Reports Vary on Philadelphia Apartment Market

How is Philadelphia’s apartment market doing? It’s an important question, not just because of rentals’ status in the overall state of Philadelphia housing, but also because of the high number of new multifamily building projects either recently-completed or coming down the pipeline. Is the market growing oversaturated? Sources seem to agree that the answer is “no, but proceed with caution.”

With so many new apartments, can Philadelphia’s rental market absorb the new units?

Center City District and Delta Associates are in agreement that Philadelphia can handle all the projects in the works and that the city isn’t “built out” so to speak. Another report seems to disagree. Axiometrics, a firm that tracks the multifamily and student housing markets, deemed the Philadelphia apartment market to be “volatile” in the last quarter. Rent growth dropped by 3.5 percent in October as compared with September. September’s rents were an increase from August, but August was a decrease from July. Which is all to say that rents are fluctuating up and down from month to month and that the apartment market might not be stable. October’s average rent was $1,252 a month.

Supporting Axiometrics’ suggestion of volatility are reports that landlords are having to increase concessions to get tenants in the door. These concessions include move-in specials like free rent, special deals on select units, and usually at least one month free. This could mean that the market is softening.

Delta Associates disagrees. They state that average job growth and a rise in Philadelphia’s popularity both mean that the city can support new apartment units and will be able to continue to do so in the near future. They cite data showing that vacancies have dropped from 3.6 percent to 2.0 percent this year and that average rent is higher than this time last year.