Philadelphia: Tech expansion seen as bright spot
Unemployment has lingered above the national average in the Philadelphia region, which is the seventh-largest metropolitan area in the United States with a population of about 6.1 million.
The metro market had a gross domestic product of $433.9 billion in 2017, the eighth largest in the United States, according to the U.S. Commerce Department’s Bureau of Economic Analysis. Economic growth last year was less than 1%.
But there are signs that employment in the area is improving, however, with unemployment at 4.7% in the fourth quarter of 2017, compared with 5.1% in the fourth quarter of 2016, according to a report on the market by Chicago-based real estate firm Cushman & Wakefield.
A new technology hub is coming to Philadelphia in the form of the Comcast Technology Center, a 60-story tower opening later this year in the Center City area that will house the company’s software engineers and other technologists, and also will include an incubator space for local tech start-ups.
Philly’s prospects as a technology center are buoyed by its long-standing status as a hub for higher education. The city is home to the University of Pennsylvania, which is the largest private employer in the area, as well as Temple University and Drexel University, which like Penn, are considered among the most prestigious research schools in the country. They are among the 80-plus colleges, universities and specialty schools in the region.
Financial services are the largest business sector in the economy, but health care, biotechnology, information technology and manufacturing are all important industries in the market, which is home to the headquarters of pharmaceutical giant GlaxoSmithKline, and several other pharmaceutical and biotechnology companies have operations in the region. Drug distributor AmerisourceBergen is based nearby in Valley Forge, Pa.
On the retail scene, Ahold’s Giant division has been in a battle with longtime market-share leader Acme, a local division of Albertsons. The market was roiled by the 2015 bankruptcy of A&P/Pathmark, which had operated SuperFresh and Pathmark stores in the area. Ahold divested several of its Bottom Dollar stores in the area when it merged with Delhaize, providing an opportunity for discounter Aldi to expand by taking over some of the locations.
Philadelphia is one of the strongest major metro areas for Camp Hill, Pa.-based Rite Aid, although CVS Pharmacy, based in Woonsocket, R.I., has been the largest chain in the market. It’s not yet clear how the acquisition of Rite Aid’s stores by Deerfield, Ill.-based Walgreens and Boise, Idaho-based Albertsons will shift the market share in the region.
Natural and organic specialty retailers are expanding in the Philadelphia market, as well. In addition to a new outlet last year from Rockville, Md.-based Mom’s Organic Market, Philadelphia also is expected to get its first Sprouts Farmers Market this year, a 32,000-sq.-ft. space in a development called Lincoln Square, slated for a late-2018 opening.
Austin, Texas-based Whole Foods Market opened a 62,000-sq.-ft. store in the Philadelphia market in 2016 that is considered a flagship for the Amazon-owned chain’s Mid-Atlantic region.
Target also has zeroed-in on the Philadelphia market, opening three of its small-format retail stores in the city in the last two years — all of which include a grocery selection and a CVS Pharmacy.
Philadelphia also had its share of retail controversy in the past year with the introduction of a soda tax, which raised $78.8 million in the first year and whose detractors include such retailers as ShopRite operator Brown’s Super Stores, which said the tax has driven shoppers to the suburbs.