Why Invest in Philadelphia’s Multifamily Market
- Jul 05, 2019
Philadelphia’s economic growth led by its steadily increasing tech market, continues to attract investors and developers. The metro’s consistent population and job gains are what drive Morgan Properties to deploy capital for multifamily communities in the area.
The company ranks as the largest owner in Pennsylvania. According to Yardi Matrix data, it owns and manages more than 42 properties and since January, the company acquired roughly 2,300 units.
“Our strategy for this recent transaction includes additional capital investment for interior renovations and amenity upgrades to enhance the level of value and quality at these communities,” Morgan Properties Area Vice President for Pennsylvania and Delaware Christine Beechan told Multi-Housing News. In the interview below, she also names some challenges investors face in the market, as well as the company’s expansion plans.
What are the main multifamily trends in Philadelphia today?
Beechan: Multifamily remains a coveted real estate investment and like much of the Northeast and Mid-Atlantic, there is limited supply relative to properties being offered for sale in the Philadelphia area. Those that do come to market have high price tags and an ample buyer pool ready to chase them.
Tell us about the metro’s hottest submarkets. What makes these submarkets stand out?
Beechan: There are players that feel very comfortable within city limits, and those like Morgan Properties that typically prefer the suburbs. The one thing the submarkets have in common is a relatively high barrier to entry into the home buying market. This, combined with the fact that the number of renters by choice (rather than renters by necessity) continues to rise, creates solid markets almost anywhere in the metro that an investor is willing to provide a quality product.
Name a few challenges investors currently face in the Philadelphia multifamily market.
Beechan: Because Philadelphia is such an in-demand market, finding the right deal with the best opportunity for value-add enhancement is the challenge. Given the multifamily owner composition is primarily made up of families, being quick and nimble when communities are placed on the market is key. While we continue to be very selective on acquisition opportunities, having the right investment strategy and knowing your operational expertise is aligned allows for future expansion.
According to Yardi Matrix data, Morgan Properties acquired seven properties in the metro since January. What can you tell us about your expansion strategy for this market?
Beechan: With the addition of seven properties and 2,346 units in the Philadelphia area, this transaction solidified our geographic concentration in one of our core markets. With this transaction, Morgan Properties has accumulated a total of 9,300 units in Pennsylvania officially ranking us as the largest multifamily owner and operator in the state. Two of these communities are located in the sought-after Main Line neighborhoods of Devon and Bryn Mawr. The other five communities are located in suburban neighborhoods within Conshohocken, West Chester, Downingtown, Jeffersonville and Bensalem.
How have your residents’ needs changed in the past years?
Beechan: The needs of our residents have not necessarily changed over time, but rather evolved. Convenience, lifestyle and a sense of community are more prevalent in today’s world. Our mission to add value and create experiences has never wavered.
Do you have plans to expand to other markets in the future? Tell us more about Morgan Properties’ growth plans.
Beechan: Morgan Properties is always looking to expand in other markets when the right opportunity comes along. In 2018 we expanded into the Nashville, Tenn., market increasing our company footprint across a total of 11 states. We recognize that continued local growth is difficult because there are very few deals that come to market and that means we will look at new markets.
Our investment criteria, however, remains consistent. If and when we expand to a new area, it needs to be big enough to allow us to accumulate at least 2,000 units and achieve the operating efficiencies that come with scale. From humble beginnings starting with one apartment community in the Philadelphia market over 30 years ago to today with a total of 167 apartment communities and over 50,000 units, we have the desire and ability to continue growing.