The apartment market is finally getting sunnier in Philadelphia

 

By Brenda Nguyen CoStar Analytics

After three years of climbing vacancy, Philadelphia's apartment market is finally catching its breath. The development boom that produced nearly 35,000 new units in the past three years is winding down.

With fewer new units hitting the rental market, Philadelphia renters are filling units faster than developers are building them. In the first quarter of this year, demand for apartments exceeded unit completions for the first time in 13 quarters. The spring leasing season is also on track to see demand exceed new supply.

As a result, Philadelphia's vacancy rate has finally reversed course, trending lower since the end of 2024.

The recent development wave culminated in a multi-decade-high vacancy rate of 7.8% in late 2024. Since then, the average market vacancy has shrunk by 50 basis points to 7.3% during this spring leasing season, signaling a market turning point.

Certain neighborhoods felt the impact of the oversupply more than others. Northern Liberties and Fishtown—two adjacent urban neighborhoods that attracted significant new apartment development—recorded 25.1% and 19.5% spring vacancy rates, respectively.

Although still elevated, these high vacancy figures are lower than their mid-2024 peaks. Both neighborhoods have collectively seen vacancy rates decline by 640 basis points since peaking, suggesting that even the most oversupplied markets are beginning to rebalance.

Looking ahead, the combination of slowed construction activity and sustained renter demand increasingly points to Philadelphia's multifamily market restabilizing. With vacancy rates trending downward and the supply-demand balance restored, the market appears positioned for continued stability through 2026.

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