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Philadelphia's Center City Rebounds as Downtown Residents Return Amid Ongoing Development
Philadelphia's downtown is bouncing back from the COVID-19 pandemic, according to the latest housing report from the Center City District. Early on, the pandemic drove some residents to temporarily relocate amid public health restrictions and the civil unrest that followed the murder of George Floyd at the hands of Minneapolis police. The report indicates that the trend reversed in 2021 and continued to move in that direction in 2022.
According to CCD President Paul Levy, the influx of recent college graduates, millennials, and empty nesters into the area, along with a steady supply of multi-family units, consistent rents, and numerous new housing developments in the pipeline, bodes well for the future of greater Center City. This area, as defined by the organization, spans from Girard Avenue to Tasker Street and from river to river.
“Optimism is too strong a word given everything we’ve been through. But all the trends we see are moving, I think, in very positive directions,” said Levy.
The report states that in greater Center City, which includes Brewerytown, Fishtown, and parts of deep South Philly on both sides of Broad Street, a total of 4,393 units were completed in 2022, representing 75% of all new units built that year. The report further reveals that over 90% of these new units were apartments.
Rising Mortgage Rates and House Prices Lead to Increased Apartment Rentals and Development in Philadelphia's Greater Center City Area
According to Mark Zandi, chief economist at Moody’s Analytics, the rising mortgage rates and house prices until recently made single-family housing very difficult. This led more people to renting, with apartments being built for residents who are choosing to live downtown, particularly people in their late 20s and early 30s, as well as in their 60s and early 70s.
According to the report, there are thousands of additional units in progress in the greater Center City region, indicating that a developer has obtained a building permit from the city for the project. Citywide, more than 28,000 units were in progress in 2022, a figure that is significantly higher than the average annual total for Philadelphia, with almost half of those units located in greater Center City.
Addressing Philadelphia's Affordable Housing Crisis
Despite the positive developments, the release of data coincides with Philadelphia's persisting affordable housing crisis, which has been highlighted by the growing number of people on the waiting list for housing choice vouchers through the Philadelphia Housing Authority. About 18% of renters in the city benefit from some form of housing subsidy, including vouchers, which Levy emphasized as a clear indication of the pressing need for additional affordable housing units.
Brian Emmons, a board member of the Building Industry Association of Philadelphia, suggested that the city should collaborate more with private developers and reduce building restrictions to address the housing needs of its population.
“The public sector is not going to be able to deliver that themselves,” said Emmons, adding that the process for disbursing city land needs to be much faster.
The city’s housing action plan calls for more than 13,000 affordable homes and rental units to be built by 2028. Despite the challenges, the Center City District’s latest housing report is a positive indication of the city's ability to overcome the COVID-19 pandemic's impact on the real estate industry, with the downtown area continuing to rebound.