Q2 2012 Philadelphia, Pennsylvania Apartment Submarket Trends

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Q2 2012 Philadelphia, Pennsylvania Apartment Submarket Trends

Center City is one of the most vibrant residential downtowns in the United States, but no other Philadelphia area submarkets stand out. In general, the suburban markets on the New Jersey side have lower rents than the suburban markets on the Pennsylvania side, with Cherry Hill, NJ as an exception.

City of Philadelphia

  • The 15,376-unit Center City submarket has a second quarter 2012 vacancy rate of 2.7%, and an average asking rent of $1,716 per month, highest among 28 submarkets according to Reis.
  • Net absorption remained solid in the second quarter at 108 units, and the vacancy rate fell 70 basis points. It is down 210 from a year earlier. The average asking rent increased 1.2% during the quarter with the average effective rent up 1.5% to $1,677 per month. The year-over-year gains are 2.4% and 3.3%, respectively.
  • The 163-unit Gold Tex apartment building is scheduled for completion in September 2012. It will be followed in the first half of 2013 by two projects already under construction: the 270-unit 2040 Market and the 316-unit 2116 Chestnut Street.
  • An additional three projects with 492 units are forecast to break ground in September. All are expected to complete construction in late 2013. Reis predicts nearly 1,000 units will be added in Center City next year.
  • Although many developers were burned by the condominium bust, one is ready to take a chance again. Reis predicts a 74-unit condo project will break ground at 410 S. Front Street next June.
  • Reis reports the 6,405-unit West Philadelphia submarket vacancy rate is 4.0%, and the average asking rent is $944 per month.
  • This vacancy rate was unchanged here during the second quarter, as the average asking rent increased 1.5% and the average effective rent rose 1.6% to $939 per month. Compared with a year earlier the vacancy rate is down 50 basis points, the asking average is up 2.2%, and the effective average is up 2.7%.

Pennsylvania Suburbs

  • In the 8,338-unit Upper Bucks County submarket, the vacancy rate is 1.6%, second lowest among the submarkets, and the average asking rent is $1,143 per month according to Reis.
  • The vacancy rate fell 30 basis points in the second quarter, and is down 50 from a year earlier. The average asking rent increased 0.6% during the quarter, while the average effective rent rose 0.8% to $1,128 per month. The year-over-year gains were 2.1% and 3.0%, respectively.
  • The 233-unit The Station at Bucks County completed construction in August according to Reis. Just under 400 units are forecast to be added here during the 2014 to 2016 period.
  • For the 8,237-unit Lower Bucks County submarket, Reis reports a vacancy rate of 2.7% and an average asking rent of $931 per month.
  • The vacancy rate was unchanged during the second quarter but is down 90 basis points from a year earlier. The average asking rent was up 1.1% for the quarter and 1.6% year-over-year. The average effective rent increased 1.3% over three months and 2.4% over twelve to $913 per month.
  • The apartment boom will not affect this submarket, as no new apartments are expected to complete construction here through 2016.
  • Reis reports the second quarter vacancy rate is 2.8% and the average asking rent is $949 per month, in the 12,167-unit Torresdale-Bensalem submarket.
  • The vacancy rate decreased 40 basis points during the second quarter and is down 10 from a year earlier. Rents increased 0.6% asking and 0.8% effective during the quarter, with the effective average at $923 per month. The year-over-year gains are 1.2% asking and 1.8% effective.
  • Here, as well, no new construction activity is reported or expected. The vacancy rate is forecast to fall toward 2.0% during the forecast period.
  • The 6,055-unit Upper/Lower Merion submarket, which includes many of Philadelphia’s affluent “Main Line” suburbs, has a vacancy rate of 4.1% and an asking rent of $1,127 per month according to Reis.
  • The vacancy rate increased 10 basis points during the quarter, and is up 50 from a year earlier. The average asking rent increased 0.8% during the quarter, but is down 0.4% from a year earlier. The average effective rent of $1,104 per month is up 1.0% during the second quarter but up just 0.1% from a year earlier.
  • Marcus & Millichap reports 600 units proposed in this submarket, but Reis predicts fewer than 400 will be completed by the end of 2016.

Southern New Jersey

  • The 5,181-unit Camden submarket has a vacancy rate of 5.2%, and an average asking rent of $929 per month, according to Reis.
  • The vacancy rate fell 10 basis points during the second quarter, and is down 110 from a year earlier. The average asking rent rose 1.2% during the second quarter as the average effective rent increased 1.5% to $882 per month. The gains from a year earlier are 3.5% asking and 4.0% effective.
  • In the 16,877-unit Camden West submarket, Reis reports the vacancy rate is 4.7% and the average asking rent of $929 per month.
  • The vacancy rate fell 40 basis points during the quarter and is down 140 from a year earlier. The average asking rent increased 0.7% during the second quarter, with the average asking rent up 0.9% to $891 per month. The year-over-year gains are 3.1% and 3.4%, respectively.
  • The 317-unit Abitare apartment project, which completed construction in Voorhees in February, is the only new apartment project Reis predicts will complete construction here through 2012. The 108-unit Abitare condo project in Voorhees remains under construction.
  • For the 6,050-unit Cherry Hill/Eversham/Medford submarket, Reis reports a vacancy rate of 5.9%, highest in New Jersey, and an average asking rent $1,198 per month, also the highest in the Garden State.
  • The vacancy rate decreased 120 basis points during the second quarter and is down 270 from a year earlier. Net absorption has totaled 139 units during the first half of 2012. The average asking rent increased 1.0% during the quarter, while the average effective rent rose 1.2% to $1,114 per month. The year-over-year gains were 2.3% and 3.1%, respectively.
  • “The Klein Co. has completed a new apartment community in Cherry Hill, N.J., that had been delayed when the recession hit,” according to the Philadelphia Business Journal. “Dwell is a 16-building apartment complex that has 233 units on 13 acres at the intersection of Route 70 East and Birchwood Park Drive. Rents range from $1,350 for a one-bedroom upwards to $1,850 for a two-bedroom unit.”
  • The 4,886-unit Burlington County submarket has a vacancy rate of 5.0%, and an average asking rent of $905 per month, Reis reports.
  • The vacancy rate fell 40 basis points during the quarter and is down 20 from a year earlier. The average asking rent increased 1.0% and the average effective rent rose 1.2% to $894 per month. The asking and effective averages are up 2.5% and 3.1% from a year earlier.
  • Reis predicts more than 600 market rate units will complete here in 2013 and 2014, led by the 520-unit (450 market rate) Pennypacker Village in Willingboro. It is expected to complete construction next October.
  • In the 6,787-unit Gloucester County submarket, Reis reports the vacancy rate is 3.1%, and the average asking rent is $948 per month.
  • The vacancy rate decreased 30 basis points during the second quarter and is down 70 from a year earlier. The average asking rent rose 0.6% during the quarter, with the average effective rent up 0.8% to $930 per month. The year-over-year gains are 2.5% and 3.1%, respectively.