Suburban Apartment Sales on Pace for a Record Year
Apartment properties in Philadelphia's western suburbs have been trading at such a strong clip this year that sales are on pace to potentially be a record year. Some of the properties that have sold so far include: Pantzer Properties paid $77.8 million for the Riverworks in Phoenixville; Morgan Properties paid $82 million for Marchwood in Exton; UDR Inc acquired Park Square in King of Prussia; Madison at Glen Mills was part of a larger $370 million sale; and Relative Properties paid $87 million to buy Riverwalk at Millennium in Conshohocken.
The suburban multifamily market has fared well in spite of the increase in new apartment construction. Overall rents grew in the second quarter by 3.1% according to Delta Associates second quarter report. Drilling down to the county level, Montgomery County saw rents rise by 3.5%, Delaware and Chester counties combined jumped by 3.2% and Delaware County by 1.4%. The vacancy rate has ticked up but remains healthy at 4.1% in June 2019, from 2.5% a year ago, according to Delta. In Montgomery County, vacancies stand at 5.5% and it is 3.4% in Delaware and Chester counties.
There are several drivers for the uptick in multifamily sales. Many of the new suburban apartment properties have been developed by merchant builders. There's also a lot of capital in the market chasing multifamily properties, and low interest rates are also fueling deals. The torrid pace of apartment sales is expected to continue for the remainder of 2019.
Source: Philadelphia Business Journal; July 29, 2019