Moving   Your Community   , Landlords   , College  

Millennials are Shaping Real Estate Development in Philly, and Your City Could be Next

Most of us are aware of Philadelphia’s outpour of mental capital into the US society and economy at large. Philly sits right next to Boston when you account for how many undergrad and grad students walk the streets vs normal civilians (think: Penn, Drexel, Temple, Villanova, Thomas Jefferson, St. Joe’s, LaSalle, U Arts - and that’s just naming a few). The drastic increase in student enrollment is having very differing effects on two regions of the city.

After reading Pat Clarke’s Bloomberg piece, which focuses on the profitability and expansion of landlords into the college space, I was inspired to take a look into the developments around the Philly market and see what was spurring the growth. Clarke discussed the correlation between enrollment booms in the last twenty years, increasing investment in "super college" residencies, and the inability for institutions’ on-campus departments to keep up with demand.

Using the scope of Clark’s article as a basis for my research, I wanted to dive into the recent boost of Philly’s student and young-professional focused residential development. I took a look at two concurrent changes: the increase in off-campus housing development in N. Philly, located around Temple University, and the refocused increase in housing for today’s young professional in the University City area.

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Temple University and the Growing Demand for Off Campus Housing

It's no secret that Temple U dominates the economic development of North Philly. Not only is Temple’s main campus a landmark nestled into the Cecil B Moore Neighborhood, but its hospital, located just 1.5 miles up Broad Street, also provides jobs and areas of research and learning. Currently, 38,000 students attend Temple’s main campus, which has just 11 on-campus residencies (5,595 total beds) - leading to only 18% of students living on campus.

When I attended Temple a few years ago, I wasn't even guaranteed on-campus housing during my freshman year - a story 23% of their newly admitted students will experience, as well. Increased student population and a quickly recovering economy have enticed developers to lock their eyes on the exploding demand for off-campus housing in the Temple area. Now, new developments and cranes are the N. Philly skyline.

Temple has tried to slow the expansion of students into the historic, surrounding Cecil B Moore neighborhood with on-campus developments such as Morgan Hall in 2012, which boasts 1,275 beds. Private developers have also jumped in on the action with projects like The View (2012) and The Modules (2010), which, for the most part, remain within Temple’s already established footprint.

Amid all this, it's interesting to note that although Temple is the third largest private employer in Pennsylvania, the surrounding housing has been largely consumed by students and longstanding N. Philly residents. So, where the rush of new students drives Temple’s real estate landscape, across town, in University City, folks are seeing an increase in development for slightly different reasons.

University City and the Courting of Young Professionals

While Drexel has 17,000 students attending its main campus and Penn has 10,500, many of the new developments aren’t being built for them. Developers have noted that recent grads want to experience an extension of the college lifestyle, without the “college part” — meaning less beer cans, loud music, and obnoxious young folk, and more access to bars, shops, and higher-level conversations with peers.

In the last three years, nine new residential buildings have been constructed. Developers are noting that half of University City’s 50,600 residents are between the ages of 20 and 34 and, with new projects like Comcast’s record breaking Innovation & Technology Building being completed soon, they’ll have plenty more mid to high wage opportunities to choose from. The increase in jobs and a desired upgrade in the caliber of renter in University City is driving development. To get in front of their young professional target demo, buildings have been using sites like in hopes of swaying some of the 60,000+ Philadelphia users to sign a lease.

Developers are banking on the 75k jobs - added to the U City economy since 2008 - to attract higher-wage, young adults to their residencies. They want nothing to do with the college demographic. Many buildings have overtly boxed-out interested college students by setting higher rent prices, making sure their lease cycle doesn’t align with the college schedule, and by denying renters who are reliant on a guarantor.

It’s important to note, these changes aren’t just specific to Philly. We’re seeing these trends occurring all over the US.

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Millennials are reshaping your cities, too

While Philly is a good case study for these millennial-driven changes in city composition - understand, it's likely that this is happening in your backyard, too. Historically, Seattle, New York, Boston, and San Francisco have been the hotbeds for college students and grads to descend upon. Now, this group is expanding. Note the growth numbers below:

  • Baltimore: Between 2000 and 2010, the number of college educated millennials living in the city increased by 92%
  • St Louis: Between 2000 and 2012, the number of college educated millennials increased by 128%
  • Detroit: Even through severe economic struggle, between 2010 and 2013, the millennial population grew by 7%

Time will tell how all the new investments - following the millennial crowd - turn out. As with any market, there are ebbs and flows in the industry that must be accounted for. One thing we can conclude — whether developers are going with the stats or their gut instinct in making these decisions, they’re hoping to spur the change they wish to see. And hopefully, for their sake, they’re spot-on. Otherwise, a lot of pockets will be hurting.