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Real Estate Journal — Fall Preview — September 30 - October 13, 2016 — 7C
M id A tlantic
S tudent H ousing
By Ken Wellar, Rittenhouse Realty Advisors The rapid expansion of the student housing market in University City, Philadelphia
Value-add deals are trading at great prices as well. RRA sold two properties (a 61 unit build- ing and a 77 unit building in the heart of University City) where the buyer plans complete renova- tions. The cap rate on existing numbers was around 4% when the properties sold to a group out of New York earlier this year. Overall, the current Univer- sity City market has a healthy number of sellers as well as potential investors eager to get into the market. Ken Wellar is a manag- ing partner at Rittenhouse Realty Advisors . n
niversity City is one of the hottest markets in all of Philadelphia. The
ployers, is expanding and add- ing new jobs, along with other major area employers such as Comcast, Jefferson Health and Independence Blue Cross. All of these factors are driv- ing national investors to look into the University City market. This is driving up per unit pric- ing and driving down cap rates. Apartments are currently trad- ing at record prices per unit. RRA recently represented a local developer in the sale of a 39 unit building with 112 beds to a group out of Denver for $11,750,000, which was over $300,000 per unit and around a 6% cap rate.
University of Pennsylva- nia, Drexel Un i ve r s i t y and Univer- s i ty o f the Sciences are the engines behind the massive re-
Ken Wellar
development of the University City section of West Philadel- phia. Each of these highly ranked universities have am- bitious master plans for their respective institutions. Drexel University alone plans to spend $3.5 billion on their Schuylkill Yards project, which aims to become a world-class innova- tions hub. And just recently, The University of the Sciences announced plans to construct a new $50 million student hous- ing facility that will serve 400 students. This project is just the first step in the University’s plan to replace its student housing in the coming years. It seems as though every block in University City has a construction project in process. Development ranges from small to large properties and from the core of University City to its bor- ders. A number of new construc- tion, Class-A residential and mixed-use high rises are going up, including 3737 Chestnut, Vue31 at 3201 Race St. and the FMC Tower, across the street from 30th Street Station. Small- er new construction projects are popping up too, from Lancaster Ave. in the northern part of the neighborhood to Woodland Ave. in the south. How are developers able to fill all of these new projects? The truth of the matter is: Univer- sity City has always had one of the strongest rental markets in Philadelphia, with 1-2 percent vacancy and rental growths of over 3% year after year. An increasing number of students are staying in Philadelphia after they graduate, bolstering the local rental pool, instead of moving to other markets like New York, San Francisco and Washington, DC. According to a survey by non-profit Campus Philly, Philadelphia’s retention of recent graduates has more than doubled since 2004, with a rate of 64% reported in 2014. The local job market continues to grow and recruit from the local applicant pool. Penn Medi- cine, one of the city’s largest em-
RRA sold Spring Hamilton apartments near Drexel University in August at $300k per unit
FOR SALE
THE MODULES - 72 Units/160 Bedrooms $13,250,000 Temple University - Philadelphia, PA
DIAMOND GREEN 92 Units/350 Beds + 12,433 SF Retail $27,500,000 Temple University - Philadelphia, PA
SOUTHVIEW at 1701- 9 Apartments 1 Ground Floor Retail: 7-11 Corporate Lease $4,600,000 Graduate Hospital - Philadelphia, PA
BRECKENRIDGE PLAZA - 92 Units $10,200,000 Phoenixville, PA - Chester County
TALL TREES APARTMENTS - 29 Units $2,100,000 Ridley Park - Delaware County, PA
SCENIC APARTMENTS - 49 Units $2,750,000 Haddington - West Philadelphia, PA
Ca l l ( 215 ) 454 - 2852 for a FREE Proper t y Va l uat i on ! Additional Information and Listings Available on Our Website: www.rittenhouserealty.com
Corey Lonberger, Managing Partner corey@rittenhouserealty.com
Steve Miceli, Associate steve@rittenhouserealty.com
Chris Egan, Associate chris@rittenhouserealty.com
KenWellar, Managing Partner ken@rittenhouserealty.com
Mark Duszak, Director mark@rittenhouserealty.com
For information visit www.RittenhouseRealty.com or call (215) 454-2852
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