Rents Declining, Apartments Sitting Vacant As A Multifamily Glut Hits Philadelphia

Photo credit: Courtesy of PRDC Properties
A Rendering Of The Conversion Of The Heid Building From An Old Hat Factory Into An Apartment Building With A Block Of Units Master Leased To Sonder.

Multifamily rents are declining in Philadelphia, and thousands of apartments are about to come online to make things more difficult.

A study by research website RealPage found that eight apartment buildings have been completed between the Delaware and Schuylkill rivers, Girard Avenue and Tasker Street in the last year, and 19 are under construction. A separate study by Zillow found that median rents are on the decline for the first time in seven years, WHYY reports.

The average asking rent on new deliveries is $1,900 per month, according to RealPage, indicative of the rising rents that have characterized the city's market in recent years. Brokers told WHYY that with much of the availability focused in the Class-A space, renters are choosier than ever.

“Two years ago, we’d do a Craigslist post, and we’d get 20 hits instantly,” Philadelphia-based broker Mike McCann told WHYY. “Now, I just had one, a little one-bedroom on Ninth and Spruce for $1,100. We had no hits in a week.”

Slow population growth is perhaps the biggest factor in the relative lack of absorption, according to Drexel University's Lindy Institute for Urban Innovation professor Kevin Gillen. Without a large influx of jobs (say, 50,000 of them from Amazon), all the new construction will simply have to wait out some weak absorption.

Even with the negative trend in the market, few are concerned about anything as severe as a bubble. Center City's occupancy has declined 3% year-over-year, but still remains at a healthy 94%.

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