Same-store effective rents in the City of Philadelphia finally, but just barely, crossed the recovery threshold to pre-pandemic levels, while in the suburbs, growth since March 2020 was in the double digits. In 2021, rents increased by 17.4% metro-wide with even stronger growth in the city. Meanwhile, vacancy is down 410 basis points over the year in the metro area with an even greater 650 basis-point drop in the city. The apartment market in the city of Philadelphia was more severely impacted by the pandemic compared to the suburbs, a trend common among cities in the Mid-Atlantic and other parts of the country. Over the past year, apartment market metrics in the city appeared to outperform the suburbs, but that is because the city is coming out of a much larger deficit, from rents to vacancy to absorption.
FOURTH QUARTER 2021 HIGHLIGHTS
The metro area Class A stabilized vacancy decreased by 410 basis points from a year ago to 2.5% at fourth quarter 2021. Southern New Jersey reported the lowest stabilized vacancy at 1.5%, a decrease of 1,110 basis points over the year.
- Suburban Pennsylvania stabilized vacancy decreased by 190 basis points from December 2020 to 2.3%.
- Stabilized vacancy in Southern New Jersey decreased 1,110 basis points from 12.6% last year at this time to 1.5% at December 2021.
- Stabilized vacancy decreased by 650 basis points in the City of Philadelphia to 3.0%.
The City of Philadelphia led in rent increases over the year, followed by Southern New Jersey. Here are the effective rent changes in 2021:
- Suburban Pennsylvania up 13.6%
- Southern New Jersey up 17.8%
- City of Philadelphia up 22.1%
Metro-wide, effective rents increased 17.4% in 2021. Average metro-wide effective rents at fourth quarter 2021 are $2,137, or $2.32 per SF. Effective rents average $2,315 ($2.78 per SF) for the City of Philadelphia (primarily in mid- and high-rise product) and $2,039 ($2.07 per SF) for the suburbs (primarily in low- and mid-rise product).
Delta Associates, the research affiliate of Transwestern, is a firm of experienced professionals which has been providing consulting and subscription data services to the commercial real estate industry for over 40years.
