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Strongest growth in housing production in Center City Philly area since 2002, new report finds

As millennials poured into the Center City area in 2018, they created a record demand for housing.

A lot under construction in North Philadelphia.
A lot under construction in North Philadelphia.Read moreAnthony Pezzotti / Staff Photographer

As millennials poured into the Center City area in 2018, they created a record demand for housing.

Last year alone, 2,810 new housing units were completed in the area known as Greater Center City — the largest number since 2002, according to a report released Tuesday by the Center City District. Greater Center City runs from river to river, and is bounded by Girard Avenue on the north and Tasker Street on the south.

The housing boom tells quite a few stories about the city. Here are a few takeaways from the report:

Millennials’ choice

The trend is “being pushed by millennials,” people aged 23 to 38, said Paul Levy, president of the CCD. Their love of the city has helped create the “largest construction boom in Philadelphia since World War II,” said Kevin Gillen, senior research fellow at the Lindy Institute for Urban Innovation at Drexel University.

And, Gillen said, unlike the previous housing boom that caused the Great Recession because it was based on cheap credit, “this boom is driven by more positive fundamentals: the desire by millennials to live, work, and play in Philadelphia.”

Of course, it’s not just millennials creating Center City’s “unprecedented population growth since 2000,” said Lauren Gilchrist, senior vice president for research at JLL, a commercial real-estate services provider. There is evidence of New Yorkers fleeing high real estate rates, as well as empty nesters from the Philadelphia suburbs flocking to the area, she said.

The fastest growing area is Northern Liberties, she said, which saw its population rise 62 percent between 2000 and 2017.

Renters rule

By the numbers, the CCD report said, the majority of housing built in and around central Philadelphia during the last eight years focuses on renters: 72 percent of the new housing units added since 2010 are apartments (10,660 units). During the same time, 4,143 for-sale condominiums and single-family homes were delivered.

Making the area more enticing: The 71,900 jobs that Philadelphia added since 2010 are highly concentrated in Center City, as well as in University City, the report said.

The new housing is concentrated in limited areas, Levy said. Around 80 percent of new units built in Philadelphia are in Greater Center City or its five adjacent zip codes — an area making up 17 percent of the city’s geography, according to the report.

Most construction in the city is just north of Greater Center City, with more than 3,000 units being built or recently completed in Fishtown, Kensington, and other nearby neighborhoods, the report said.

In 2018, 78 percent of the houses sold in the city were priced at $250,000 or less, the report said.

Growth in New Housing Units

In the years before the last recession, most new housing units in Greater Center City were condos. Apartments have been most common since the recession, and construction of single-family homes is strong in the Francisville, Point Breeze, and Northern Liberties neighborhoods.

Staff Graphic

Cool-down coming?

The CCD report showed that the market might be slowing.

About 2,100 apartment units were under construction at the end of 2018, compared to approximately 3,900 units being built at the end of 2017, according to the report. “The amount under construction is tapering down,” Levy said. “We are assuming we might see a pause in 2019.”

This isn’t necessarily a problem, Gillen said. “We’re past the peak, and that’s good,” he added. “You want to take a breather.” Currently, new construction is outpacing population, and no one wants to see apartments sitting vacant, Gillen said, stressing that this slow-down is “a normal cyclical fluctuation, not another housing bubble bursting like 10 years ago.”

Suburban draw

The CCD report captured what Levy called “an unreported story”: “Despite the great market success of the Greater Center City District,” he said, “more people are moving out to the suburbs than there are suburbanites moving in.”

Each year, Philadelphia loses to the suburbs 7,000 more individuals than it gains, the report said.

Most people believe those who depart are couples with children, ready to build greener lives in wider spaces, Levy said. In truth, however, 81 percent of households that move to the suburbs don’t include children, he added.

While conditions have improved, Philadelphia still suffers from slow job growth, and many local residents find work in the suburbs. Because they’re already reverse-commuting, Philadelphia residents often decide they might as well move to where their jobs are — and where the city’s 4 percent wage tax isn’t, Levy said.

The problem of poverty

The report shows that gains in housing “are outstanding compared to Philadelphia’s history,” Gillen said. “But compared to other cities, it’s very, very modest.”

Contrasting various Metropolitan Statistical Areas, Gillen found that the San Francisco area registered four times the rate of post-recession housing construction as Philadelphia; both Dallas and New York nearly tripled Philadelphia’s rate. In fact, in a list depicting construction rates in 18 MSA’s, Philadelphia ranked 14th.

What keeps the city from soaring, construction-wise?

“Poverty,” Gillen said. “In fact, it’s such a huge issue here that our boom is kept modest.”

Added Levy: “The absence of wealth, along with slow job growth, is why we have such a diminished tax base,” which exacerbates poverty.

Philadelphia is still 21 percent below 1970 job levels, the CCD report said. “Recent growth is very promising, but we have not yet gotten back even to 1990 private-sector job levels,” the report continued. “This is a prime reason why Philadelphia has a poverty rate of 26 percent, and why more than 200,000 households making less than $50,000 [annually] are paying a disproportionately large share of their incomes on housing costs.”

Levy hastened to add that large sections of the city are doing well, making Philadelphia still a good choice for many families.

The city embodies instances of both “poverty and affordability,” Levy said. It’s important to note, he added, that “there are whole sections of the city that are quite stable.”

Philadelphia Media Network is one of 21 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice. See all of our reporting at