The building at 209 North Third St. is a three-story structure that has been "meticulously restored," according to Schwartz. She and Susman represented the owner, Yaron Properties, in the sale and secured the buyer, Rocco Management, which paid almost $1.7 million. "In addition to offering stable tenancy and attractive rents, properties in Old City are increasingly coveted by investors for the upside potential of converting them to fee-owned condominiums," Schwartz continues.

The gentrification of Old City, northeast of Independence Mall, began several years ago. "As Downtown prices have continued to climb, the redevelopment of other neighboring submarkets has ensued," says Jeffrey Algatt, regional manager of M&M's office here. "Once-blighted areas, such as Northern Liberties and Fishtown, are now hotbeds of activity."

The multifamily vacancy rate for the entire Philadelphia MSA is 3.8%, making it the sixth lowest among 42 markets in M&M's National Apartment Report, and Algatt expects that rate to hold throughout 2005 despite additional construction and conversions. This MSA remains in 11th place in M&M's National Apartment Index, which ranks the 42 apartment markets according to a series of 12-month, forward-looking supply and demand indicators, which include employment growth, anticipated construction and other factors.

"The relative strength of the local apartment market has exerted positive rent pressure throughout the MSA," Algatt says. His company forecasts asking rents to rise 3.2% this year to an average of $931 a month. "As fundamentals remain steady and rents continue to climb modestly, this market remains a favorite of institutional and private investors." The "condo conversion craze," he adds, is also helping to push apartment sales higher.