Philadelphia continues its ‘fragile’ economic recovery with jobs, foot traffic, and home sales gaining strength
Office vacancy rates nudged up along West Market Street, but other indicators were strong.
Philadelphia last month continued to generate “encouraging” indicators that the economy is slowly regaining strength, according to a report issued Monday by the Center City Business District
The number of people filing for unemployment benefits in the city “has dropped dramatically,” said Paul Levy, president and CEO of the Center City District. The unemployment rate declined from more than 18.2% in June to 15.8% in August to 11.7% in September.
“The rate is still higher than the national rate of 7.7%,” Levy said. “But we’re heading in the right direction.”
Construction permits continued their surge to their highest level since February. Though permits were down about 18% from their pre-pandemic peak, more than 4,350 permits were issued in September, a healthy increase from the 3,980 issued in August.
“The most encouraging thing is the life on the street,” Levy said. “Through the entire summer we were averaging only 33% of the pedestrian traffic. But that’s also on the rise.”
Foot traffic along Center City’s main commercial corridors, Walnut and Chestnut Streets, was at 70% to 75% of normal in October with outdoor dining and reopening retailers driving a slow but steady recovery.
There were moments during the last two weeks when many feared the fragile comeback would collapse.
“Everybody boarded up with anxiety over the fallout of the police shooting [of Walter Wallace Jr.] and worried there would be challenges with the election,” Levy said. “But that turned into a huge celebration over the weekend.”
Dilworth Plaza, the public space operated by the Center City District on the west side of City Hall, saw its largest crowds of the year over the weekend. The ice skating rink opened on Friday to host limited numbers of skaters in the 74 degree temperatures.
“The momentum is positive,” Levy said. “And the great weather has been a great shot in the arm for everyone’s psychology.”
On Monday, many retailers who had feared postelection riots removed the boards from their windows, Levy said. Many Center City Wawa stores, which had closed for several days, took down plywood fortifying their shop fronts and reopened for business.
Home sales in Philadelphia were nearly as strong in September as they were in May 2019. Median home sale prices were greater than at anytime last year at $242,000. That figure was 19% higher than the median of $200,000 houses were fetching in September 2019.
“I can’t fully explain this,” Levy said. "There was all this worry about people fleeing cities in general. That doesn’t seem to be the case. We talk a lot about how digital hurt retail, but it seems to have really invigorated the real estate market.
“But in all the good news about sales, we did notice that there was an increase in people asking for forbearance for their mortgages,” he said.
The vacancy rate in office buildings was up slightly month over month, averaging 13.9% in September, with the highest rate on West Market Street at 19.4%.
Levy said that was not surprising given that businesses have only returned 15% of their workers to offices. “And that goes with hospitals and universities as well," Levy said.
Levy expects the office market to firm up on Monday’s announcement of progress toward a coronavirus vaccine.
“All of us are cheering the great news about Pfizer coming up with a successful trial,” Levy said. "No one wants to urge people to come back to an unsafe situation. But getting those white collar workers back into the city will be the key to the restoration of the hospitality jobs.”