If you’re looking to move in the City of Brotherly Love, have a look at the current status of the Philadelphia apartment rental market. Numbers show a progressive growth in the area, leaving behind the economic fears of 2010-2011. The demand for rentals is firm, vacancy having fallen 300 basis points from its peak in 2010.
Vacancy is actually low enough to drag along developers onto reviving the projects put on hold due to the recession. In fact, they’ve thought about the next step also, having started purchasing land in suburbs once zoned for commercial use, and building large Class A complexes. When all the new apartment supply comes online, competition will be even greater. Employment has been expanding and will continue to do so up to 1.0 percent by the end of the year (27,000 jobs), thus the developments currently in progress will ease slightly the rising need for rental units.
Through June, the construction output reached 645 new units, the 230-unit Jefferson at West Goshen boosting stock by 2.6 percent. 1,700 units are under development currently in Philadelphia, more than 600 landing in the Burlington submarket, and over 5,600 units still on the drawing board: 700 apartments proposed for Upper/Lower Merion and 830 units for Center City.
The rental prices reflect a mild slow down when compared with the second half of 2011 and the asking rent lifted with only 0.4 percent reaching $1,048 per month. Proportionally, the effective rents rose 0.9 percent to $1,007 per month, after the 1.2 percent growth of 2011. By the end of 2012 the asking rent-effective rent duo might reach the level of $1,070-$1,028 per month, mirroring an increase of 2.5-3.0 percent from 2011.
The submarket hierarchy, taking into consideration the Vacancy Rate and the Effective rents has at the high end Center City (3.1% – $1,608/month) followed by Central Chester (2.3% – $1,197) and North Delaware County (3.3% – $1,161) and at the low end Olney/Oak Lane (4.2% – $720), Foxchase/Lawndale (1.6% – $734), and East Delaware County (2.5% – $782).