Philadelphia, Pennsylvania-New Jersey Although the recession has not affected Philadelphia’s economy as heavily as in some areas of the Nation, it has had an impact. During the late 1990s, nonagricultural employment in the Philadelphia metropolitan area increased 1.5 percent annually. During the past 24 months, the growth stopped. Employment in the area for the 12-month period ending June 2002 declined slightly by 8,267 jobs, or 0.3 percent, to 2.4 million. Manufacturing employment has declined throughout the metropolitan area. Comparing the 12 months ending June 2002 with the previous 12-month period, the metropolitan area lost 15,100 manufacturing jobs, a decline of 5.1 percent. The trade sector also lost jobs. Gains in the services sector, particularly health and social services, partially offset the losses. The unemployment rate increased from 4.5 percent in June 2001 to 5.5 percent as of June 2002. Employment in the city also declined by 5,100 jobs, or 0.7 percent. The city’s unemployment rate rose to 7.8 percent as of May 2002 compared with 6.4 percent in May 2001. The population of the Philadelphia metropolitan area increased 0.4 percent annually, or 195,000 persons, from 1990 to 2000. The increase continued in 2001 but at a lower rate of 0.25 percent, resulting in a population of 5.1 million as of midyear 2001. Suburban Chester, Montgomery, and Bucks Counties in Pennsylvania and Gloucester County in New Jersey recorded increases of 1 percent or more annually in the prior decade, due in large part to out-migration from the city. The population of the city of Philadelphia declined by 0.4 percent annually to an estimated 1,491,800 persons as of 2001. A dramatic exception to the city’s population loss is Center City, where population increased 10 percent during the past decade. The attraction of empty nesters and young professionals to Center City has increased the redevelopment and rent-up of new luxury apartments. From 1997 through 2001 multifamily building permit activity averaged approximately 2,800 annually in the metropolitan area. In the 12 months ending June 2002, multifamily building permit activity was down less than 6 percent compared with the same period a year ago. A significant portion of the development occurred in Center City and adjacent neighborhoods, where former office and factory buildings were converted to luxury apartments. In recent years these conversions have added approximately 1,500 units to the market. In addition, approximately 1,000 units are currently in lease-up or under construction. Another 700 units are in various stages of planning and may be completed within the next 3 years. Despite developers’ difficulties locating zoned land and obtaining local approvals, approximately 2,300 units are in the pipeline in the Pennsylvania suburbs, and another 1,100 units are in the suburban New Jersey pipeline. The Philadelphia metropolitan rental market is currently balanced but has become more competitive recently. Apartment vacancy rates remain low in both Center City and the suburbs but have increased slightly over the past year as new units enter the market. New luxury apartments in Center City are absorbing units at a slower pace than a year ago. Rents are flat throughout the metropolitan area, and high-end apartments in both Center City and the suburbs are beginning to offer concessions. Homebuilding was strong in 2001, with 12,500 units permitted. In the 12 months ending June 2002, single-family building permit activity was up 10 percent compared with the same period 1 year ago. The median single-family sales price in the Philadelphia metropolitan area was $147,400 at the end of the second quarter of 2002, 8 percent higher than the second quarter of 2001, according to NAR. Existing homes are selling more quickly in 2002 than at any time in the past 4 years. Sales of older, existing row homes in the city tend to bring down the metropolitan median sales price. In comparison, the sales price of a new single-family home in the area’s Pennsylvania suburbs averaged $324,311 as of June 2002, according to the Meyers Group. Single-family, active-adult communities for residents age 55 and older are becoming common in area’s suburban markets, with new home prices starting at approximately $200,000. Office construction in the Philadelphia metropolitan area increased during the late 1990s and into 2001, resulting in an 11-percent vacancy rate by the end of 2001. Although construction has slowed considerably, the vacancy rate is expected to reach 13 percent by the end of 2002. Philadelphia’s western suburbs have the area’s highest vacancy rates due to increased space being offered as a result of cutbacks in the technology sector.

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