Philly has a reputation for New York City construction costs (high) and Philadelphia rents (low). But AthenianRazak director of multifamily management Kathie Ellzey and analyst William Knapp tell us that Philadelphia multifamily is one of the countrys boom markets. (Boom? Philly is even borrowing NY adjectives.) Kathie says by AthenianRazak's estimates, over 3,000 units could be added in the next two years. Rising rents have made ground-up development possible, despite high construction costs. Development activity is also pushing outwards from Center City (Phillys urban core).

Can all of the new units can be absorbed? The Center City District reports that Greater Center City added over 10% to its population (1,000 households a year) between 2000 and 2010, and projections from the Delaware Valley Regional Planning Commission imply that will continue through 2020. Still, new supply will outstrip this population growth within the next two years, William says. But since supply is tightvacancy under 2%the market will be able to absorb a good chunk of the new units without pushing vacancy too high. New multifamily development will probably slow after the start of 2015, but he thinks the market could handle something close to 1,000 new units per year for the foreseeable future.