Philadelphia Multifamily Boom Set To Slow After Massive Construction Wave In Greater Center City

Center City and its surrounding neighborhoods are the beating heart of Philadelphia’s residential boom, which appears to have reached its peak.

Last year, the area covered by the Center City District accounted for 44% of housing completions in Philly even though it accounts for less than 6% of the city’s land, according to the nonprofit’s latest housing report.

“One in eight residents in Philadelphia live in greater Center City,” CCD Vice President of Economic Development Clint Randall said at a press conference on Tuesday.

The report also found Philly has added more new apartments than Boston and San Francisco combined since 2020.

Many of those projects were expedited so they would begin before the expiration of the city’s 10-year tax abatement, which ended at the end of 2021. Now that lots of those buildings are online or nearing completion, the multifamily pipeline in Philly is set to shrink.

“We expect the pace of deliveries to slow down naturally,” CCD Manager of Economic Development Lauren Smith said.

“This opportunity allows demand to catch up with the supply,” she added.

Randall predicted housing production in 2025 would fall to about a third of that seen last year.

An overwhelming share of last year’s housing completions happened in the 19123 ZIP code. The area extending roughly from the Delaware River to Broad Street between Callowhill Street and Girard Avenue accounted for a full quarter of Philly’s new units in 2024.

Many of those apartments are in a handful of large buildings located in the shadow of the Market-Frankford Line. 

“I think what we’re also seeing is this entire new neighborhood rise out of the ground from scratch,” Randall said.

Public transit access is a big part of the neighborhood’s appeal, but developers were also drawn by the hefty former industrial parcels available along the Delaware River and a combination of tax credits and zoning adjustments meant to juice construction there, CCD officials said.

“The waterfront, more than anything, is the source of that really astonishing number of new units,” Randall said. “Nearly every large parcel between Spring Garden Street and Penn Treaty Park has seen some kind of construction move forward.”

He expects the next wave of residential development to take place in more northerly neighborhoods along the Market-Frankford Line, including Fishtown, Kensington and Port Richmond. That conclusion was based on the report’s analysis of housing permits issued last year through the Philadelphia Department of Licenses and Inspections.

Market East, a core segment of CCD’s territory, has not been a major part of Philly’s residential boom. It’s unclear what will happen with the neighborhood now that the Philadelphia 76ers won’t be building a new arena on the corner of 12th and Filbert streets.

But CCD CEO Prema Katari Gupta has an idea of what she’d like to see as city officials begin drafting a new master plan for the neighborhood.

“I think we’re really focused on Market East being a mixed-use corridor,” she said.

The CEO also highlighted several surface parking lots along the corridor that could be strong candidates for residential development given the area’s status as a regional public transit hub.

Office-to-residential conversions are often a major point of discussion when it comes to revitalizing downtowns, but there aren’t a lot of straightforward candidates left in Philly.

“A lot of the simpler conversion prospects have definitely been gobbled up,” Randall said. “Now we’re looking towards a future where some of the conversions are going to be a little more complex.”

Still, the report highlighted several ongoing conversion projects that will bring more than 900 units to the city once they reach fruition. 

That includes Morgan Lewis’ work at 1701 Market St., which included transforming much of the 300K SF office tower into 299 apartments. The first tenants are set to move in this spring.

Lubert-Adler is nearly finished with its work at Bellevue, which will bring 155 apartments to the high-end hotel. The company is also bringing 176 units to underutilized office spaces at the Bourse and 400 Market St.

“It’s nice to chip away at that oversupply of office space,” Randall said.