Face Off: Philadelphia leaders on potential credit crunch, economic resilience

Face Off: Philadelphia leaders on potential credit crunch, economic resilience

2023-08-10T11:31:54-04:00August 10th, 2023|Economy, Face Off, Philadelphia|

Writer: Esteban Pages

4 min read August 2023 — While continued interest rate hikes from the Federal Reserve over the past 18 months are expected to impact future growth, Greater Philadelphia benefits from industries such as healthcare and education that serve as anchors. 

The bank failures of Silicon Valley, Signature Bank and First Republic Bank have also shifted the banking environment as lenders are hesitant to give out loans, tightening lending standards to protect their balance sheet from loan losses and deposit flight. But leaders in Philadelphia have said there’s still a notable development pipeline across key sectors.

The Federal Reserve Bank of Philadelphia’s Small Business Credit Survey foundopens PDF file 60% of the businesses surveyed reported financial conditions were poor or fair as pandemic assistance programs were being phased out throughout 2022. Now into the third quarter of 2023, a potential credit crunch stands to have a greater impact on small businesses versus its larger counterparts.

Invest: sat down with Zabeth Teelucksingh, executive director of the Global Philadelphia Association and Matthew Bergheiser, president of University City District, to get their insights on how Greater Philadelphia is facing these current economic challenges as well as their outlook for the region.

What are the major challenges you see facing the city and region’s economy?

Zabeth Teelucksingh, Executive Director, Global Philadelphia Association: Money is tight so it’s hard to develop new businesses or start new construction. There is a money supply challenge which is affecting growth in numerous sectors. On the university side, the student population is declining overall. There’s a need to pay attention to that to make sure educated high schoolers are coming in to feed the workforce pipeline and to make sure our country is on the right track regarding higher education goals. 

The big elephant in the room is AI and ChatGPT. Many of our stakeholders are concerned or paying attention in terms of how fast this will become a reality in their work. We’re wondering what the future holds in that way. We might be able to forecast what we think will happen but there is a bigger picture that I don’t think we’ve been able to think through yet. 

Matthew Bergheiser, President, University City District: We are in a fortunate position where certain industries, such as healthcare and education, are recession-resistant. They serve as anchors not only in University City but across Philadelphia. They provide a lifeline for the local economy, although it doesn’t mean our anchor institutions won’t face challenges and headwinds that the rest of the country experiences. Nevertheless, they provide a crucial foundation for economic activity.

While there is anxiety about the economic uncertainty that lies ahead, particularly regarding the commercial office market in a hybrid work environment, University City is unique. Many healthcare and university workers still physically go to work every day, as their jobs cannot be done remotely or from home. This dynamic has played a significant role in maintaining a baseline of economic activity in our area. Our organization and community have the responsibility to create vibrancy for those who are present and to ensure that when people return, they feel welcomed and recognize that this is a fantastic place to work. We want them to know that Philadelphia is alive and ready to resume where we left off before the pandemic.

What is your outlook for Greater Philadelphia?

Teelucksingh: We have a big few years ahead. Philadelphia will be celebrating the 250th anniversary of the nation’s independence in 2026 and we will be very active in that planning. 2026 will also see the city hosting the World Cup. Philadelphia received World Heritage designation in 2015 and will go all out celebrating our own 10-year anniversary. We are halfway through putting up the artwork for our SDG public art project. I suspect that by the second quarter of 2024 that project will be complete. It will be an exciting educational tool. For 2026, the intention is to move all the works of art to one location so people can learn in one place about the SDGs and how they were translated and applied in Philadelphia. The future is bright.

Bergheiser: When we consider the pipeline in University City, it is truly remarkable. We have 1.5 million square feet of development under construction, with an additional 32 million square feet in the pipeline. Our universities and health systems collectively invest $1.8 billion annually in research and development. All of this activity takes place within a concentrated area of 2.5 square miles. As we envision the future and consider the magnitude of these developments, it is evident that the future is exceptionally bright. University City is poised to contribute to the growth and prosperity of Philadelphia. However, it is crucial that we do it the right way. Our priorities extend beyond mere growth; we aim to create a vibrant and inclusive community. Our goal is to provide opportunities for individuals, whether they hold a PhD or a GED, to transform their lives through meaningful employment and to create a place where families can thrive and call home. That is the vision we have for this neighborhood.

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