PHILADELPHIA, PA—Philadelphia's economic recovery, particularly its track record of rental properties weathering the 2008-2009 recession in fairly good shape, is getting the city some brotherly love from the capital markets in the form of renewed investment interest, according to the Capital Markets Update Panel at the ALM Media RealShare Philadelphia conference held February 10 at the Union League.

“The market has clearly changed over the past couple of years,” says Brian Sykes, senior vice president, Originations, Capital One Multifamily Finance. “The stability of Philadelphia as well as the steady rent growth, as well as the fact that it survived the 2008-2009 situation where vacancy was on average only about six percent and you had a lot of other markets in the country well above that, and right now we're looking at about 3.4 percent vacancy. There's a very steady, 2.4 percent rent growth. It's caught the attention of a lot of institutional investors. There's plenty of capital here. In fact, one of my institutional clients has never bought in Philadelphia and was mentioning to me the other day that they want to pursue multifamily investment here. It's a very attractive market these days.”

Outside Philadelphia's central business district, industrials had already commanded the respect of investors in that sector, according to Brad Ruppel, senior associate, CBRE. “We're already regarded as a Tier I market,” he says. “You've got the top 20 portfolio buyers in industrial already having holdings in and around Central PA.” In addition, Wall Street is pressuring publicly owned investors in this sector to increase their participation in the Philadelphia market, he says.