M id A tlantic Real Estate Journal — Owners, Developers & Managers — November 2024 — 31
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O wners , D evelopers & M anagers By Carlo L. Batts, MAI, Rittenhouse Appraisals Greater Philadelphia multifamily market shows resilience and growth
T
he multifamily housing market in Greater Phil- adelphia is healthy,
west of Drexel University, was just announced as moving forward. The project received a U.S. Department of Transpor- tation grant this past summer, as part of the Infrastructure Investment and Jobs Act. Another area with strong multifamily performance is lower Camden County. Per CBRE’s Q3 2024 Philadelphia Multifamily report, the area is the top submarket by oc- cupancy and rent growth year over year, although the aver- age rent per unit trails other suburban counties. Rent per unit in the collar counties is
led by Chester ($2,010), North Montgomery ($1,916), and Lower Montgomery ($1,999). However, a slowdown in new multifamily projects is anticipated, and the city most likely not seeing a repeat of the 2024 delivery numbers in the coming years. The initial rush driven by tax-abatement dead- lines has tapered off, meaning that current and future proj- ects are likely to come online at a more moderate pace. This should provide some balance between supply and demand, stabilizing rent growth and potentially reducing the need
The multifamily housing market in Greater Philadelphia is healthy, continuing to experience growth in 2024, and further highlighted by certain submarkets emerging as standout performers.
continuing to experi- ence growth in 2024, and further highlighted by certain submarkets emerg ing as standout
for tenant incentives. The multifamily housing market in Greater Philadel- phia has shown notable resil- ience and growth, even amid mixed national trends. It offers a range of attractive options for prospective tenants, with rents that remain relatively affordable compared to other East Coast cities. Meanwhile, for investors and landlords, the
market’s solid fundamentals and above-average rent growth present promising opportuni- ties for stable returns, though careful attention to submarket dynamics will be essential. Carlo L. Batts, MAI, is the principal of Rittenhouse Appraisals, a regional com- mercial real estate valua- tion firm based in Center City Philadelphia. MAREJ
Carlo L. Batts
performers. Overall Phila- delphia’s rental landscape is vibrant, bolstered by a wave of new units and climbing rental rates. However there are a few challenges to temper this confident outlook. In recent years, the number of multifamily developments across the region has surged, driven in part by changes to the city’s 10-year property tax abatement program in 2021. Many developers were intent on securing permits and lock- ing in benefits under the prior tax structure before the end of 2021, accelerating the launch of new projects. The result of these steps is clear, with more than 5,700 new apart- ment units brought to market in the first nine months of 2024 alone, according to Yardi Matrix data. Barring any de- lays, a total of 9,262 units are expected to be delivered this year, which is significantly higher than the 6,800 units completed in 2023. As this flow of inventory comes on board, Philadelphia’s average asking rents have been resilient. Yardi’s report notes that rents rose by 1.9 percent year-over-year as of September, nearly doubling the national average increase of 0.9 percent. In drilling down into sub- markets, the supply of units in Philadelphia itself slightly outpaces demand, especially in certain neighborhoods. Fish- town has been on an upward trajectory for several years, and now has an abundance of inventory. In this competitive environment landlords are being tasked with offering concessions to attract ten- ants, including reduced rent or waived amenity fees. Other city neighborhoods are at the beginning stages of their growth spurt, such as the Navy Yard and West Philadelphia. As an example, the first phase of Westpark, a planned 1,000 unit, mixed- income housing development
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