More jobs, attracting and retaining millennials along
with improving funding for public education are keys to keeping Center City’s
supply of apartments and condominiums in equilibrium, according to Center City
District’s annual report on housing.
While gains have been made to attract people to live in
the city and, as a result, increased its population, those inroads are
threatened by decades old problems that continue to plague Philadelphia — tax
policies that deter companies from setting up in the city and a poor public
educational system that lacks funding.
For as much as that has changed in Center City, there are
some things that haven't.
Both of those issues continue another decades old dynamic
– people leaving the city in search of work and better schools.
While that has slowed, it hasn’t been eliminated. Data
show that between 2010 and 2014, 21,000 people from the region moved into the
city while 28,000 people who were living in Philadelphia fled to the suburbs,
most notably Montgomery County. That’s a net loss of 7,000 for the city.
“We have to be careful that our hype doesn’t obscure the
facts. Funding for schools is essential, but job growth exceeds that,” said
Paul Levy, CEO of Center City District, during a presentation of a report
called: Sustaining Demand for Downtown Housing. “People move to where the jobs
are.”
Though there is an increasing trend of companies from
outside the city relocating into Philadelphia or setting up satellite offices,
it’s not enough. On a national level, the top 25 largest cities are
experiencing 2.8 percent increase in private sector job growth. Philadelphia is
not among those cities, but places such as Boston and Memphis are. Philadelphia
is recording a 1.1 percent increase in private sector job growth and regionally
it's at 1.3 percent.
Levy directly linked job growth in Center City to the
health and sustainability of its housing market, the residential development
projects underway and in the pipeline, as well as rental and sale prices. So
far, demand has been meeting supply and other indicators are positive but there
are hints that trouble could be on the horizon if job growth and other issues
aren't tackled.
Developers may already be taking note. There's been a
steady decline in the number of apartments, and to a lesser degree
condominiums, being constructed.
In 2015, 1,538 housing units, mostly rental, were
completed. That's 22 percent fewer than 1,983 completed in 2014 and a 26
percent drop from a record of 2,091 in 2013, according to the CCD report.
Rents rose by 3.1 percent over 2014 and the vacancy is at
2.8 percent compared with 5.7 percent. On the for-sale front, sales are up,
prices increased and the number of days on the market has declined.
“But with 5,833 units, 78 percent of which are rental,
now under construction and many more proposed, continued market equilibrium
depends greatly on the timing in which these new units are delivered during the
next three years, the duration of the current national economic expansion, and
Philadelphia’s ability to generate more dynamic job growth and retain a greater
share of young professionals as their children reach school age,” the report
said.
There’s another 8,000 units in projects that have been
announced but have not yet broken ground.
For demand to meet the supply under construction, the
city will need to attract 650 more households a year above its existing growth
rate. That can be done through a variety of ways including keeping a certain
percentage that might move out to the suburbs for a job or schools, bringing in
people through job opportunities and even other slightly more desperate
maneuvers such as developers taking longer to deliver units or having obsolete
units demolished.
“This is a cautionary tale. Fifty percent of the millennial
population don’t expect to be here in the coming decade,” Levy said, citing a
2014 study by Pew Charitable Trusts.
The No. 1 reasons: Lack of job opportunity and schools.
Source: Philadelphia
Business Journal
No comments:
Post a Comment