Philadelphia’s CBD apartment occupancy at cyclical high despite ongoing inventory growth
The latest data on multifamily buildings across Greater Center City show a market firing on all cylinders.
November 13, 2019
- The latest data on multifamily buildings across Greater Center City show a market firing on all cylinders. This analysis focuses on large properties (50 units or more) where asking rents exceed $2.00 per square foot in order to filter out older and lower quality product. Since the beginning of 2014, the inventory of units meeting these criteria has grown by 7,007 units across the eight zip codes making up Core and Extended Center City, while the sum of units absorbed stands at 7,445. While deliveries and absorption vary hugely quarter to quarter, the net result is more units absorbed than delivered over this time period, resulting in occupancy just below 94 percent. This is the highest occupancy rate among large apartment buildings in this market cycle.
- Average rents have continued to climb as well, with the asking rate across these 130 properties at $2.60. Five years ago, this same set showed an average asking rate of $2.25 per square foot. This is partially a function of the inventory itself growing: in 2014, only 90 buildings met these criteria for size and cost.
- More than 1,900 units are actively under construction, set to expand the inventory in 2020 and 2021. With performance metrics holding strong, additional proposals are likely to pull the trigger. This next wave is overwhelmingly weighted to the east side of town, with the megaproject Piazza Terminal and waterfront projects gaining steam. With Penn’s Landing Park set to deliver in 2024 and a call for developers to propose build-outs for adjacent sites, the next wave is almost certain to be along the Delaware. The question is whether the waterfront will see significant movement in this cycle or whether investors will grow cautious and wait out a downturn to bring this increasingly appealing residential destination to life.
Source: JLL Research, CoStar