Attention consistently falls on Center City and adjacent
neighborhoods, but residential real estate development is happening all over
the region.
It's as true in the rental-apartment market as it is in
the home-sale market.
In Haddon Township, for instance, Walters Group unveiled
on Sept. 26 the first of four luxury-apartment buildings the South Jersey-based
builder is constructing at the site of the old Russell Cast & Stone cement
factory on West Albertson Avenue off Haddon Avenue.
The building is part of an 82-unit development begun in
2014 with the demolition of the factory on the 3.5-acre site.
The project, Albertson Village, is an example of
transit-oriented development, within walking distance of the Westmont station
on the PATCO High-Speed Line.
"Economic conditions have improved to the point
where we felt this was a good time to move forward on this type of
redevelopment," said Ed Walters Jr., president and founder of Walters
Group.
His observation applies to the existing-multifamily
segment, in which investors are battling for just about any property for sale.
In Chestnut Hill, Hill House Apartments, a 188-unit
high-rise on West Evergreen Avenue, was sold Oct. 1 for a price "north of
$40 million."
The buyer, Equus Partners of Philadelphia, plans a major
renovation, including unit rehabs and extensive work to common areas.
Interest in the building, constructed in 1966, was
frenzied.
"We conducted over 50 property tours, and more than
20 offers were submitted on the property," said Corey Lonberger, a
managing partner at broker Rittenhouse Realty Advisors.
Despite continued opposition by some suburban communities
to multifamily development, the apartment market, fueled by millennials, is
healthy.
Economist Kevin Gillen said many millennials decline to
own houses because renting offers "decreased responsibility and greater
freedom."
"This is probably the first generation in U.S.
history that is relatively risk-averse when it comes to home ownership,"
said Gillen, chief economist of Meyers Research and senior research fellow at
Drexel's Lindy Institute for Urban Innovation.
In its third-quarter apartment-market report, real estate
investment services firm Marcus & Millichap called the Philadelphia outlook
"bright," benefiting from total employment being "on the cusp of
recovering all jobs lost during the recession."
Developers are on track to complete 3,600 rental
apartment units in 2015, increasing total inventory 1.4 percent. In 2014, 2,400
rental units were delivered region-wide, Marcus & Millichap reported.
Builders continue to focus on Center City, however, where
nearly 25 percent of the rental apartments set for completion this year will be
located.
The absence of developable land in the downtown area is
forcing developers to convert office space into apartments, as demonstrated by
the Avenue of the Arts office building at Broad and Chestnut Streets and its
217 new residential units.
Despite rising inventory, Marcus & Millichap said,
the absorption rate "continues to surpass supply," with vacancies in
every one of the region's submarkets falling within a narrow range between 3
percent and 7 percent.
In the third quarter, the report said, the expanded
construction pipeline would slow the vacancy decline this year as the rate
recedes 10 basis points to 4.5 percent, on net absorption of 5,300 units. In
2014, average vacancy fell 90 basis points.
Demand is pushing property values higher as owners
continue to hold on to their assets. At the top of the market, some
institutional-grade apartment buildings in Center City are beginning to sell at
record-high prices and cap rates in the low 5 percent range, Marcus &
Millichap said.
Strong rental demand will foster a 3.6 percent gain in
average effective rents to $1,195 a month, up nearly 11 percent from the
pre-recession high, Marcus & Millichap said.
Last year, rents rose 3.2 percent.
Source: Philly.com
No comments:
Post a Comment