higher-priced tenants by an inferior class of settlers. Hence, there will undoubtedly be leeway for a good deal of new building on the Heights and at Inwood; but not for as much as has been projected in 1909. Altogether it is prob¬ able that the amount invested in new building projects may well be smaller by a quarter or a third than the sum now being spent on new construction. THE reasons which make an increase in real estate activ¬ ity very probable are equally obvious. As we have already seen, the current year has been a comparatively dull one in real estate. The buying which has been undertaken for building purposes on Washington Heights and in the new wholesale district has not been accompanied by any con¬ siderable revival of speculation. On the contrary, purely speculative purchases of real estate have uot been very numer¬ ous, and speculative advances in price either widespread or considerable. The professional operations have'been content to sit tight and to hold ou as best they could. But during the coming year many of them will be supplied with funds by their ability to refund their mortgages on better terms; and the general atmosphere of prosperity will tempt them to look around more sharply for real estate that has some chance of increasing in value- Moreover, we believe that .they will be encouraged to do so by an increasing investment demand for improved properties. The Record and Guide pointed out last week some of the reasons which made such an increasing investment demand very probable. Well im¬ proved real estate looks like a better income-producing form of property than good stocks and bonds. This present week the papers report that business men have been selling stocks purchased at lower prices, because they needed the money to meet the demands of an increasing business. If any further rise of prices takes place in the fall, as may w-ell be the case, many investors will adopt a similar course; and real estate is bound to get the beneflt of the release of this capital. Of course, nothing of the kind is to be expected in case there is a break in the price of good securities, or in case the rates for money go up. In the former event the shrewd investor will wait for the better price, which he is pretty sure to get, and in the latter case, he will probably expect that cash may be more valuable than either stocks or real estate- But assuming a moderate advance in the price of securities next Fall and continued ease of money, a very considerable investment deiuand for real estate is most prob¬ able. It is a curious fact but true that at no single moment since the business revival of 1901 have the conditions been favorable for the widespread purchase of real estate merely as an investment. As soon as prosperity came in 1901 and in 1905 the capital of the country was immediately required to finance its business expansion. Real estate was purchased largely for use, and great increases in prices have taken place for that reason; but conditions have never been favor¬ able for a large investment demand. It is at least possible that they will be more favorable than for many years during 1910, and iu any event there is sure to be a considerable expansion of purely speculative activity. TN a current magazine article Controller Metz predicts that A New York will have a population of 4,700.000 in 1910 and of over 6,000,000 in 1920. It seems to the Record and Guide that these flgures are rather an underestimate than an overestimate- They are based on the percentage of in¬ crease in population which New York attained during the decade between 1890 and 1900; but the ten years between 1900 and 1910 will be years of greater industrial activity aud urban growth than the ten preceding years. Assuming that the population of the whole country will augment at about the same ratio as it did during the preceding decade.