By: Ann Bailey, CCIM
Positive market growth in both rents and occupancy has continued in the region in the first quarter. Almost all geographical regions (city and suburban) are experiencing this growth. While our regional residential sales are recovering modestly, this has not negatively impacted our multi-family occupancy. As a result of this last “great, economic turndown”, there will be a large number of households regionally and nationally who will choose to remain renters and never return to home ownership. All positive for apartments!
While the counties surrounding Philadelphia continue to be somewhat supply constrained, the downtown market is experiencing a “growth spurt” most notably in the area west of Broad Street. There are four new Class “A” high rise communities coming online. Two are currently under construction and two are expected to begin construction this year. In addition, the approximately 280,000 SF 1616 Walnut St. will be retrofitted to apartments in the near future. This would bring approximately 1,500 +/- units into inventory. Rest assured, however. The area is buoyed by robust employment, world class educational, medical and performing arts facilities and a 24/7 social and dining environment. While timing plays a critical role in this expansion, we believe the market will have no problem digesting these new units. The combined downtown and University City population continues to grow and thrive and this new construction will further enhance our already well perceived downtown.
The number of First Quarter 2012 sales (7) are approximately 36% below the same reporting period last year – 1st Quarter 2011. While the number of units sold in 2012—1,307—is up by 18%. This unit increase is because last year in the First Quarter of 2011 there were 7 Philadelphia properties which were part of a distressed portfolio sale. The market is still very much supply constrained from a buyer’s perspective. Many owners are enjoying the benefits of recent refinancing, positive cash flow and increased rents through capital improvements. This has resulted in no motivation for selling at this time and, in fact, trying to increase their holdings in this desirable region.