New-York Tribune from New York, New York • Page 34

i i Construction Costs Will Remain High Until Break Comes in Commodity Prices Will Be Years Until Prices Are Adjusted to a Lower Level; Pre-War Schedules Are Gone Forev er; Cost Plus Con? tract Best Building Basis at Present By John C. Hegeman President Hefreman-Harria Com? pany, Builders, New York The question that is asked many times a day of every architect and builder is, "Are building costs coming down, and if so, when The demand is urgent, and to those interested it is a uestion uppermost in their minds, he answer, addressed to every busi? ness man. is: Building cost3 will come down at the same time, or, perhaps a tittle earlier, than the cost of products handled by you will come down. If you can estimate when the costs of your own raw material, or your own lahorv charges or own expenses of doing,) business will come down, you can, with fair accuracy, approximate the arrival of the day that building costa will be? gin to descend toward the levels of that distant happy day, known as "pre? war which I consider are gone! and will be forever forgotten. Why should bnilding costs come down when prices of all other indus? tries are leaping upward day by day? There is no mysterious exception to the building business which warrants any one to expect that the cost of building may be kept down while all other industries are being operated at a higher cost "Not Until Coat Comes Down" Talk Manufacturers come to the architect and builder and tell of enormous ta? rrease in demand for their products, They will frankly say that their busi? ness has outgrown their present build? ing and that space cannot be leased or for any consideration.

They1 will complain that unless they can find increased facilities for production the development of their business will bo retarded. Through all their talk will run the story now so familiar, of ris? ing costs of raw materials, and the ever mounting demanda of their despite all of which their business has grown faster than they can keep pace with. The demand for their goods at any price was never so strong. In their own business they know that rising costs must be reckoned with; but these same men, when they! come to the architect or builder, expect I things to be different. They cry out in- dignantly when they study the esti-! mates of cost on their proposed new! building, and not infrequently decide to wait "until building costs cornel down." We have heard these decisions in the spring.

We have heard them through the summer. We are hearing them to-day. The costs have not come down In the building business any more than they have in any other. It is interesting to know, as a matter of' fact, that the cost of building is not keeping pace with the costs of other necessities of life. Statistics show that whereas building coats have risen 116 per cent since 1012, the average of twenty-six necessities of life shows an increase of 123 per cent.

It is not for me to prophesy when our well ad? vertised friend, "The high cost of liv? ing," will be reduced. When it does, I know that building costs will be re? duced, and not before. If the desire or necessity for a new building arises I would most certainly recommend that, steps 'be taken to start the work as soon as possible. Lamp Sum Contract Is Not Best Should the owner of the proposed building decido to proceed a study of the forms of contract according to which his building might be built would he most advantageous to him. A few years ago the building business, to the average prospective owner, was something that could not be understood by the lay mind.

The ordinary procedure was to the services of an architect and after the plans were drawn have him send out broadcast to obtain esti? mates as to the cost of doing the work. Without regard to the problem cover? ing his special work a contract is finally entered into with the builder to build his bnilding for a certain fixed sum known as the "lump sum con? tract," It scarcely seems necessary now to point out the disadvantages of this form of contract. Under it the owner and architect were against the builder. The selfish interest of the A Christmas contractor would dictate that he would do the work as cheaply as possible, and the difference between the cost of the work and his contract was his profit. The cheaper he could do it the more his profit was.

The owner and the ar? chitect were ranged against him to ob? tain as much out of him for their own side as possible. In such a situation it is easy to imagine the constant bick? ering and disputes which arose. Some? times the contractor estimated too low or met unusual conditions and suffered disastrous losses. In such a situation the quality of the building necessarily suffered. Advantage of Cost-plus Plan The Great War changed these con? ditions for the better.

When the United States government began its vast building program it very quickly developed that tho lump sum form of contract would not prove very efficient or economical. The government offi? cials decided, after due consideration, to award contracts on some form of "cost-plus" basis. The basic idea of the cost-plus con? tract is sound, The interest of the owner and architect not being ranged against the contractor, as under the lump sum form of contract, the three are ranged on the same side of the one purpose, that of building the best building for the least money in the shortest possible time. The owner is in reality engaging the "know-how" of the contractor for his own benefit. In selecting the contractor it is neces? sary for the owner to assure him? self of only two First, does the contractor know his business? Second, is the contractor honest and is his whole organization imbued with tho highest principles of honesty and business integrity? These conditions being'met, the owner may assure him- self by securing the services of two the architect and builder, working in harmony and work- ing for his own his build- ing will be built at less cost in shorter time and with a higher degree and i quality of workmanship than by any other method of doing the work.

Every individual building contract is a prob? lem in itself. In these times as never I before, in any building operation, upon the part of the builder are required, first, a most careful preliminary plan? ning as to the method of doing the work, and, second, the most careful following up of details of purchases and details of work to secure the best results. The great objection in the minds of prospective owners upon doing work upon the cost-plus-percentage basis i. the idea that the contractor will run up the cost of the building in order that his percentage fee may be cor? respondingly increased. If the condi? tions in the selection of a contractor which I have pointed out above are met with, this could not be true, as ordinary business practise would dic? tate that the owner's interests be pro? tected when so served.

The thought, however, oftentimes remains. To meet this thought, the cost-plus-fixed-fee form of contract has been devised, which, to my mind, is the fairest of all forms for all concerned. Under this form of contract the owner agrees to pay the builder a certain definite fixed sum for his profit for doing work regardless of what the building costs. Form Fixes Builder's Profit If the cost of the actual building op? erations is either more or less, the con? tractor will obtain the same fee. All of us know in making our daily purchases, ranging from bread to automobiles, that each article contains a certain definite fixed profit to the manufactur? er, which was determined only after the article had been manufactured and its cost absolutely fixed.

There is no objection from any one to pay this manufacturer's profit. The builder must make a profit in the same way in order to continue, and by paying this fixed profit the owner is buying the ser? vices of the builder for his interests, first and all the time, and not his sec? ondary interest, as under the old lump sum form of contract. There Is another factor in the build? ing industry which war work developed. I refer to increased efficiency. Build? ers learned how to do things in a big Eve Purchase TMe the) States Express Building, at the northwest corner of Rector Street and Trinity Place, bought on Christmas Eve by Elias A.

Cohen, aa president of the Broadway-John Street Corporation. It waa then that the structure was held in the market at $5,000,000 onA the rental derived (rom the twenty-three-story structure was $610,000. that the announcement of the real estate folks in the deal over etatad tha valwa of the property and the yearly Income from the structure, lutawft W. Smyth, treasurer of tha United State? Express Com pany, that tha? building sold for $3,725,000 and tha rant fata? wee ee way in war-time construction. We learned how to standardize our work.

We learned the secret of quantity buy? ing and quantity production and the most economical method of handling our materials. We are now applying these methods to our work on private account. In the face of the vital emergency of war and confronted by problems vastly greater and, more complicated than we had ever dreamed of, it was necessary to change our methods and to adopt or invent others. Some mis? takes must necessarily have been made by all, but as the result of such mis? takes and the unparalleled experiences obtained we are enabled to place before prospective owners for their benefit methods of building far better than have obtained in the paBt. Other building companies which engaged in war work had similar experiences, and as a result the building industry to? day is more efficient and more compe? tent to solve the problems of the in? dividual building operation than it ever has been before.

In conclusion, therefore, I would say that, though costs at the present time are high, I do not consider that they will be lower in the next few years. If the prospective owner's re? quirements are sufficiently urgent to pay the present costs, I can only rec? ommend that he proceed immediately, and as compensation for the additional high costs there is to be considered the closer relationship between the owner and the builder, and his greater responsibility to the owner, together with the greater efficiency which the builder has developed through his ex? periences, in war work. All of which tends to offset the comparatively high costs. Sage Auction To Be Held This Month Proceeds From Sale of, Extensive Real Estate Holdings To Be Given to Colleges and Charities The first big auction sale this year, I and one of the largest ever held in the Vesey Street salesroom, will take place on Tuesday, January 20, when the valuable New York City properties owned by the late Mrs. Margaret Olivia Slocum Sage, wife of the late Russell Sage, financier, will be offered to the highest bidder, Mrs.

Sage, under the terms of her will, left the entire residue of her es? tate to be divided- among thirty-six institutions. The residuary estate, which is estimated to be worth $40, 000,060, is to be divided into fifty-two shares and distributed in varying pro? portions among the institutions named in the will. The Sage Foundation will receive seven of the fifty-two shares. Colleges to Share The institutions that will be bene? fited from the sale are: The Sage Foundation, Women's Hos? pital in the State of New York, Women's Board of Foreign Missions of the Presbyterian Church, the State Charities Aid Association, New York Presbyterian Hospital, New York In? firmary for Women and Children, New York Bible Society, New York Public Library, New York Botanical Garden, New York University, Yale, Princeton, Williams College, Amherst, Dartmouth, Barnard, Vassar, Wellesley, Smith, Bryn Mawr colleges, Syracuse Univer? sity, Hamilton College, Clinton, N. Troy Polytechnic Institute, Union Col? lege, Schenectady; Troy Female Semi? nary, Hampton Institute, Tuskegee Notarial and Industrial Institute, Board of Home Missions of the Presbyterian Church in the United States of Amer? ica (women's executive committee), Presbyterian Board of Relief for Dis? abled Ministers and the Widows and Orphans of Deceased Ministers, Chil? dren's Aid Society, Charity Organiza? tion Society, American Bible Society, Metropolitan Museum of Art, American Museum of Natural History and New York City Mission and Tract Society.

The properties to be sold are located in some of New principal thor? oughfares, including Fifth Avenue, Park Avenue, Madison Avenue, Lexington Avenue, Riverside Drive, Central Park West and West 125th Street. In addi? tion there are a number of parcela located in various side streets on the East and West sides. The properties embrace business buildings, elevator apartment houses and one of the most valuable block fronti? in Riverside Drive now available for improvement. Several valuable corners and resi? dences in Long Island City and in the Central Avenue section of Far Rockaway and private dwellings in Cedarhurst, L. are included in the sale.

One of the Fifth Avenue properties is the loft building at 73 Fifth Avenue, northeast corner of Fifteenth Street; aiiother the former residence of Mrs. Sage, at 604 Fifth Avenue, a four-story and basement brick dwelling, on plot 80x100, and the leasehold property, a fivo-story elevator building, at 632 Fifth Ave? nue, opposite the Cathedral. Other offerings are the five dwellings at the northeast corner of Madison Ave? nue and Sixty-fourth Street; the va? cant block front in Riverside Drive, from 109th to 110th street; the two ele? vator apartments at 422 and 424 Cen? tral Park West, northwest comer of 102d Street: the five-story apartments at the southeast corner of Park Ave? nue and Ninety-eighth Street and the five five-story apartments at the north? west corner of Lexington Avenue and 100th Strwt; two store tenements at 46 and 47 West 125th Street, between Fifth and Lenox avenues; the six five story dwellings at 118, 116, 117, 12? 37 West Fifty-fourth Street, a garage Ninety-third Street, a five-story ffat; 117 West Fifty-fourth Street, a garage; 515 and 617 West Seventy-sixth Street, between Avenue A and John Jay Park, a 60-foot vacant plot; 108, 107 and 109 East 100th Street, and three five-story tenements, between Park and Lexington avenues. Good Speculative Property "The Sage estate sale," Mr. Day said yesterday, "is the first big and impor? tant offering of the year 1020.

The salo, to carry out the magnificent be? quests made by the late Mrs. Russell Sage, will benefit many of the most prominent educational and charitable institutions in America, and reflects the fine character and the kindly heart of America's most noble and philanthropic woman. "In view of the character of the late Mrs. Sage, it is highly probable that she indulged in as little rent raiqlng nu possible. It is altogether likely that the properties to be Hold are rented tit! the present time for less than half; their market value.

This, of course, Is the sort of opportunity the speculator in real estate thoroughly appreciates, and the outlook, therefore, is for active bidding on the day of sale, as estate properties not dealt in fer a long term of years generally eon ceded be the veal esv Il Sensational Undertakings Were the Feature Of Construction in This City Last Year $2,800,000,000 to Be Invested in New Buildings This Year Residential, industrial and other building contracts aggregating $2, 800,000,000 will be awarded east of Missouri and north of the Ohio rivers in 1920, as compared with 000,000 in the same territory during 1919. Statistics for years back show that only two-thirds of construction planned is ever undertaken. Working on this basis, Franklin T. Miller, head of the F. W.

Dodgy Company, has arrived at the above estimate for actual construction work this year, the total value of proposed building filed during 1919 being $4,200,000,000. Contracts awarded for building in New York City total $269,767,000. Residence? (15,197) including dwell? ings, apartment houses dormitories and hotels, manufac? turing buildings (302), miscellaneous (2241), $94,467,000. 16-Story Building For Seventh Ave. And 35 th St.

Corner James F. Ogden, Music Roll Manufacturer, to Erect Structure, Part of Which Company Will Occupy James F. Ogden, president of the toona Music Roll Company, has leased from the estate of Anna Loughran Daly, through John R. Oscar L. Foley and J.

Arthur Fischer, the prop-! erty at 464, 466, 468 Seventh Ave? nue and 209-11 West Thirty-fifth Street, being the northwest corner of Seventh Avenue and Thirty-fifth Street, a plot 85x100, covered with six five-story buildings. The term of the lease is sixty-three years, and the aggregate net rental for the term is said to be $2,500,000. Mr. Ogden intends to demolish the present buildings and erect, on the site a sixteen-Htory mercantile building, part of which will bo used for offices and showrooms for his own com? panies. Two Fine Apartments Planned for West Side Campagna Is to Build 9 Stories on West 75th St.

and, With V. Cerabone, a House on 146thSt. Anthony Campagna, builder, will soon start the erection of a nine-story apartment house on the south side of Seventy-fifth Street oetween Broad? way and West End Avenue. The plot, covering an area of 60x100 feet, wan assembled some time ago through Slawsou Hobbs, and the plans for the project are being prepared by George F. Polham, architect.

The building will contain suites of three and four spacious room. Care? ful thought has been given to all the needs and requirements that go to make a modern apartment, and the problem of soundproofing, which 's one of the thorns in most multi family houses, has been met in a practical and efficient manner by plac? ing lines of closets U.tween adjoining apartments. The house will be ready for occu? pancy next fall. Mr. Campagna has also, together with Victor Cerabone, purchased for improvement the north? east corner of Riverside Drive and 146th Street, and associated with them in this enterprise will be Michael and Armin? Campagna.

This plot was held for the laBt forty-Bix years by John Brown, one of the oldest real eatate investors of Washington Heights. Work will be started at onee on this sito for an apartment house similar to the one just completed by Anthony Campagna and Joseph Paterno at the opposite corner, which was the first apartment house erected in Manhat? tan after tho war, and a very success? ful operation. This family of builders, the pioneers of fireproof apartments on tho West Side, arc among the first to produce new apartment houses and face the high costs and the tremendous diffi? culties in labor and materials. Cash for Bronx Apartment Investor Purchases a Corner House on Grand Boulevard Richard H. Scoble hus rosold for Adolph von Oehsen to a client for cash the northwest corner of Grand Boule? vard and Concourse and 184th Street, a five-story apartment, three stores, on plot, 62x92.

Sarouel Cowen has sold 128 Alexan? der Avenue, a four-story store build? ing, to a Mr. Pagano. Tho Frangella Realty Company has sold for Mrs. T. Lynch to Mrs.

M. Shandclman tho three-family house at 780 East 180th Street; for Charles Dietrich to M. Dolgin the two-family house nt 615 Oak Tree place, and for William Malarky to Francesco dAmlco the two-family house at 775 Blast 183d Street. J. Clarence Darles has sold for nalla 8.

Dean and other? 1089 College 198 feet north of Street a throo-family briek twaae, on lo? 80 Builders Overcome Cost by Construction Expert Reminds Folks, That There Is No Use Evading the Issue; Good Houses Cost Money; Skimpy Buiicling Is Not Fair to the Buyer By Charles F. Neergaard President, Garden City Development Corporation From the real estate news angle the announcement made last August, that the Garden City Estates residential colony in Nassau County, L. had been acquired in its entirety by the Garden City Development Corporation, was interesting. Of far greater importance, however, was the additional announcement that the newly organized corporation would immediately erect a number of high grade residences, to be sold for less than $20,000 each. This acquirement of one of the larg? est and best developed residential colo? nies In the suburban section of New York, together with the announcement of an active building campaign, came just at a time when many persons were seeking to purchase permanent homes, in preference to continuing as apart? ment tenants at constantly increasing and abnormally high rentals.

This news came also at a time when hotiHO builders and home seekers had about arrived at the deoision that the present high cost of building is a con? dition they must be prepared to face for a long time to come. House Owners Can Name Price This condition has been emphasized since July 1 by the increase of ap? proximately SO per cent in the cost of building, and the end is not yet in sight. Prices, in fact, arn almost cer? tain to go to higher levels. The buyer of to-day will be the seller of to-mor? row at a substantial profit. That profit is absorbed, however, when it comee time to reinvest in another house.

Sell? ers are fortunate, indeed, if they "break even" on their purchasers. So few In number the houses to he lot that renting practically is a dead issue. The owners of houses are in a position, therefore, to demand al? most any price within reason. Ever under these conditions there are com? paratively few houses available. How has tho average builder met the arisen from high costs, ar abnormal demand and an inadequate supply? Some Builders Have Skimped In many instances he has adopted the policy of sacrificing tho quality of the materials, the equipment, the deco? rations and the workmanship that go to produce a suburban home of one that is fit to be occupied by per? sons of discriminating taste, who ir purchasing a permanent homo seel comfort and safety of investment, nol "gingerbread" effects or construction In following out this policy he ha? not neglected to avail himself of opporunity to revise his price list upward.

"Jones pays the freight." Not Garden City Way Garden City Estatus, eotablishec twelve years ago on a sure and Am foundation, is its own best protectioi against the bad effects of the adoptioi of any building policy. It bo suicidal for any builder to other than a "quality" house there where the 200 or more residence erected during tho last twelve years nnd practically all occupied by thei owners, aro of an order to challeng comparison with those of any otho suburban community. Th physical attributes of the colony ar equally as fine and honest. It is thi combination that places Garden Cit Estates quite in a class by itself. There is but one way, however, li which the cost of producing "quality houses can bo minimized.

This can be accomplished by en operating closely with an experience and fully equippod organization houso builders, an organization tha pays cash for its materials and equip ment and that buys direct from th producers in sufficiently large quant) ties to make it an object to sell them. The organisation must en highest class mo? labor. By these methods? these alone, can the cost of production be- minimized, and a "quality" house produced at a reasonable figure. Coincident, therefore, with tho or? ganization of the Garden City Develop? ment Corporation, we contracted with the Hegeman-Harris Company to erect our first unit of twenty-five new houses, all of which are in course of comple? tion now and being sold from the plans. The personnel of this, and our own organization includes men of high standing, all of whom are experienced in real estate and building.

This is additional assurance that the present high character of Garden City Estates will be maintained and that with the growth of the colony to larger propor? tions values there will advance to high? er levels. In addition, there is the assurance of the well informed that building costs and house prices are "up to stay," and cannot, uhless existing con? ditions are sharply revised, be further Labor and Capital Agree The "fly in tho ointment" of those who in the recent past wished to build but who dared not because of the un? certainties of the labor and wage situ? ation disappeared recently with the agreement on a wage and work scale reached by the labor the Em? ployers' Associations and Councils. This pact fixed the wages and hours of labor tor the year 1920, which is fi big step in the right direction. If combined with a little more effi? ciency, the production quickei delivery and downward revision of the price of materials, the agreement be? tween the unions and the employer! should be productive of a large amoun' of building activity during the year. Final analysis of the work and wag? scale adopted and a study of cona? tions in the material market lend bu small encouragement to the expecta tion that dwelling houses will be low in price by the activities of th? future, due to the improvement ii It is all a question of "supply am demand," and the demand to-day is such huge proportions as to affect th possibility of the supply being in creased for at least a decade in amount sufficient to bring it abreas of the demand.

This is the only logical and tru answer to the question "when will th price of suburban dwellings be low ered?" Higher Rents Are Coming Residents of New York, and in fac every other city, town and villag wherever located, must, become recor ciled to the great change in condition that has taken place. They must prepared to pay higher rents, an higher prices for their abodes, just they have become reconciled to payln higher prices for food products, art cles of clothing, objects of ar diamonds, and all the long list of cessitieB and luxuries they deei necessary to their individual comfor and to the maintenance of their st? tion in society. It is, however, withi? the provln? of every man to at least exert a ce tain amount of control over his penditures. With the idea in view of aidlr prospective home buyers to do this, are prepared to sell sites of great varying cost, at Garden City Estate to those who prefor to build Iioub from the designs of their own arch tects, and which It is our purpose help them finance, and to build at considerable saving In cost. Every tail of the work will be attended by our owner Imvii only to turn tho key in tho door whi tho'house is completed and the groun landscaped.

In these two huildii houses ourselves, and by building order, for believe wo best servo the interests of congest? despairing New York, and in a mai uro, add to tha at, lamentai inadequate supply of hooi to? Looking Forward Not in Anticipation "The outlook for 1920 for sub? urban and country homes is both in? teresting and puzzling. There is no question about the demand, but brokers' shelves are relatively bare, hence they look forward with mixed feeling rather than lively anticipa? tion. New construction proceeds as rapidly as the material and labor markets permit, but the work under way can furnish no appreciable re? lief. In other words, the housing situation in the Ridgewood section of New Jersey is extremely acute and the spring homeseeker will find himself a very busy man if he waits till spring. Truly the early bird will have cause for self-congratula? tion.

S. WALSTRUM, "President S. S. Walstrum-Gordon Forman." Mr. Walstrum's summary of sub? urban conditions, though applicable to this particular field of operation, might be accepted as a concise view of the entire suburban realty mar? ket.

Alwyn Court At Seventh Avej Corner Sold Twelve-Story Flat at 58ifc Street, With Two to Floor, Bought ty the Compaq Sales of Business Realty Max Natan son Parts With Eleveu-Story Loft Build, ing in East 20th Stree4 Alwyn Court, twelve stories, at I southeast corner of Seventh and Fifty-eighth Street, has just sold by Edgar Feinberg for tb( Orean Company, Frank president The new owner Is the i nell Company, represented by H. B. vin. The selling company acquired tU property at auction in January, ipj? as plaintiff foreclosure It represents a syndicate of bondhola ers which foreclosed the second mort Alwyn Court is on a plot 125x100. was erected about twelve years ago bi the Hedden Construction from plans by Harde Short, for a time held the record for high apart? ment rentals.

It. contains two aparU mcnts of fourteen rooms and five bathi on a floor. Sale of U4th Street Apartment Lloyd Winthrop Company sold for Otto Horwitz and Carolin? Wiener, 312-H West 114th Street a mix story apartment on plot SOxlOfl The Winthrop Company hue boen app03Jited agents of the property. Flat in Greenwich Str-eet Sold Van Vliet Place have sold for John D. Wellenkamp the four story flat a( 791 Greenwich Street, on plot 34 fix 68x65.

Natanson Sells Loft The Nomar Realty Companv (Vax Na? tanson, president) has sold io the Msn port Realty Company (I. Portniaii president) the eleven-storv loft build ing at .39 East Twentieth Street, on a lot 25x100. The structure was eulfj. for all cash over a mortgago of $110 000 Max Cohen and Henry I. Cooper wer? the brokers.

Sale in Greene The Lebertan Corporation has bought from Pauline Meyers, Leah S. King and Louis S. Brush, 125 Greene Street a five-story and basement atore ani loft building. C. S.

Moore was the broker for the sellers. Estate Sells Old Boildlng William Cruikshank's Sons and Cam mann, Voorhees Floyd havo sold for the estates of Daniel Edgar amj bold Edgar to the Markham Rcal'y. Company, Clarence W. Eckhardt, presi? dent, 108 Washington Street, story stable on a lot 23.4x8S.S. This is the first sale of the property in 80 years.

East 21st Street Realty Sold Horace S. Ely Company have for Mrs. Margaret E. Munson, 203-20E East Twenty-first Street, a thrce-story; building on lot 47x120, and have resold' the property to the Willis Pipe Com-, pany, who will make extensive improve? ments. The ahora illustration raprasanta tha building which the Fred French Company, and engineers, plana to erect, chiefly for th? hrms own occupancy, at the northwest corner of Madison Avenue Forty.firet Street.

Tha property was bought by the builders several weeks through Lawrence, Blake 4 Jewell, and the improvement tfca alta will be undertaken aa soon aa il wilt be possible 1er tltf French company te atar ted. Tha owner will occupy the upper the proposed itia that a financial haut, fjh?.