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November 09, 2002

American High Culture III: The Role of Real Estate


“High” culture in America, city governments and the real estate industry have had a long relationship in the U.S. This relationship was already visible in 1892 when the original Metropolitan Opera building in New York City burnt down. The stockholders were divided as to whether it made sense to rebuild, as they had only $60,000 in insurance, and it would take several times that to restore the building. One of the stockholders, Henry Clews, spelled out the case for rebuilding:

The opera house property is a good investment. The ground alone is worth that much and the enhancement of values has been so great that I am sure that it has increased more than three times the original cost. In this way the stockholders are protected from loss in spite of the lack of insurance.

In the end, the partners who wanted to rebuild created a new company, tellingly named the Metropolitan Opera and Real Estate Company, and bought out the property for $1,425,00—a price that was, in fact, roughly three times the cost of the original building.

By the late 1920s, the rebuilt opera house was obviously far too small and there was widespread desire for a new facility. John D. Rockefeller, Jr., (known rather touchingly as “Junior”) whose business interests had always been in real estate, not in oil, went so far as to buy up several blocks around 50th Street, west of Fifth Avenue. He intended to build a new opera house along with office and commercial space. By October 1929, Junior was committed to paying $3.3 million a year in ground rent when the stock market plunged and the Met hastily withdrew from its commitment. Junior went forward anyway, and built Rockefeller Center.

Rockefellers Senior and Junior Art Lovers?

However, although the Met got away that time, the Rockefellers weren’t done with culture, or with real estate, of which they had amassed a great deal in Manhattan by the 1950s. The next go-round with the Met was, in fact, motivated by the fact that after the Second World War and the revival of general prosperity, people had started leaving New York and heading for the suburbs. This trend was distinctly unfavorable for the Rockefellers’ extensive real estate holdings in the city, and it led them to counterattack on multiple fronts, assaults that lead not only to the development of Lincoln Center but also to the World Trade Center. As Alice Goldfarb Marquis in her book “Art Lessons” points out, the motivation behind the development of Lincoln Center had little to do with art (not a subject the Rockefellers were known to embrace):

Many lofty words have been offered as motivation for the determination by John D. Rockefeller III and a phalanx of New York’s business moguls, in 1955, that the city must have a grand cultural complex…Beneath the flow of fine words, unarticulated, ran a current of fears: that the city was slipping from the summit of the financial world; that Manhattan real estate values would languish; that Cold War exigencies were inevitably concentrating power in Washington D.C.; that Boeing’s 707 jet, rolled out eighteen months earlier, would soon be whisking tourists past New York to London and Paris. But most palpable was the fear that the people who bought insurance and stocks, who saved and borrowed at local banks, who consulted the city’s lawyers and doctors, and who formed the backbone of audiences for cultural offerings—the middle class—was souring on big-city life.

New York City also had motivations for helping with Lincoln Center that were also decidedly non-artistic. The chairman of New York’s Slum Clearance Committee in the 1950s, Robert Moses, had focused on seventeen blocks around West 65th Street where Broadway and Columbus Avenue intersect. The area had gone downhill as Hell’s Kitchen had extended itself northward and was made even more threatening by the spread southward of Puerto Ricans, whose street gangs were the inspiration for West Side Story. Moses used Federal slum clearance money to buy up the properties, evict the mostly poor tenants, and make a suitable site for a new arts complex. (This caused some controversy as it became known that the plans for the land included, in addition to the cultural complex, a large number of luxury apartments.)

The actual gestation of the cultural complex was very long, delayed by the necessity of substantial “fund raising” by John D. Rockefeller III on behalf of Lincoln Center’s nonprofit corporation as well as the complex’s ever-increasing budget. Eventually the concert hall opened in 1962 and the new Metropolitan Opera House opened in 1966.

Temple of Opera (Grim Late Modernist Style)

The financial results for the Met were not favorable. In its last season at the 1892 opera house the Met had been profitable. However, during its first season at Lincoln Center, while its income had doubled, expenses had more than tripled. A night at the new opera house could now take in $42,000 at the box office, but cost $59,000. As far as the Rockefellers were concerned, however, Lincoln Center was an enormously successful project. It revitalized Manhattan’s Upper West side, stimulating some $700 million worth of new construction in the vicinity. And New York City was happy: those down-market Puerto Ricans were gone and all the new property development yielded the city some $30 million in additional sales and property taxes. Of course, by 1969 Lincoln Center was virtually bankrupt and had to cancel its summer festival, but hey, it had done what culture was supposed to do—raise the tone of the neighborhood. And it was a lesson not lost on the rest of the nation’s cities or real estate developers, as Ms. Marquis points out:

The glaring conclusion that new arts centers would likely be unprofitable hardly deterred the assortment of civic boosters, downtown real estate developers and genuine arts lovers who indulged the edifice complex that swept across the United States during the late 1950s. By 1962, some seventy cultural centers were being built or contemplated...the Los Angeles [Music Center] complex, built at a cost of $34.5 million marked the start of a wave of cultural centers constructed across the United States…Between 1962 and 1969, 173 arts centers or large theaters were completed and another 179 were on the way. In 1964, some 60 percent of donations to the arts, whether private, corporate, or government, went into construction. Five years later, buildings alone were absorbing more than 66 percent of donations.

And unprofitable the cultural complexes were. In Atlanta, three months after civic leaders delightedly opened a $13 million Memorial Arts Center, the resident ballet, opera, and drama companies all collapsed financially. But their existence had a tonic effect on neighborhood real estate values. In Los Angeles, the Music Center set off a spate of high-rise development that gave the city something as closely resembling a downtown as it was ever likely to get. It was, accordingly, no oddity that whenever the NEA would come up for congressional reauthorization, the lobbying by traditional arts organizations was reinforced by lobbyists for major cities, all asserting that government-supported art was vital to their economies. The fact was, as San Francisco Mayor Joseph Alioto expressed it in a 1967 interview, that

The arts give a flavor or luster which is important to the personality of a city.



P.S. Sorry I didn’t get around to the role of universities this posting, but that’s next.

posted by Friedrich at November 9, 2002


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