Real Estate Confidental

The most striking fact about New York in the last decade is the realty boom. Wherever one goes—in the heart of old Manhattan or the farther outskirts of the Bronx and Staten Island—construction is seen. Craters yawn in what were pleasant meadows, metallic booms and tiers of steel loom against the sky, overhead bridges span entire sidewalks with scaffolding and the pressure hammer constantly gnaws at the vitals of the pavement. It would seem that nothing is spared in this massive demolition and rebuilding. Old trees and young buildings enter the same insatiable maw; for neither leafy elms nor elegant Park Avenue structures can withstand the path of progress as conceived by builders.

It must bewilder the senses of the spectator, this awesome chopping down and regurgitation of concrete and steel. Why are stately edifices barely thirty years old uprooted for squat ribbon-windowed office structures? Why are new massive apartment houses crowded jowl to jowl, blocking out air and light, when even the atrophied organs of the city dweller still feel joy at a shaft of sunshine? And, most of all, where do the tenants come from to fill the wave on wave of new apartments and office buildings? With rents frozen at approximately $20-30 in the older houses, while the new apartments charge an average closer to $60 per room for lower ceilings and cheap partitions; with older commercial space renting at an average of about $3 per square foot while the newer office buildings demand almost double—what is behind this boom?

The author of this article has participated in the postwar building frenzy from its inception. He has watched its legitimate start, when the city woke from a depression lethargy and war immobility, to erect new housing for the generation of war brides and new offices equipped with air-conditioning, acoustical ceilings and fluorescent lighting. He has seen the maturity of the boom, as shifts in racial population have altered the residential character of whole boroughs and the needs of expanding business have integrated many out-of-town companies into the financial web of the metropolis. And he has now begun to observe a repetition of the overbuilding of the 1920s in which, like fabled Midas whose touch turned everything to gold, the city will throttle itself.

To understand why the builders have had such a field day in New York City and continue to build without reference to actual space needs, skyrocketing land values and ever higher construction costs, the economic background must be examined. Building is a favored industry, comparable in some respects to oil drilling from the point of view of accelerated depreciation, and stock market speculation in so far as capital gains are concerned. The tax structure is deliberately keyed to subsidize the rich and acquisitive, who then find themselves compelled by the very logic of this favoritism to expand and expand again without reference to the market needs; and let the dev...