Market conditions in the Philadelphia metro area were steady during the first quarter of 2020. Annual rent growth was near the five-year average while vacancy held steady. Meanwhile, absorption in the City of Philadelphia continued to rise and the 36-month development pipeline was steadily decreasing. The COVID-19 pandemic will disrupt the apartment market moving forward, but its severity and duration depends on how long stay-at-home orders and other measures to help “contain the spread” are in place.
FIRST QUARTER 2020 HIGHLIGHTS
The metro area Class A stabilized vacancy remained unchanged from a year ago at 4.3% at first quarter 2020. Vacancy fell in Southern New Jersey but changed only slightly in Suburban Pennsylvania and the City of Philadelphia.
- Suburban Pennsylvania stabilized vacancy increased by 10 basis points from March 2019 to 4.4%.
- Stabilized vacancy in Southern New Jersey decreased 50 basis points from 4.2% last year at this time to 3.7% at March 2019.
- Stabilized vacancy decreased by 10 basis points in the City of Philadelphia to 4.3%.
The City of Philadelphia lead in rent increases over the year, followed by Southern New Jersey. Here are the effective rent changes for the 12-month period ending March 2020:
Southern New Jersey up 3.7%
City of Philadelphia up 4.2%
Metro-wide, effective rents rose 3.1% over the 12-month period ending March. Average metro-wide effective rents at first quarter 2020 are $1,992, or $2.15 per SF. Effective rents average $2,352 ($2.76 per SF) for high-rise product in the City of Philadelphia and $1,785 ($1.81 per SF) for low- and mid-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.
