There are plenty of options for renters in Philadelphia proper, but a new report found that prospective tenants could use more choices in the city’s supply-constrained suburbs.
It also concluded that the Lehigh Valley is the most competitive small rental market in the nation.
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Suburban Philadelphia was the eighth-most-competitive rental market in the U.S. this year, according to the report from RentCafe.
Nearly 95% of the region’s rentals are occupied, and there are 10 prospective tenants for every available unit. Suburban Philly also has a lease renewal rate of 75.5%, which is larger than any of the other seven markets that rank higher on the list.
The share of new units in the region is just 0.81%, lower than every other region in the top 10 except suburban Chicago.
The city of Philadelphia didn’t even crack the top 30 on the list, which also included Pittsburgh at No. 25 and Central New Jersey at No. 26. Philly proper ranked 58th out of 66 metro markets.
None of this means Philadelphia isn’t a well-regarded rental market. A Zumper report found that the city was the third-most popular destination for renter relocations this year behind only Chicago and Portland.
But a large number of multifamily projects entered Philly’s pipeline before the city scaled back its 10-year tax abatement program at the end of 2021. The market is still working through that glut with more units slated to come online in the near future.
“Philly is in a bad way for apartments right now,” Scully Co. CEO Jessica Scully told the Philadelphia Business Journal, adding “there's two and three-month concessions on all the new [buildings].”
The Lehigh Valley topped RentCafe’s list of competitive small rental markets. With an occupancy rate above 96% and a lease renewal rate of 80%, it is seeing 15 prospective renters for every available unit.
The region’s overall competitiveness score of 90.1 is up 6.5 points from 2023. That is partly because the share of new units in the Lehigh Valley this year dropped to just 0.1% from 2.64% in 2023.
The increased demand followed a flurry of warehouse and third-party logistics activity in the region during and after the pandemic, but that sector is starting to cool off.
Harrisburg made it to No. 7 on the small rental markets list with similar statistics to the Lehigh Valley. RentCafe found that 96.1% of units are occupied and there are 13 prospective tenants for every available rental. The region has a lease renewal rate of 75%. Just 1.6% of rentals in the market are new.
The 230-unit Taylor Park Apartments complex in Harrisburg recently sold for $21.5M.
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