High Rent District

Is Philly building too many apartments?

Rent prices and apartments in Philadelphia

illustration by Lan Truong

The Sansom, 2116 Chestnut, the Granary, Icon, 2040 Market Street, Evo, Southstar Lofts—these are just a few of the rental buildings that have come online recently, are under construction or are in development. Other proposed buildings don’t even have names yet, like Brickstone’s project on the 1100 block of Chestnut Street. And this is the short list. The very short list.

All of which has some people wondering: Is Philadelphia headed for an apartment glut?

The rental craze is happening all over the country. Vacancy rates for rentals are the lowest they’ve been in more than a decade, while the rate of homeownership has fallen to 65
percent—with a particularly striking decline among people between the ages of 25 and 34. Unemployed or underemployed and saddled with debt, the millennials aren’t taking chances when it comes to housing: Between 2006 and 2011, renters in that age group increased by more than one million.

Still, do these national patterns justify Philadelphia’s rental boom? Rental properties under construction here as of October 2013 totaled about 4,000 units. That number isn’t excessive for other cities—but it’s certainly robust for Philly.

“There is a little too much—though not a flood,” says realtor Allan Domb, president of the Greater Philadelphia Association of Realtors. “I think we’re going to have a short-term problem. There’s a bit of musical chairs going on.” Domb points out that five to 10 years ago, everyone was building high-rise condos in Center City. In recent years, money became available to build rental housing instead. But real estate is, as he puts it, a pendulum field. “What will happen is that the rental buildings will be converted to condominiums,” he predicts. “Within 12 to 24 months, the units will be absorbed.” In the meantime, Domb wouldn’t recommend that anyone build more rentals.

For the moment, apartment occupancy is extremely high—roughly 96 percent in Philadelphia. And fortunately for those new buildings opening up, more renters are on their way, including empty nesters coming back to town. Is the city of rowhomes being transformed into a city of apartments right before our eyes? We should have a more definitive answer in the next 24 months.

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  • CS

    Boo. There’s no glut. Keep building. Absorption is strong.

    • NateFried

      Keep on building. There are masses of people moving in and our apartment occupancy rate is incredibly high.

      • DTurner

        Agreed, although I keep finding it shocking that while so many wealthy, or at least wealthier, people are moving in to the city, the companies and commercial properties have not really perked up. Maybe it is just a question of time?

        • NateFried

          I heard that the first people who move in are artists/hipsters… then comes the nightlife… then comes the yuppies… then comes the stores…then comes the companies Right now, downtown on walnut is finally seeing the surge of stores. Northern Liberties is on the verge of finally being able to support stores. So commercial is on its way. Its starting more and more. As for companies… they are also coming… just not downtown – navy yard and university city is the place to be for a new company that supplies career-type jobs.

          • DTurner

            That’s very true. What has me worried is that the biggest news in terms of company movement recently has been companies moving from CC to Navy Yard and UC, that’s not really helping the city (although it is keeping jobs in the city, versus having them leave entirely). Progress will be having companies like Subaru and SAP decamp for the city or, even better, companies coming in from other regions.

  • Rashad Johnson

    what about low income housing in these high rent areas ? Or is that too much too ask?

    • Pee Bee

      There is plenty of low-income housing in Point Breeze, North Philly, etc etc.

      • Julezee

        Ha! Not everyone would agree with you on low/affordable/workforce housing in Point Breeze. ;-)

        • Pee Bee

          well they must not be familiar with PB. It’s infested with low-income housing, shacks, etc.

  • Rashad Johnson

    I feel as though diversity in regards to income should play a part in the makeup of center city .The city government should provide luxury high rises for those with limited income and resources in these areas experiencing growth . With people from different backgrounds living close to one another the results would be positive for the city .The wealthy would not only benefit from the diversity but would also directly subsidize the much needed programs.