Multifamily demand continues to be strong in Philadelphia, sustained by an influx of degree-holding Millennials drawn to the metro’s expanding job market, as well as a growing population of Baby Boomers opting to rent within the city core while downsizing. Despite the recent spate of deliveries, occupancy remained high, reflecting the market’s capacity to rapidly absorb new product.
Job gains were highest in professional and business services and leisure and hospitality, a trend fueled by new businesses, the organic growth of existing firms and large-scale projects, such as Schuylkill Yards—a $3.5 billion innovation community that Brandywine Realty Trust is developing on land owned by Drexel University. The project’s initial phase will bring entrepreneurial workspaces; corporate offices; educational and research facilities; and residential, retail and hotel space. Meanwhile, the soon-to-be-completed $1.5 billion Comcast Center—Philadelphia’s tallest building—is expected to become a catalyst for the local technology sector. The 60-story tower will host technologists, engineers and software architects, along with a media center and startup incubator.
As more institutional investors have entered the market, competition has spiked, pushing 2017 sales volume above the $1 billion mark. Development is also likely to ramp up in the foreseeable future, with new deliveries concentrated in Center City. This uptick in supply should keep rent growth moderate in the coming months.