Philadelphia’s Suburbs Outpace Urban Apartment Rent Performance

 

By Brenda Nguyen Costar

Apartment rent growth patterns have emerged between Philadelphia’s premiere urban and suburban neighborhoods in mid-2023. Rent performance in the top suburban neighborhoods surpassed the regional average growth rate of 2.6%, while rent growth in the most in-demand urban neighborhoods has lagged.

This analysis focuses on the top five suburban and top five urban multifamily districts by the highest rental rates, out of the 33 locales tracked by CoStar in the Philadelphia region.

Among these districts, the Conshohocken and Plymouth Meeting neighborhoods stand out with an average annual rent increase of 5.3%, twice the regional average. Following closely are the King of Prussia and Valley Forge neighborhoods, the Main Line and Lower Burlington County – all suburban districts logging between 3.2% and 4.3% rent increases in the past 12 months.

Meanwhile, North Philadelphia, which encompasses Fishtown, Kensington and part of the Delaware Waterfront, posted the lowest rent growth of the 10 districts at 0.6%. The remaining neighborhoods lagging the region’s 2.6% average growth rate are located in the City of Philadelphia, except for Upper Chester County.

The divergence in rent growth can largely be attributed to the completion of a large number of units in the past 12 months and ongoing construction projects in each district. The four suburban areas with the fastest rent growth saw very few project completions in the recent quarter and have fewer than 500 units under construction. King of Prussia, in particular, had no recent completions or significant multifamily development in progress.

Meanwhile, the six neighborhoods with slower rent growth have between 1,000 and 4,350 more units under construction. Over the past year, North Philadelphia has seen the highest number of construction completions, with 1,385 units delivered and another 3,500 units in progress. The Northern Liberties and Art Museum districts, which had the second-slowest rent growth, saw 990 completions during the same period. Another 4,350 units are in the pipeline to be completed here through early 2025, the highest concentration of development in the region.

Given the expected completion of substantial apartment construction projects in Philadelphia, it is anticipated that rent levels will continue to stagnate across these top urban neighborhoods. Conversely, supply-constrained suburban neighborhoods are likely to maintain solid rental performance in the foreseeable future.

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