Market conditions in the Philadelphia metro area have deteriorated since the second quarter. Partially due to high concessions, the Philadelphia metro area reported negative rent growth of -4.7%. Similar to the Washington and Baltimore metro areas, the suburbs are outperforming the city. Rents are down nearly 10% in the City of Philadelphia. The Philadelphia suburbs however, are somewhat stable with a rent decrease of 1.0% and a stabilized vacancy rate of 3.3%.
THIRD QUARTER 2020 HIGHLIGHTS
The metro area Class A stabilized vacancy increased by 170 basis points from a year ago to 5.1% at third quarter 2020. Southern New Jersey reported the lowest stabilized vacancy at 2.3%, an increase of 110 basis points over the year.
- Suburban Pennsylvania stabilized vacancy increased by 80 basis points from September 2019 to 3.5%.
- Stabilized vacancy in Southern New Jersey increased 110 basis points from 1.2% last year at this time to 2.3% at September 2020.
- Stabilized vacancy increased by 340 basis points in the City of Philadelphia to 8.5%.
Southern New Jersey lead in rent increases over the year, followed by Suburban Pennsylvania. Here are the effective rent changes for the 12-month period ending September 2020:
- Suburban Pennsylvania down 1.4%
- Southern New Jersey up 0.7%
- City of Philadelphia down 9.8%
Metro-wide, effective rents dropped 4.7% over the 12-month period ending September. Average metro-wide effective rents at third quarter 2020 are $1,897, or $2.04 per SF. Effective rents average $2,072 ($2.44 per SF) for high-rise product in the City of Philadelphia and $1,804 ($1.83 per SF) for low- and mid-rise product in the suburbs.
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