Fishtown is Booming, Where’s Next?

For this month’s Philadelphia Housing Index (PHI) blog post, we decided to take a look at new construction permit data from Philadelphia’s Department of Licenses and Inspection. We filtered the data to examine only new construction building permits to see how Philadelphia’s development pipeline stacks up compared to previous years and which neighborhoods are showing the greatest activity. For comparison’s sake, we are comparing neighborhood trends from the first five months of this year with the first five months of last year to account for seasonality and to identify new trends.

For example, it’s not surprising to anyone that follows our monthly posts or the Philadelphia residential real estate market in general that the Point Breeze neighborhood’s growing housing index is matched by a consistently high volume of new construction permits. However, fewer permits have been pulled in this neighborhood for new construction this year in comparison to the same time last year. And in fact, this year the city has seen a 14 percent decrease in new construction permits issued as opposed to the same time last year. Don’t draw any construction downturn conclusions just yet, as we’ve also found a number of “new” neighborhoods where new construction permits are just now picking up.

 

 

L&I permit data shows that, particularly in the lower portion of North Philadelphia (around Fishtown and Kensington), a number of fringe neighborhoods are showing signs of more development activity in 2018 than in the past. (ICYMI, Forbes has labeled Fishtown “America’s Hottest New Neighborhood.” That label is reflective of the PHI, which indicated prices that are reflective of the popularity. Kensington is close behind because of the proximity to all the action.) The construction permits issued in the Fishtown neighborhood have almost tripled from 91 in 2010 to 263 in 2016, and for the first time decreased since 2010. This trend seems likely to continue this year, considering that 37 construction permits were issued in the first five months of this year, compared to 85 last year. However, the house prices in Fishtown have not stopped growing since 2010 .

 

While new construction in Fishtown and Kensington may be slowing down, investment seems to be pushing outward from its boundaries and into currently less expensive areas. In the first five months of 2018, 62 construction permits were issued in West Kensington, compared to 20 at this time last year. This outpaces the neighborhood’s permitted construction at this time last year, but also demonstrates an increase over the total volume of permits applied for in the neighborhood for all of 2017, which was 54 permits. What’s that mean in terms of the housing index? Well, it’s reasonable that it’s partly because of the newer homes coming on the market that the overall PHI will grow in the coming months in that neighborhood. Remember, ESI’s PHI reflects data collected from recent home sale transactions, so the new construction in these neighborhoods and resulting sales will inevitably skew the PHI higher.

A similar trend can be seen in the Richmond neighborhood to the northeast of Kensington, although the pace of new construction permits is a little slower than West Kensington. The neighborhood has attracted many developers that are bullish on the Fishtown-Kensington submarket as well as the potential growth in the Richmond neighborhood. For example, in February, the City approved a plan to build luxury housing in the four-acre vacant lot at the corner of Lehigh and Frankford Avenues in Richmond.

While at the moment we’re seeing a lower rate of construction permits issued in the whole city compared to last year, we wouldn’t draw any conclusions about the future of the construction pipeline on that alone. Keep in mind that many neighborhoods, including West Kensington and Richmond, have actually seen a significant increase in construction permits issued since the start of the year, showing new investment in these areas. Stay tuned for future blog posts where we will overlay other indicators of redevelopment on the PHI to highlight where the next booming Philadelphia neighborhood will be!

 

Gina Lavery is an Associate Director at Econsult Solutions. Gina focuses and leads projects on market research and analysis for the Greater Philadelphia area.

 

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Jing Liu is a Senior Analyst at Econsult Solutions. She specializes in spatial analysis, quantitative analysis, and data visualization. Prior to joining ESI in 2016, Jing received her Master’s in City Planning and Urban Spatial Analytics from the University of Pennsylvania.

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