Employment Gains Spur Growth in Philadelphia
An evolving wage structure, influx of young professionals and boom in hospitality and development are helping the city's multifamily market keep its head above water.
By Alexandra Pacurar
An evolving wage structure, influx of young professionals and boom in hospitality and development are helping Philadelphia’s multifamily market keep its head above water. In an effort to attract employment, the city lowered its wage tax again in July. For the first time in 25 years, the metro is adding jobs at a faster pace than its regional peer New York City, with education and health services remaining the city’s economic backbone.
Children’s Hospital of Philadelphia alone added 600 jobs in the past year. High-earning sectors such as professional services, finance and information are also attracting skilled labor and increasing demand for office space, particularly in the central business district. The $300 million investment in the expansion and modernization of the Port of Philadelphia is also expected to create at least 9,000 jobs in the trade and transportation sector. A number of vacant buildings in core submarkets are being redeveloped into luxury mixed-use high-rises. In University City, Schuylkill Yards, a $3.5 billion project, will transform the area around Drexel University into an innovation hub.
With 4,500 units slated to come online in 2017, this year is expected to exceed the 2016 cycle peak of 4,000 units. The expanding economy and the fact that millennials are flocking to Philadelphia’s core should keep demand healthy for the foreseeable future. We expect rent growth to reach 2.4 percent by year-end.
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