Nearly half of Philly’s new homes were in and around Center City last year

More than 5,800 new housing units were completed last year in Philadelphia. Nearly half were built in greater Center City.

That’s according to an annual housing report released Monday by the Center City District, a business improvement organization. The district defines greater Center City as Girard Avenue to Tasker Street and between the Schuylkill and Delaware Rivers.

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In and around Center City has been the fastest growing residential region in Philadelphia for two decades. More than 200,000 people lived in greater Center City in 2020. The area initially took a hit early in the pandemic, but the population is up a bit.

Center City has been “incredibly resilient” over the last few years, and the new housing being offered can appeal to households at various stages of life and careers, said Paul Levy, president and chief executive officer of the Center City District.

Center City can be unaffordable for households at the lower end of the income scale, which needs to be addressed, but “the growth of market-rate housing in the downtown is a sign of health and vitality, and it’s a job driver for the city as a whole,” Levy said.

Here are some takeaways from Center City District’s 2022 housing report.

Greater Center City’s land area makes up a little less than 6% of Philadelphia. But 48% of the new housing units completed last year in the city were located there. That’s 2,805 units.

Combined with adjacent zip codes in North and South Philly, this section is 16% of the city but had 75% of its new housing units in 2022.

In the core of Center City, developers completed 728 housing units in nine properties, led by the Riverwalk North apartments, the One Cathedral Square apartments, and the Arthaus condos.

Within the zip codes directly above and below the core that make up the rest of greater Center City, developers completed 2,077 housing units in 267 projects. More than 80% of these units were in multifamily buildings with at least five units.

Of the new housing units completed in greater Center City in 2022, more than 85% were apartments. A lot of Center City’s growth is younger people, which is driving the apartment market, Levy said.

“Every bit of this city’s history tells you that we derive most of our homeowners from people who rent here first,” Levy said. “So the fact that we’re putting a lot of stuff into the rental pipeline to me is positive.”

The city’s 10-year tax abatement for the conversion of vacant office and industrial buildings has helped to spur more residential reinvestment and to make Philadelphia a leader in these conversions. From 1998 to 2022, 8.2 million square feet in more than 40 major office buildings became homes or hotels.

As of Dec. 31, 2022, 13,544 housing units were either under construction or had active permits in greater Center City. That’s 48% of the total number across the city.

At the beginning of 2023, just under 5,000 apartment units in large-scale buildings are under construction in greater Center City.

Living in the core of downtown has gotten more expensive, which has helped spur demand for housing in nearby neighborhoods.

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Over the last several years, as developers have fewer large sites available in the core, development activity has shifted to surrounding areas, such as Northern Liberties, around Temple University, Fishtown, and recently along the Delaware River.

The Center City District points to ease of access to core Center City, these neighborhoods’ “improving mix of amenities and services,” and access to highways and bridges for people who commute out of the city.

But because of rising interest rates and construction costs, “it is unlikely that projects that have neither secured financing nor commenced construction will move forward in the near future,” according to the report.

In 2021, 41% of the 110,500 housing units in greater Center City were owned by a person living there. More residents just outside core Center City own their homes than they do within the core.

The median price of a home sold in the core of Center City dropped in 2020 and 2021. Prices rose last year, but the median price of $825,000 was still 13% below where it was in 2019.

The median condominium sales price in the core of Center City last year was $371,500, 2% above the 2019 level. The condo market in greater Center City trailed the regional market in late 2021 and into 2022, but the gap narrowed in the second half of 2022.

Greater Center City had just over 63,000 apartments in 2021. In 2022, the area added about 2,700 apartments — a roughly 4% increase.

Average asking rents in larger and newer apartment buildings in greater Center City dropped more than 4% in 2020, rose more than 8% in 2021, and increased 1% in 2022. In core Center City, the ups and downs were steeper in 2020 and 2021. Asking rents were up by 0.5% in 2022.

The number of leased units in these kinds of apartment buildings in greater Center City dropped by 900 in 2020 but rose by 3,700 units in 2021, despite increasing rents.

Last year, greater Center City added a little less than 1,500 occupied units in this class of building.

Between 2000 and 2020, greater Center City accounted for 66% of the city’s overall population growth.

The population in the core of Center City grew by more than half to about 69,100 in 2020. During the same 20-year period, the population of Philadelphia as a whole grew by 5.7%.

Then the pandemic and civil unrest happened. According to estimates using mobile phone location data, greater Center City lost 3% of its population in 2020 because of people moving out. Most of that loss was from the core, which lost nearly 7% of its population.

In 2021, residents moved into greater Center City, and in the first 11 months of 2022, the population there grew by almost 2%.