Philadelphia Multifamily Construction Boom

At the end of 2021, developers sought to capitalize on the expiring tax abatement for new construction projects. This led to a record number of construction starts for new multifamily product in the city of Philadelphia, giving way to an 8.1% expansion in the existing renter-occupied inventory. 

Some speculated the massive over expansion of renter-occupied housing, coupled with an underperforming office market, would result in much of the new construction sitting vacant. However, most of the expansion was immediately absorbed. Specifically, 65.6% of all new product (built after 2021) is currently occupied. This rapid absorption points to a pent-up demand for quality and best-in-class living accommodations. Interestingly, the strong absorption happened despite the overall net negative migration for the city/county. This was possible as most inbound migration came from renter dominated areas such as New York City and Washington DC. That is, the city has a steady exodus of to-be owner-occupied residents and a steady inflow of renters, thereby enabling the near complete absorption of a historic construction boom.  

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