Developers Seek to Fill Philadelphia’s Apartment Shortage
A piece that ran today in the Wall Street Journal covered Philadelphia’s apartment shortage and profiled one big-name project stepping in to fill the void. As is the trend in cities with more than five million people, the downtown population is on the rise in Philadelphia. Millennials and empty-nesters especially are flocking to these urban centers, and Philadelphia has lagged behind other major cities in terms of providing plentiful apartment housing for these would-be city dwellers. The population has increased 16% in Center City since 2000, a boom that is in line with growth in other urban centers. Add to this growth the fact that statistically, millennials prefer to rent rather than to own, and you can see why there’s a real need for more apartments in Philadelphia.
In Philadelphia condos are plentiful, but apartments are rarer.
One project that’s creating more apartments in Philadelphia – the one mentioned by the WSJ – is being built at 1213 Walnut Street as a collaborative effort between Houston-based developer Hines and the local Goldenberg Group. The apartment tower, which will have 322 units, is situated in the hip Midtown Village of Center City. It is due to be completed in 2017 (after just breaking ground last week) and will cost $125 million. It will be 26 stories high. Seth Shapiro, Goldenberg’s chief operating officer, refers to the trend that he sees not just across the country, but particularly in Philadelphia – people are flocking to the city and there simply isn’t enough stock of apartments to hold them over. Apartments make up just 15% of the housing in Center City, as opposed to 30% of housing in Chicago, 35% in Boston and 51% in New York City.
The Philadelphia apartment shortage is driving rents sky-high. Rent for a one-bedroom apartment in Center City runs about $1,650 a month, a rate that is up 40% from $1,175 in 2010.
There are so many apartment projects under development in Philadelphia at the moment that many developers are actually taking a pause on pulling permits for new projects right now, lest the market swing in the other direction and become over-saturated.
