FixList New Construction Market Report24 Jan 2017
By Stacey Mosley
As we leave 2016 behind, we at FixList wanted to reflect on some data-driven indicators on new construction in our hometown, the City of Philadelphia.
In particular, we analyzed zoning permit and building permit issuance for new construction projects between 2011 and 2016. These two permit types are standard when developing brand new buildings in Philadelphia with zoning permits preceding building permits. Here’s what we found.
Northern Liberties is Slowing Down
To see where building permits for new construction were issued, we laid them out on a map.
We then overlaid the building permits (in orange) with the locations of zoning permits (in blue) for new construction which indicate plans for future development.
Activity in the frequently mentioned hot spots for new construction such as Fishtown and Point Breeze is expected, but we are surprised to see certain concentrations or sparseness of activity. For example, Mantua, the heart of the Promise Zone, saw sparse activity compared to neighborhoods like Ludlow. New construction permit issuance in Northern Liberties is slowing, while in Strawberry Mansion, the government is building dozens of new homes near the East Park Reservoir and James Blaine Elementary School.
Chart 2: Properties Issued New Construction Permits Annually (Select Neighborhoods Normalized by Total Properties Within the Neighborhood)
A list of new construction permit counts in recent years for each neighborhood as defined by the Planning Commission can be found here.
20% Increase in Building Permits for New Construction
In total, 1,286 properties were issued new construction building permits in 2016, 80% of which were active as of January 16th, 2017. This is nearly a 20% increase citywide when compared to 2015, and follows the five year trend of increasing new construction permit issuance year over year.
Chart 1: Properties Issued New Construction Building Permits Annually
Multi-Family and Mixed-Use Properties Are Disproportionately Being Developed
Residential property types RSA5s and RM1s - frequently developed into multi-family rentals - continue to be most frequently in development. RSA5’s in particular, while representing 42.6% of the property stock city-wide, represented 49% of the properties issued new construction building permits in 2016.
A disproportionate number of CMX2s (small scale neighborhood commercial and residential mixed use) have also been issued new construction building permits since 2011, averaging 8% of the properties each year compared to the 4.5% of properties zoned CMX2 citywide.
(Learn more about different zoning classifications in the City of Philadelphia’s Quick Reference Zoning Guide.)
Chart 3: New Construction Building Permit Issuance by Zoning Classification
Table 1: New Construction Building Permit Issuance by Zoning Classification
Average Time Between Zoning & Building Permit Issuance Decreased
The average number of days between zoning and building permit issuance between January 2011 and January 2015 went from 204 to 172 days. A month was shaved off of the average timeframe for this part of the construction cycle, indicating that the cycle got faster over the last few years.
As zoning permits for new construction often precede building permits for new construction, we took a closer look at the time difference between these two particular milestones to see how they trended. To do so, we:
- Calculated the cumulative number of properties issued zoning permits for new construction in the last 365 days of a given month (Blue)
- Counted the number of those properties then issued building permits, foreseeably moving on to the next stage of development (Red)
- And calculated the difference, corresponding to projects that either still have not come to fruition or changed course (Yellow)
Chart 4: Properties Issued Zoning Permits for New Construction within 365 days of a Given Month and How Many Have Received Building Permits for New Construction
In the yellow, the number of properties that have not yet received a building permit for new construction began to dramatically increase towards the end of 2015. This is expected given the average months in between these milestones. What is more striking is that the number of zoning permits issued within a given 365 day cycle continued to rise well into the end of the 2016, exceeding the values of the years prior.
And Then There Are Towers
The increasing number of properties issued new construction permits does not account for the size and square footage of each building. Commercial mixed use towers like the new Comcast building require vastly more workers.
In the last five years, 91 new construction permits were issued for high-rise commercial mixed use properties (zoned CMX4 and CMX5). 31 of these remain active as of January 16th, 2017. Another 5 permits for new construction of CMX4 or CMX5 classifications have already been issued between January 1st and January 16th, 2017.
Table 2: New Construction Permits Issued Annually (CMX4’s and CMX5’s)
|Zoning||2012||2013||2014||2015||2016||5 Year Total|
Table 3: New Construction Permits Active as of Jan. 2017 by Year Issued (CMX4’s and CMX5’s)
|Zoning||2012||2013||2014||2015||2016||5 Year Total|
Questions of Capacity, Time & Money
With over 30 active or soon to be active high-rise commercial mixed use properties in addition to high residential demand through the end of 2016, Philadelphia is entering 2017 with more new construction in the works than in the five years prior.
Though the time between zoning and building permit issuance decreased by over a month between 2011 and 2015, this timeframe may very well begin to lengthen as skilled workers remain in increasingly high demand. This may likely impact the cost of construction, as well. With so much activity in the private market already, these matters may only be exacerbated by the implementation of the City’s Rebuild initiative and the Healthy Rowhouse Project, both seeking capital and, by necessity, labor to make vast structural improvements throughout the city with government and private funding.
Philadelphia continues to push its limits into 2017 with the volume and rate of new construction. We will revisit and analyze these metrics to see how things progress, so stay tuned for more information.
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Note: This analysis was conducted between January 3rd and January 16th, 2017. While this analysis excludes other major renovations, alterations, and additions, it is reflective of the demand for brand new buildings amidst the mixed property stock of the city.