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Effects of the Pandemic on Vacancy Rates
Regional economies across the U.S. are showing stark differences in their capacity to rebound in this phase of the COVID-19 pandemic. As a recent Brookings Institution study simply stated, “More so than any prior economic downturn, the COVID-19 recession has crushed certain industries—those that depend on the movement of people—while leaving others relatively unscathed—those that depend on the movement of information.” In a city like Philadelphia, these industry differences are not just evident at a metro level but also at a neighborhood level. Some neighborhood economies, as tracked by business vacancy rates, are doing better than pre-COVID times, while others are doing far worse. And for many areas, like the neighborhood where our Philadelphia offices are located, industry concentration seems to play a significant role.
Business vacancy rates in the city of Philadelphia appear to have returned to pre-pandemic levels after a vacancy spike during the 2020 lockdown, as has the larger metro area, according to data from Vericast’s Valassis Data Solutions. While vacancy in the metro area, as shown on the red trend line below, only fluctuated slightly during the course of the pandemic, Philadelphia, in purple below, very clearly saw a jump during the long winter of 2020 but has since returned to pre-pandemic levels. Vacancy rates as shown below for the 3rd quarter of 2014 through the 2nd quarter of 2021, have been slowly declining in both the metro and the city for a number of years now.
This decrease, however, has not uniformly been the case across Philadelphia where multiple neighborhoods are experiencing an ongoing increase in business vacancy. In the map below, neighborhoods where vacancy rates improved over the last year are shown in orange and yellow while neighborhoods where vacancy rates are rising are shown in purple.
In some areas, including the neighborhood where our own Philadelphia offices are located, vacancy rates have increased significantly – by over 20% in the past year.
In fact, looking at quarterly vacancy rates for our specific neighborhood (in purple below) suggests that business vacancy increased significantly between the 1st and 2nd quarters of last year and has remained high. It has not yet started to improve. This is in contrast to the City and the larger 19107 zip code (in red below) which has started to see signs of improvement through a decrease in vacancies.
Impacts of Industry Concentrations on Pandemic-Era Vacancy Rates
The concentration of restaurants and other accommodations in our neighborhood is high and is the likely reason business vacancy has not started to improve. Nationally, an estimated 90,000 restaurants have closed permanently since March 2020. The Delta variant, new safety measures, worker shortages, supply chain issues and high prices are all compounding the impact of COVID alone to make a rebound in this industry challenging. Pre-pandemic, approximately 40% of people working in our neighborhood were employed in the Accommodation and Food Services industry, compared to a little over 8% citywide. How, when, and if employers choose to return to working life in Center City will impact how fast an area like ours can begin to see improvement.
Quarterly vacancy data published on PolicyMap can help public policy makers track signs of economic improvement and create targeted, strategic interventions to assist businesses in need of support. Contact us to learn more.