Philadelphia Multifamily Investment Forecast
Development Pushes Back Into the Urban Core;
Bidding for Class B and C Deals Intensifies
Developers shift focus to downtown where rebound is further behind. Despite below-national rate of employment growth overlapping with the most rapid supply growth in at least two decades, multifamily fundamentals improved last year and going into 2022. Suburban areas were at the forefront, with vacancy outside of the urban core falling into the low-2 percent range, fueling rent growth amid historically tight availability. The market's 2022 construction pipeline comes short of last year's record-setting delivery volume; however, the location of development could apply upward pressure to vacancy in certain areas. The epicenter of upcoming inventory expansion is projected to shift back to the urban core with over 50 percent of apartments slated for 2022 located within Philadelphia city limits. During the previous two years, the majority of stock enlargement took place in the outlying suburbs. Substantial supply growth could translate into modest increases in availability and slower rent growth in popular core submarkets like Northeast Philadelphia and Center City.