PHILADELPHIA-Center City's residential boom accelerated this year for the fifth year in a row, taking the number of Downtown residents to 88,000 by year's end, according to a report by Center City District, an economic development agency that tracks housing trends and other real estate sectors. Since approval of a 10-year tax abatement for the conversion of commercial buildings to residential use in 1997, converters added 6,390 units from 110 properties. Since the abatement was extended to new residential construction in 2000, another 1,845 units were added.
Even when these units are joined by those currently under development and planned, the report says "abated owner-occupied units will not represent any more than 5% of Center City's owner-occupied inventory in the next 10 years." The peak expiration years will fall between 2013 and 2017. Even under the "unlikely scenario of synchronized selling," units with expiring abatements will be distributed evenly across Center City and not apt to distort values in any one area.
Acknowledging that full taxation on these units will affect their sale prices, the report suggests that market conditions and interest rates will have more impact than abatement-expirations. It predicts that no more than seven percent of the units will go on the market within a given year. Concern over expirations, according to Paul Levy, executive director of CCD, should be supplanted with concern about enhancing amenities.
Two groups--empty nesters and people between the ages of 25 and 34 with no children--lead the growth in Center City residents and both segments are growing, says the report. According to its survey of Downtown residents, 80% said what they liked best about living in Center City is proximity to dining, shopping, entertainment, culture and arts and the convenience of being able to walk to these attractions and to work.
By 2008, an additional 3,574 units are scheduled for completion, and another 7,205 units are proposed, but not certain, by the end of the decade. If current conditions persist, the study projects that the Downtown population could be between 96,000 and 105,000.
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