Snapshots

Center City apartment absorption not lagging as far behind new deliveries as originally feared earlier this year: occupancy still near 90 percent

A survey of large Center City apartment buildings (50+ units) since 2015 shows that while the inventory has grown considerably in that time – a net gain of 23 new buildings and 4,562 apartments – absorption has ramped up as well, largely keeping pace with the onslaught of new housing options.

December 04, 2018
  • A survey of large Center City apartment buildings (50+ units) since 2015 shows that while the inventory has grown considerably in that time – a net gain of 23 new buildings and 4,562 apartments – absorption has ramped up as well, largely keeping pace with the onslaught of new housing options. Total occupancy has dropped only 3 percentage points in four years to 89.2 percent, and is actually up 110 basis points from this time last year. 
  • Net absorption totals more than 3,700 units across this timespan, but the acceleration is notable. Renters absorbed fewer than 500 units in 2015, but then 698 in 2016, and 1,120 in 2017. With several weeks left in the year, more than 1,437 units have been rented in 2018. Thanks to this ramp up, 82 percent of the growth in supply has been occupied, leaving slack of just over 800 units.
  • This performance is sustaining a construction pipeline that many expected would have slowed to a trickle at this point in the cycle. Instead, major proposals are putting shovels in the ground, including 1300 Fairmount (471 units on North Broad) and The Laurel, a rental and condo building that will become the city’s tallest residential project.
  • A number of factors are helping to fuel the multifamily sector locally: rising mortgage interest rates; very low inventory of single-family purchase options in Greater Center City, particularly in the first time homebuyer bracket; and healthy employment growth attracting residents able to pay the CBD’s growing rent.

    Source: JLL Research, CoStar

 

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