The fourth quarter of 2025 was far from ideal for multifamily in Philadelphia, with fundamentals weakening across the board, according to the latest market report from CBRE.
Most notably, net absorption went underwater after a strong first three quarters of 2025. Demand was -356 units during the last three months of the year, yet that only brought the full 2025 total down to 8,599.
"Demand was especially concentrated in the city, which captured more than half of all units absorbed and helped restore balance to a market that had been under pressure from elevated new supply," CBRE said of the full-year performance.
Rents were also sluggish, declining by nearly 1.5 percent from the previous three months to $1,948 per unit. Occupancy dropped by about 50 basis points to 96 percent. By property type, those built in 2020 and afterward showed the most weakness, averaging an occupancy of 94.8 percent.
On the bright side, while supply increased to 2,030 units on a quarterly basis, the amount is down from the more than 3,000 level seen a year ago.
Additionally, it was a strong quarter for multifamily investment sales in Philadelphia, which increased by nearly five times from the previous quarter. However, the activity was uneven when comparing the city to the suburbs.
"Investment activity reflected these fundamentals, with suburban assets remaining the preferred target for institutional and private buyers seeking stable, risk-adjusted returns," CBRE said.
"In the city, softer near-term conditions kept many institutional investors on the sidelines, while emerging distress among small and mid-size developers created selective acquisition opportunities for investors with opportunistic capital as the market prepares for its next leasing cycle."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.