Philly’s Multifamily Construction Set to Rebound in 2026

Philadelphia’s developers are dusting off shelved plans after a bout of overbuilding in the multifamily market.

Ground-up apartment construction is poised to accelerate again next year as buildings delivered during the boom finally lease up and occupancy rebounds, according to the Philadelphia Business Journal. Several long-planned projects moved forward late this year, signaling that lenders and developers are growing more comfortable betting on demand.

Among the big projects, Post Brothers locked in $170 million in financing for the next phase of its Piazza Alta project in Northern Liberties, while Pearl Properties secured a $173 million construction loan for the 267-unit Harper Square tower near Rittenhouse Square. Brevet Capital also submitted plans for a 36-story apartment tower in Pennsport, where construction is expected to start in late 2026.

The renewed activity marks a sharp turn from 2024 and much of this, when developers largely hit pause as supply flooded the market, occupancy slipped and concessions piled up amid high interest rates.

Philadelphia delivered more than 5,000 units in 2023 and roughly 7,500 in 2024, according to Cushman & Wakefield. But only about 2,500 units came online in the first three quarters of 2025, a steep dropoff that is now tightening the pipeline.

“We had a classic case of overbuilding,” Dranoff Properties CEO Carl Dranoff told the Business Journal.

Occupancy for multifamily properties with at least 50 units fell to 87.8 percent in 2024, according to Cushman & Wakefield, down from nearly 94 percent the prior two years, before rebounding to 91.5 percent this year.

Newer inventory has lagged behind with projects delivered since 2020 about 78 percent occupied by midyear. But lease-ups are happening faster than expected, Cushman researchers said, especially as fewer buildings are set to deliver in the near term.

That dynamic is pushing developers back toward infill and established neighborhoods. Post Brothers’ Piazza Alta expansion and Pearl’s Harper Square are both adjacent to existing stabilized projects, a strategy lenders view as lower risk. In less proven areas, financing remains harder to come by.

Occupancy still varies widely across the city. Fishtown and Northern Liberties, which absorbed much of the recent construction, are about 80 percent occupied, while most other submarkets are north of 90 percent.

With concessions beginning to burn off and effective rents ticking up to $2.20 per square foot in the third quarter, according to Cushman, developers see a potential shortage brewing.

Cushman’s Michael Hanes warned that with few projects under construction beyond a handful of conversions, Philadelphia could soon “run out of new buildings.”

— Holden Walter-Warner