Philadelphia Region Multifamily Report H2 2023

February 8, 2024 5 Minute Read

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The Greater Philadelphia multifamily landscape has become a tale of two divergent markets – the suburbs and the city. Property fundamentals in the suburbs remain healthy, with stable rent growth and high occupancy levels. Unlike the wave of new construction that hit King of Prussia, Bala Cynwyd and Exton a few years ago, there are no submarkets with multiple properties currently in lease-up simultaneously. Operating fundamentals in the City of Philadelphia, however, softened as approximately 14,000 units are under construction or in lease-up currently. Many neighborhoods are dealing with multiple assets in lease-up and an abundance of new construction set to be delivered in 2024. While winter is always the slowest leasing season, the new supply is adding to the challenge. To combat slow leasing and remain well-occupied, owners are employing concessions to attract new residents. In some cases, as much as two or three free months of rent are being offered to entice prospective residents to move. Institutional investor interest is focused primarily on the suburban submarkets, to avoid concerns of overbuilding and crime. While the long-term trend remains favorable for multifamily assets in Philadelphia, many investors believe that the next 18 to 24 months are likely to be challenging.