Market Insights | Summer 2024 | Philadelphia Metro
Summer 2024
Average
Rent
Average
Occupancy
YTD Sales
Volume
YoY Rent
Change
Occupancy
Change
The city of Philadelphia serves a population of nearly 1.6 million residents and is the cultural, financial, and economic hub of a five-county region that includes Bucks, Chester, Delaware, Montgomery, and Philadelphia Counties in southeast Pennsylvania. The broader Philadelphia-Camden-Wilmington, PA-N.J.-Del.-MD., Metropolitan Statistical Area (MSA) is spread across southeastern Pennsylvania, southern New Jersey, and northern Delaware and is within a day’s drive of 40% of the U.S. population. Philadelphia benefits from its strategic geographical location, lower living costs compared to Washington D.C., New York City, and Boston, and rich cultural and recreational amenities.
Employment
Greater Philadelphia exerts global influence as one of the nation's largest markets and generates over $450 billion in gross regional product. The region is home to 13 Fortune 500 companies and approximately 100 colleges and universities. Philadelphia's economy is poised for continued growth and diversification in the coming years with a world-class transportation network and a location advantage that can reach 40% of the U.S. population in about a day’s drive. Exceptional transportation options like train connectivity from Washington D.C. and New York City strengthen the metro area’s 3.3 million-strong highly skilled workforce. Philadelphia has a diversified economy with the leading industries in the areas of finance, insurance, law, education, life sciences, medicine, research, and leisure and hospitality. The education and health care supersector employs about 730,000 area residents and accounts for over 20% of the region's workforce.
| % ∆ from May 2023 | |||
|---|---|---|---|
| Metro Area Employment (Thousands) | May 2024 | Philadelphia | National |
| Total Non-farm | 3,124.30 | 1.4% | 1.7% |
| Mining, Logging And Construction | 126.6 | 0.2% | 1.7% |
| Manufacturing | 181.8 | 0.4% | 0.2% |
| Trade, Transportation, and Utilities | 539.1 | -1.0% | 0.6% |
| Information | 52.7 | -2.6% | -1.2% |
| Financial Activities | 230.4 | 0.6% | 0.4% |
| Professional and Business Services | 497.9 | -1.1% | 0.5% |
| Education and Health Services | 733.7 | 4.6% | 4.1% |
| Leisure and Hospitality | 289.2 | 4.1% | 2.4% |
| Other Services | 125.4 | 1.5% | 1.7% |
| Government | 347.5 | 1.5% | 2.6% |
Source: U.S. Bureau of Labor Statistics
Rental Market
Renter demand has been strong and steady over the past 12 months, following a 10-year low in market performance in 2022. Rent growth in the Philadelphia metro area varies by regional location and asset class, with mid-tier, three-star properties generating the strongest gains. Suburban submarkets like Bucks County, Burlington, and Cherry Hill experienced strong rent growth between 4.0% and 5.5% due to supply limitations. Supply-constrained suburban areas, particularly in Southern New Jersey, have outpaced the regional average rent growth of 1.1%, according to CoStar. In contrast, prime urban neighborhoods experienced a decline in rent growth in the first half of 2024 due to an influx of new deliveries. Rent gains in Northern Liberties and Fishtown declined between -0.6% and -1.5%. As of Q3 2024, the vacancy rate for the region was 7.2%, compared to the national vacancy rate of 7.8%. In Northern Liberties and Fishtown, the vacancy rates were notably higher at 24% and 20%, respectively, as of May 2024. Competitive lease terms and concessions are expected to increase in the second half of 2024 and into 2025 for both new and existing inventory in the City of Philadelphia submarkets. Currently, over 25% of apartment communities offer renter concessions, compared to 6.5% in the suburbs.
Average Monthly
Mortgage Payment
Average Monthly
Rent
Source: Business Insider
Average Rent / Vacancy
Asking Rent / Bedroom
Multifamily Construction
Absorption levels have been strong over the past year, with submarkets near downtown Philadelphia accounting for the highest level of annual absorption. Over the past 12 months, 13,644 units were delivered throughout the metro area, and 9,300 units were absorbed. Currently, about 13,000 units are under construction, with more than 11,000 units scheduled for completion in 2024. Of the units under construction, 75% are in the upper-tier segment, and 70% are located in upscale areas within the City of Philadelphia. Vacancies in these prime neighborhoods stand at 12.7%, approximately 350 basis points higher than the overall market average, according to CoStar. Construction starts have plummeted 55% year-over-year over the past 12 months, indicating that development will likely wane by the end of 2025. As supply pressures ease, market fundamentals are expected to balance toward pre-2019 historic norms.
Multifamily Completions
Past 12 Months
Single Family
Permits
Multifamily Permits
(5+ Units)
Median Single
Family Price
Completions / Net Absorption
Units by Submarket Delivering in 2024
Units Under
Construction
Units UC Delivering
in the Next 4 Quarters
| Submarket | Units Under Construction | % of Total UC | 12 Month Deliveries |
|---|---|---|---|
| Art Museum/Northern Liberties | 2,041 | 14.4% | 2,246 |
| Camden / Pennsauken | 0 | 0.0% | 0 |
| Cecil County | 549 | 18.4% | 0 |
| Center City | 1,101 | 4.2% | 1,549 |
| Central Bucks County | 303 | 6.8% | 49 |
| Cherry Hill / Haddonfield | 252 | 2.3% | 370 |
| Conshohoken/Plymouth Meeting | 0 | 0.0% | 348 |
| Horsham / Willow Grove | 412 | 3.0% | 219 |
| Lower Bucks County | 1,005 | 4.8% | 200 |
| Lower Burlington County | 300 | 2.6% | 274 |
| Lower Camden County | 360 | 2.0% | 312 |
| Lower Chester County | 166 | 14.6% | 0 |
| Lower Delaware County | 0 | 0.0% | 0 |
| Lower Gloucester County | 0 | 0.0% | 0 |
| Main Line | 172 | 2.0% | 206 |
| Norristown | 0 | 0.0% | 0 |
| North Philadelphia | 2,765 | 19.5% | 1,843 |
| Northeast Philadelphia | 0 | 0.0% | 96 |
| Northwest Philadelphia / Manayunk | 674 | 2.9% | 1,155 |
| Salem County | 0 | 0.0% | 0 |
| South Philadelphia / NavyYard | 1,154 | 17.8% | 1,236 |
| Southern New Castle County | 0 | 0.0% | 0 |
| Southwest Philadelphia | 0 | 0.0% | 5 |
| University City | 238 | 2.4% | 925 |
| Upper Bucks County | 0 | 0.0% | 0 |
| Upper Burlington County | 375 | 3.0% | 455 |
| Upper Chester County | 32 | 0.1% | 1,399 |
| Upper Delaware County | 276 | 1.8% | 84 |
| Upper Gloucester County | 0 | 0.0% | 0 |
| Upper Montgomery County | 230 | 1.7% | 87 |
| Upper New Castle County | 585 | 2.1% | 670 |
| Valley Forge / King of Prussia | 0 | 0.0% | 0 |
| West Philadelphia | 275 | 2.7% | 395 |
Multifamily Sales
At the beginning of Q3 2024, the annual investment volume stood at $713 million, significantly below the 10-year average of $1.9 billion. In the past year, less than 10% of the 240 multifamily properties that traded exceeded $10 million, a stark contrast to 2022 when 30% of the 325 multifamily transactions surpassed this threshold. Value-added sales have driven the majority of transaction activity. In 2023, approximately 80% of the roughly 5,000 units sold were rated three-star or below, according to CoStar. Local private investors and developers, along with national players, have been at the forefront of transaction activity, while most institutional investors have remained on the sidelines. With elevated interest rates, cash buyers will continue to hold a competitive advantage through the end of the year.
YTD 12 Mo. Transaction Volume
12 Mo. Change
Price Per Unit
Annual Price Change
Average Sales PPU / Cap Rate
Team
Ken Wellar
Founding Partner
Corey Lonberger
Founding Partner
Luke DeLuca
Managing Director
Robert DiPasquale
Director
Doug Emrich
Associate Director
Alan Krawitz
Associate Director
Daniel Yadgaroff
Associate Director
Brian Gola
Associate
George D. Johnson, Jr.
Managing Director, Debt & Equity
Joe Hanuscin
Director, Debt & Equity
Christopher Garzone
Director, Debt & Equity