Center City’s Housing Market Is Surging, But For How Long?
Center City has recovered from the recession, and then some.
Developers built 1,983 new housing units in Center City last year, a robust total that is the second highest since at least 2000 (The only year that was better? 2013). Property values stand at $307 a square foot, their highest value since at least 2005. Another 3,681 more units are in the Center City pipeline.
And yet, Center City District Executive Director Paul Levy is worried.
“Our basic message here is we’ve got four or five years to get it right,” Levy said at a press conference Tuesday where he shared the findings of the district’s annual housing report.
By “it,” Levy is referring to Philadelphia’s problematic fundamentals—specifically anemic job growth and K-12 education—which remain self-evidently out of whack, and have the potential to derail Center City’s progress in the years to come. The characteristically exhaustive report highlighted a few disturbing trends. 1) While Greater Center City as a whole is doing far better today than it was in 2000, Philadelphia’s core is still failing to retain residents as they reach their 40s, and 2) There has been a sharp decline in the number of school age children.
As for the millennials, so often credited with saving Center City, Levy says their role has been somewhat overblown (downtown has always been a magnet for young people). More importantly, the millennial demographic boom is going to start petering out, Levy warns, and the city needs to have its house in order when that happens if it wants Center City to continue to thrive.
“The millennials will get older and there’s not a whole lot behind them,” Levy said. “We’ve got to fix the basics.”
It’s easy to lose sight of the city’s enormous challenges given Center City’s remarkable progress these past 15 years, and it seems Levy is painfully aware of that risk. Eventually, without significantly higher job creation and a schools system that is strong enough to convince young families with the means to move elsewhere that they should stay, housing demand will dry up, development will slow and Center City’s ascendancy will stall out.
Not immediately, mind you, but the risk is real in the next five years or so, Levy says.
Other highlights from the report:
- Apartment construction is booming, eating nearly all the housing growth in the last two years. Condos remain out of favor.
- Housing projects are increasing in scale, as national developers move in on Philadelphia.
- Market East is emerging as a hot residential zone, a trend that Levy thinks will do much to bolster the retail-led redevelopment of the avenue.
- In the short-term, supply is not likely to outpace demand.
- Center City continues to dominate as Philadelphia’s top destination for newcomers, accounting for 22 percent of all inward migration to the city over the last five years.
See the full report below.