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Real estate record and builders' guide: v. 84, no. 2168: October 2, 1909

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October 2, 1909 RECORD AND GUIDE 595 ESIABUSHED^ MARPH 21"'^' 86 8. DeHi^ 10 Rf^LESTATE.BuiLDIfl'c AFtCJCiTECTURE,KoUSEl(0LDP£GCiS{ATM*^ Btlsn/Ess Affe Themes OF GElJE!\ftl IHTERE31., PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Communications should be addressed to C, W. SWEET Published Every Saturday By THE RECORD AJVD GUIDE CO. President, CLINTON W. SWEET Treasurer, F. W, DODGE Vlce-Pres, & Genl. Mgr,, H, W, DESMOND Secretary, F, T, MILLER NoH. 11 to 15 Bast 24th Street, New York Ctty (Telephone. Madison Square, 4430 to 4433,) "Entered at the Post Office at New Yorlc, N. Y., (IS second-class matter." Copyrighted, 1909, by The Record Sl Guide Co, Vol. LXXXIV. OCTOBER 2, 1909. No. 216S. THE recent purchase of the Night and Day Bank Building by the American Real Estate Coiiiiiany is referred to by one of the daily newspapers as evidence ol" the fact that the "investment idea is growing among realty corporations," Perhaps it is, but that is a very large inference from a very small number of corroborative transactions. The plain fact is that the investment idea is not growing among real estate corporations to such an extent as might have heen anticipated. In 1901, when corporations controlling considerable amounts of capital first began to be organized for the purpose of"op- erating in New York real estate, it looked as if hufee real estate investment corporations were bound to he the result of the innovation. These companies 'were indeed formed to OPERATE in real estate rather than to INVEST therein: but tlie scale and purpose of (heir operations were sucli that they seemed bound to become investment, companies. In many cases they would buy property only to resell it before or after improvement, but their'speculative transactions in¬ volved so much capital that they could not expect as a rule to sell tlie bnildings they erected to any one investor. On the other hand, they might be able to sell them to a number of investors by the indirect method of the sale of stock or debenture bonds, and that was apparently the one method, whereby they could turn over the money sunk iu big building enterprises. But while tliis process was carried on to a cer¬ tain extent it has not been carried at all as far as was antici¬ pated. The largest of these corporations, for instance, the U. S. Realty Company, exercised for a number of years a dominant influence in the development of centrally situated Manhattan real estate. It purchased a large number of the best business sites in the Borough, a few of which it sold, but the great majority of which it improved and retained as an investment- In this way it became the owner of the Trinity Building and its half-brother, the Flat-iron Building, the Plaza Hotel, the Merchants' Realty Building on the south¬ west corner of Fourth avenne and 23d street, the Hippo¬ drome and several other hotels and office buildings. But there its activity stopped. For four or five years it has al¬ most ceased to be a purchaser of Manhattan real estate, and since 1907 it has not embarked in any large projects of im¬ provement. The large number of new buiidings in the course of erection in the middle district of Manhattan are all being put up either by individual investors or operators, or by corporations representing either individual owners or the tenants of the building. In the same way the City Investing * Company has since 1907 figured In the real estate marltet chiefly as a seller. For the time being at least these two corporations are contributing nothing to the improvement of Manhattan or to the activity of the real estate inarl;et. THE INACTIVITY of the two large corporations nained is not likely to continue indefinitely. The time will come when they will again contribute to the real estate de¬ velopment of Manhattan, It remains true, however, that during the past few years the share of large corpora¬ tions in the ownership of Manhattan real estate has relatively diminished; and the question may well be asked whether they will ever become as dominant an influence as was at one time expected. One would hardly dare to answer this question with any confidence; but it cer¬ tainly looks as if the conditions which appeared to justify the existence and activity of large investment companies have become more rather than less important. The ordinary building opcralinn in (he centra! part of Manhattan deinan:!? the expenditure every year of a larger rather than smaller amount of money. It is the big office and loft building which is most 'economically constructed and operated and most quickly rented. The number of individual investors who can afford to put up tlie large sums required to purchase apart¬ ment houses, loft and office buildings of the largest size are and must remain comparatively few. The ownership of these structures must in some way he divided or shared. The cor¬ poration that owns only one building is frequently a con¬ venience, but it is rather a convenience to men who both own and occupy a large building than it is to an investor. The investor may want to be able to realize on this investment; and this is difficult when he shares the ownership of only one building. On the other hand if the company owns many buildings and possesses a large enough stock to justify its purchase and sale on an exchange, a machinery has been created for the conversion of the value represented by these large buildings into a realizable security. It is extremely probable, consequently that in spite of the fact that the real estate investment company has not heen growing as fast as might have been anticipated, it has more of a future than it has of a past. Since its inception in 1901 business condi¬ tions have favored speculation rather than investment. Ex¬ cept for short periods following on a business reaction, capi¬ tal has commanded a high price, and conservative invest¬ ments have not liad a fair chance. It remains to be seen what a period of comparatively eheaj) money will do. There is a good chance that such a period would iniijrove the rela¬ tive standing of real estate as an investment both in the form of individual and in the form of divided ownership. At any rate the policy whicii the American Real Estate Company is pursuing of buying improved rather than unimproved prop¬ erty is an interesting variation upon the policy pursued by other large real estate corporations; and its future develop¬ ment will be watched wilh lively interest. IN THE LAST ISSUE of the Record & Guide Ml-. Charles Griftitli Moses, made an interesting argument in favor of the contention that hereafter the six-story elevator apart¬ ment house, 100x100 in size, would constitute the unit of Manhattan huilding. His reasoning is based upon, the fact that the five or six story "walk-up" flat is not profltable on lotscosting over $12,000; and he sees the day approaching when there will practically be no lots left in Manhattan which can be sold as cheap as that. Owing to the increase in the value of land, the elevator apartment-house has come to prevail on Washingtou Heights. There are some thou¬ sands of lots in the Dyckman tract that can still be bought cheap enough for improvement with non-elevator buildings; but Mr. Moses predicts that as soon as the building move¬ ment in that neighborhood obtains a fair start, prices will rise, just as they did on Washington Heights, until elevator buildings of considerable size become necessary. There can be no doubt that Mr. Moses is substantially right in making this prediction. The fact that five and six story tenements are not just at present being erected at all in Manbattan does not, nf course, warrant the conclusion thai they will never be erected again. The cessation of this class of building is due to temporary rather than permanent causes; but when it revives, as it will during the coming spring, the revival will bo of brief duration. Land is becoming too expensive in Manhattan for non-elevator building; and families who wish to live in that class of building will he obliged in increasing numbers to journey to the Bronx or Long Island- Within a few years si^-story elevator apartments will constitute the cheapest and most popular type of Manhattan building; but it must be remembered that even their day will be compara¬ tively short. Some time within the next five or ten years, practically all the vacant sites in Manhattan available for this class of improvement will have been occupied: and in that case residential improvement in Manhattan will be nar¬ rowed down to the fire-proof apartment house, erected on the site of former private dwellings. When that time does . come, some modification of the tenement house aud building laws will be necessary, in order to permit the erection of eight or nine story tenements on 60 foot streets, tenements which will ofljer more resistance to fire than do the existing six story buildings without being thoroughly fire-proofed- The cheapening, that is, of fire-proof construction will be essential to the interest of the residents and the real estate of Manhattan. 1