"Investors view the Philadelphia MSA as a safe investment havendue to the area's diversified business base and long tradition ofsolid fundamentals," says Jeffrey R. Algatt, M&M's regionalmanager here.

In-migration will pick up steam, he says, "creating additionalrenter demand and supporting apartment prices." Most of theactivity, he predicts, will occur in the suburbs, because ofincreased employment opportunities and more modest living costs inthose areas. Yet, much of the increase in renter demand willbenefit the luxury market, given the relatively high wages in thegrowing life sciences industries.

Developers will deliver 1,900 new units throughout the MSA thisyear, which is nearly a 20% increase over the 1,590 units that cameto market last year. Overall multifamily vacancy is expected toinch up 60 basis points to 4.2% this year, due to an excess ofsupply. Vacancy in the northern suburbs, however, is less than3.5%, Algatt says. And, despite new construction, vacancy in BucksCounty and the Torresdale/Bensalem submarkets is also less than3.5%.