Wednesday, December 30th, 2015
According to a recent Wall Street Journal article, Philadelphia has an apartment shortage—and big developers are starting to fill the void.
A 322-apartment tower planned at 1213 Walnut St. in the hip Midtown Village section of Philadelphia’s Center City neighborhood is slated for completion in 2017. The $125 million project, which broke ground Dec. 8, is set to rise 26 stories above a bustling streetscape of restaurants, pubs and other businesses.
The partners say they are pursuing a rare opportunity to build modern multifamily housing in a market where apartment construction still lags behind rapidly growing demand. The Walnut Street project shows how the urbanism trend can create opportunities in cities that lack a big apartment supply.
Downtown populations are booming. In Philadelphia about 183,000 people now call the Center City neighborhood home, up 16% from 2000.
“Much of this growth is driven by millennials, who have shown a strong preference for not just city living over suburban living, but renting over owning,” said Kevin Gillen, chief economist at consultancy Meyers Research LLC. “Philadelphia is now the No. 1 destination for expat 20-somethings from Brooklyn,” he said, referring to young residents leaving the New York City borough.
Yet apartments make up just 15% of the housing stock across Philadelphia, a far smaller share than in other markets with strong urban cores, according to data from the National Multifamily Housing Council. By contrast, apartments account for 30% of housing in Chicago, 35% in Boston and 51% in New York City, according to the NMHC.
As a result, apartment rents are skyrocketing. The average rent for a one-bedroom apartment in Center City is now $1,650 a month, up 40% from $1,175 in 2010, Mr. Gillen said.