The Philadelphia metro area’s stabilized Class A vacancy rate* stands at 4.6% — .7% higher than the 3.9% rate registered at this time last year. Vacancy increased over the year in Suburban Pennsylvania, Southern New Jersey, and the City of Philadelphia.

  • Suburban Pennsylvania vacancy is up compared with March 2013 from .4% at 4.5%.
  • Vacancy in Southern New Jersey, at 5.5%, from 4.7% at March 2013.
  • Vacancy in Philadelphia is up 1.1% to 4.0% in the same time period.

The substate areas of Southern New Jersey and Suburban Pennsylvania experienced differing rent conditions, with overall rent growth in the suburbs of -0.8% over the year and average effective rents at $1,411.

  • The rents in Philadelphia did not fare well, with a decrease of 6.6% since last year at this time.
  • Rent growth in Southern New Jersey was the best, as rents grew by 2.4% over the same period.
  • Effective rents across the  Philadelphia metro area decreased by 2.5% over the past year.

For the metro area as a whole, average effective rental rates are $1,597 ($1.59 per SF). Effective rents in Philadelphia average $2,039 ($2.10 per SF) vs. $1,411 ($1.40 per SF) in the suburbs.

City of Philadelphia

An increase in supply over recent quarters has led to rent declines and rising vacancy in Philadelphia. The number of units under construction has risen slightly, and as a result, we project that the 36-month supply will slightly exceed the number of units that will be absorbed in Philadelphia by the end of our 36-month forecast period. This can already be seen as vacancy rates continue to rise in the last quarter. There are currently 4,763 units under construction or planned that are expected to deliver within the next 36 months in Philadelphia. Philadelphia’s supply/demand relationship indicates that vacancy will continue to edge up slightly, and rent growth is likely to stay negative over the next 24 months. This trend will be temporary, however, and we expect Philadelphia to remain a healthy market.

Suburban Pennsylvania

Effective rents in Suburban Pennsylvania are down by 2.2% when compared with rents from March 2013. Stabilized vacancy is currently 4.5% compared with last year’s level of 4.1%. Concessions have dropped slightly over the last year, from 1.5% of asking rent at March 2013 to 1.1% in the current quarter. Effective rents in Montgomery County are down 3.0% over the year, while Chester and Delaware counties experienced a negative growth of 2.2%. Bucks County experienced a decline as well over the year of 1.1%. Stabilized vacancy* is currently the highest in Montgomery County at 6.6%. Stabilized vacancy in Bucks County is 3.9%, while Chester and Delaware counties have a vacancy rate of 3.1% at March 2014.

Southern New Jersey

Mercer County currently has the lowest stabilized vacancy rate in Southern New Jersey, at 2.7%, down from 3.2% at first quarter 2013. Camden County has a stabilized rate of 7.4% while Burlington County has a stabilized rate of 3.9%. Burlington County experienced the same vacancy rate as one year ago, while Camden County experienced an increase in the stabilized vacancy rate of 1.8%. Excluding Mercer County, the vacancy rate for stabilized properties in Southern New Jersey rose by 80 basis points, from 4.7% at first quarter 2013 to 5.5% currently.

*The term stabilized vacancy rate in real estate refers to the rate of available units in stabilized properties. A property is considered stabilized when it reaches 95% capacity. The property is still considered in the pool of stabilized properties even if it drops below 95% capacity afterwards.