Class A Apartment Market Philadelphia Metro Area: First Quarter 2019

4/15/19

NORTH PHILADELPHIA – PHILADELPHIA’S NEXT HOT SPOT?

Center City has always been the hub for multifamily development in the City of Philadelphia, but North Philadelphia is beginning to find its place in a quickly changing market. With the rise of neighborhoods like Fishtown and Kensington, the number of units in the submarket’s short-term development pipeline have gone from 11 units one year ago to 576 units. The submarket also led the others in rent growth this quarter at 3.6%. While rents were above the long-term average in the City of Philadelphia as a whole, they remained below the long-term average in the suburbs and in the metro area. Southern New Jersey was the only geographic area to experience a decline in rents. Vacancy was up across the board, with every submarket experiencing an increase, aside from Center City. Absorption and supply remained fairly steady in the city from one year ago, with increases of 5.5% and 1.9%, respectively.

FIRST QUARTER 2019 HIGHLIGHTS

The metro area Class A stabilized vacancy rate increased by 100 basis points from a year ago to 4.4% at first quarter 2019. All three geographic areas experienced an increase in vacancy.

- Stabilized vacancy in Southern New Jersey rose 220 basis points over the year to 4.3%.

- Suburban Pennsylvania stabilized vacancy increased by 120 basis points from March 2018 to 4.5%.

- Stabilized vacancy increased by 40 basis points in the City of Philadelphia from 4.0% one year ago to 4.4%.

Rent increases over the year varied across the metro area. Here are the effective rent changes by sub-area for the 12-month period ending March 2019:

- Southern New Jersey down 1.2%

- Suburban Pennsylvania up 3.3%

- City of Philadelphia up 2.2%

Metro-wide, effective rents rose 2.3% in the 12-month period ending March 2019. Average metro-wide effective rents at first quarter 2019 are $1,925, or $2.07 per SF. Effective rents average $2,272 ($2.64 per SF) for high-rise product in the City of Philadelphia and $1,722 ($1.74 per SF) for low-rise product in the suburbs.

Delta Associates, the research affiliate of Transwestern, is a firm of experienced professionals which has been providing consulting and subscription data services to the commercial real estate industry for over 35years.

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