Center City Philadelphia Positioned to Handle Supply Well
Center City Philadelphia ranks #4 (following Brooklyn, Central Nashville and Jersey City) among the nation’s busiest submarkets, but this neighborhood is well positioned to handle the incoming supply. With over 6,500 apartments currently under construction, this submarket is scheduled to expand its existing base by 15.6% in the near term, according to data from RealPage Market Analytics. In the past 10 years, Center City Philadelphia has averaged delivery volumes at a much softer 1,100 or so units annually. By comparison, over 3,100 units are scheduled to complete in calendar 2022, which is roughly three times the decade average. Even with elevated new supply, however, this submarket is expected to absorb the new stock well, as apartments here are in high demand. As of March, occupancy in Center City Philadelphia was very tight at 96.5%. Effective asking rents were up 14.2% year-over-year as of March – a significant performance for this submarket and one that has maintained for three months now. While fundamentals took a significant dive during 2020 and 2021 in the depths of the COVID-19 pandemic, Center City Philadelphia has recovered in recent months and is now outperforming historical norms.