Philly landlords attract tenants with gift cards, free months

Landlords of new properties are offering a variety of concessions to potential tenants across the city, the Philadelphia Business Journal reported. Building owners are being forced to turn to creative incentives, as supply and demand in the market fall out of whack.

The high supply market is a Philadelphia phenomenon for the time being. Developers rushed to break ground on multifamily projects as a 10-year tax abatement wound down. That resulted in developers launching a combined 15,000 units in a 12-month period.

As those units come online, developers are jockeying for tenants. The oversupply of new apartment buildings is leading landlords to hand out free rent — sometimes for multiple months — Ring doorbells and gift cards, sometimes adding up to $1,000. The situation is particularly acute in Fishtown, a neighborhood booming with developments.

“Eventually what happens is [the owners will] give three, four months away free and people will choose to live there and they’ll just surf from building to building,” Alterra Property Group managing partner Leo Addimando said at a recent panel discussion.

Yardi director of business intelligence Doug Ressler told the publication that roughly 5.5 percent of buildings offer incentives to tenants when supply and demand are at equilibrium in the rental market. In Philadelphia, 8.4 percent of buildings in and around the city are offering incentives.

For landlords, the pressure of needing to offer concessions may not last much longer. While supply should eventually slow down, the rental market is always slower in the winter months than the hot summer season, meaning concessions should be less necessary come June and July.

Another repeated challenge for landlords is that oversupply can help lead to flat or even falling rents. The ability for tenants in the city to see how far their dollar can stretch led it to surge to seventh place in a February RentCafe report of the most sought after city for renters.

The median rent in the Philadelphia area is $1,392, according to a recent report from Apartment List, down slightly year-over-year.

— Holden Walter-Warner

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