Monday, August 7, 2017

Three Most Active Multifamily Submarkets in Philadelphia

Philadelphia apartment construction continues to be top-heavy in the city’s urban core, but a neighboring submarket’s development burst speaks to the continually emerging competition in Philly’s premier first-ring suburbs.

Center City Outpaces Nearest Suburbs in New Multifamily Development at 3-to-1

CoStar Market Analytics data through the second quarter, 2017 shows that Center City and bordering Art Museum / Northern Liberties submarkets had well over 2,500 units under construction - with Center City hosting more than 2,000 of the new units.

These two submarkets have remained atop the development rankings for most of the last three years, and roughly 30 new apartment communities - totaling more than 3,000 units - have delivered between the two from 2014 through June 2017. The overall average asking rent per square foot on these delivered units is over $2.60, while studios in this group are pushing toward $3.50 per square foot.


Job Rich Suburbs Attracting Renters and Developers Alike

While Center City has long been a stalwart demand base for landlords, and Art Museum/Northern Liberties has emerged over the last decade given the gentrification and development in NoLibs and Fishtown, development has picked up steadily of late in Philadelphia’s job-rich, centrally located suburbs.

Main Line, with heavy residential rental nodes in Ardmore, Bala Cynwyd and Wayne neighborhoods, started getting new stock in 2014 after nearly a decade without major deliveries. Strong leasing and renewal performance has kept developers eager, and as of the second quarter, Main Line had the second most units under construction in the entire metro area. Another 1,300 units are proposed for the submarket, with anticipated delivery dates between 2018-2020.

Housing Prices Make Renting an Attractive Option for Many Area Families

A mid-point destination for renters between the city and employment nodes like Conshohocken, King of Prussia, and Plymouth Meeting, the Main Line is known for its opulent subdivisions and outstanding school systems. It’s also known for high-six and low-seven figure single-family home price tags, and even with many of the new two- and three-bedroom households costing between $2,300-$3,500 per month, those prices are well below what a full PITI payment would be for the majority of the area’s homes. Not surprisingly, studio units are next to non-existent in newer builds found in Main Line.
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