In the Philly suburbs, premium rentals are on the rise

Brianna Klein and her boyfriend had decided to move from Illinois for jobs at the drug wholesale giant AmerisourceBergen in the Philadelphia suburbs. The employment hunt was done. The next task was finding a place to live.

They wanted to rent a place equidistant from their workplaces: Klein, 26, is a pricing analyst in Conshohocken, and her boyfriend, Dylan Howard, 27, is a financial analyst 11 miles away in Chesterbrook. They disqualified anywhere that wouldn’t allow their cats, Theo and Emma.

The couple longed for a safe town that could, in some part, offer the pace of living they had back in Springfield, Ill. And, of course, it had to be affordable.

Like many young professionals hunting for rentals just outside Philadelphia, they discovered choices in their price range were limited.

They are among a growing contingent of transient workers hired into the area’s booming pool of aerospace, life science, defense, and medical corporations with salaries that, for the most part, can afford just a modest selection of homes in communities where the average price of rentals is persistently rising.

The median monthly price of one-bedroom apartments has reached $1,800 in some of Philadelphia’s border towns, according to the real estate tracker Rentometer. In comparison, according to Rentometer, the nearby Philadelphia neighborhoods of Manayunk and Roxborough have respective median rental rates of $1,410 and $1,088 for one-bedroom apartments.

After looking at listings in Conshohocken, Norristown, Spring Mill, and Plymouth Meeting, Klein and Howard decided to forgo an apartment — where they could have more built-in amenities — and instead rent a house in King of Prussia for $1,850 a month. They contribute $925 each to live in the three-bedroom, two-bathroom house on a quiet cul-de-sac.

And with that decision, they joined another fast-growing contingent: The population opting to rent single-family houses, which constitute 35% of all U.S. rental housing, according to the National Rental Home Council in Washington.

“It was the cheapest,” Klein said. But “... I have friends [in Philadelphia] that say, ‘Wow, that’s really expensive.’”

Prices have consistently risen for premium apartments and condo rentals over the last several years in Bucks, Chester, Delaware, and Montgomery Counties. Philadelphia suburbs, said Barry Ludwig, principal of Ludwig Corp., a century-old, Conshohocken-based appraisal firm that says it regularly surveys 300,000 units across 1,700 buildings in the Philadelphia region.

Rental stock also has increased for older, garden-style apartments built in the 1960s, he said, pointing to examples in Delaware County, but not at the rate for higher-end housing.

The median rent increase is due in part to the growth of the education, medical, and technology sectors that Ludwig said had driven employment for young professionals. “The rents that they can afford tend to be the best product available on the market,” he said.

Developers have responded by rapidly building luxury apartment complexes where studios can often start between $1,300 and $1,400 and two-bedrooms can easily run $2,000 or more.

Construction has been active in towns including Upper Merion, Lansdale, Exton, and the Bala Cynwyd section of Lower Merion, where officials have developed economic revitalization plans to reawaken blighted or languid neighborhoods or add density.

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Leasing began in late January for Delwyn Bala Cynwyd, high-end housing that Federal Realty Investment Trust and Greystar Management Services billed as having “boutique-style design.” The complex, which will begin moving in residents in May, has studios starting at $1,700 a month, spokesperson Gabrielle Schwab said. A two-bedroom, two-bathroom apartment runs $2,430 a month.

Young professionals and empty nesters “have been sort of driving the demand in this market,” said Pete Sikora, vice president of Maryland-based Bozzuto Development, which has built in and around Philadelphia.

“They are willing to pay the rents that are out there for not only quality luxury apartments but also the amenities that come along with it,” he said. “If these folks were to move out to a townhouse or single-family home, they certainly wouldn’t have the amenities.”

At the same time, some can only long for that type of housing.

“Affordability is an increasing problem for all age groups, including millennials,” Ludwig said, adding that proof of stable income and a decent credit score are generally needed to rent.

Demand for affordable housing has grown, rental managers said.

At the Willows at Reliance Crossing, an affordable housing complex in Souderton, 243 applicants were on the wait-list for two- and three-bedroom apartments in January, said property manager Michelle Jacques. There were only two vacancies in 2019, she said.

After a two-month leasing period in 2018, SteelTown Village in Phoenixville, where residents can have a maximum income of $31,000 for one person, had 300 people on the waiting list, said Steve Kambic, executive director of Petra Community Housing. Monthly rent there is $680 to $807 for a one-bedroom apartment; $805 to $986 for a two-bedroom apartment; and $931 to $1,140 for a three-bedroom, according to its website.

Less than two miles away, at the Westridge Gardens Luxury Apartments, a one-bedroom, one-bathroom unit costs $1,425 a month.

And in King of Prussia, the median monthly price was $1,703, a number determined on a 12-month assessment of 26 one-bedroom apartments, according to Rentometer. The majority of apartments cost about $1,873.

The communities that Rentometer determined had lower median rental prices were Wynnewood at $1,656, Malvern at $1,556, Conshohocken at $1,500, Ardmore at $1,498, West Chester at $1,360, Wyncote at $1,330, Bryn Mawr at $1,318, Phoenixville at $1,300, and Cheltenham at $925.

“If we made less money than we do now, it would be tough to live in this area,” said Klein, who has settled into her job at AmerisourceBergen. “Right now, we’re good with King of Prussia. We haven’t really determined if we’re going to end up moving here for the rest of our lives. I think we’d end up staying if we could.”