According to a recent report, a number of factors are combining to help keep the Philadelphia residential real estate market producing “solid result” for landlords.
The study, prepared by the real estate investment firm of Marcus & Millichap, concluded that:
- Demand for residential rental housing has remained strong for a number of years, a trend that should continue into the foreseeable future
- Employers in the greater Philly area are expected to add as many as 45,000 new jobs in 2016 alone
- The number of new housing starts nationally has declined in the last few months, making rental housing a more attractive investment
According to Marcus & Millichap, developers are aware of these trends and are expected to increase the number of new residential rental units completed in 2016. Approximately 3,200 new apartments were added in 2015, but the expectation is that the number of new units in 2016 could be upwards of 5,500. The study found that nearly all of the new units opened in 2015 have already been rented, with the few exceptions being mostly in luxury and high-end apartments.
Of course, when demand meets or exceeds supply, the average cost of rent goes up as well. The report anticipated a three percent increase in the average rent for a residential apartment over last year, to an average of $1,221. The study also found that property owners in Philadelphia had an average return on investment of 7.93% last year, highest in the Mid-Atlantic region, but under the national average.
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