Invest: Philadelphia 2021

Philadelphia 2021 An in-depth review of the key issues facing the economies of Bucks, Chester, Delaware, Montgomery and Philadelphia counties, featuring the exclusive insights of prominent industry leaders

$159.00 ISBN 978-0-9988966-1-8

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9 780998 896618

Contents: 45 Market voices: Growth areas James Bartolomei, Principal, HBK CPAs & Consultants; Paul Dougherty, Partner-inCharge, EisnerAmper; Kimberly Dula, Managing Partner – Philadelphia, Friedman LLP; Christopher Meshginpoosh, Managing Director, Kreischer Miller 46 Interview: Ted Durkin, Director, Pennsylvania Market Head, UBS Financial Services Inc. 48 Roundtable: Lessons learned Rachael Bushey, Partner, Troutman Pepper; Lawrence McMichael, Chairman, Dilworth Paxson LLP; Lori Miller, CEO & Senior Partner, Goldberg, Miller & Rubin; Stephanie Resnick, Managing Partner, Fox Rothschild LLP

11

Economy:

12 Economy in numbers: 14 What a year: Few people will ever forget 2020 but the light at the end of the tunnel is beginning to shine

30 Interview: Mike Bowman, President & CEO, Valley Forge Tourism & Convention Board

50 Interview: Kevin Fiumara, Managing Director, CBIZ – Philadelphia

31 Interview: Larry Korman, President, AKA Serviced Residences

51 Interview: Matt Taylor, Chairman & CEO, Duane Morris LLP

15 Interview: Michael Rashid, Commerce Director, City of Philadelphia

32 Interview: Gregg Caren, President & CEO, Philadelphia Convention and Visitors Bureau

16 Interview: Pam Henshall, President, Greater Northeast Philadelphia Chamber of Commerce

33 Market voices: Tourism in Philadelphia Steve Byrne, Executive Director, Visit Delco, PA; David Devan, General Director & President, Opera Philadelphia; Jim Salvo, Complex General Manager, The Inn at Penn & DoubleTree by Hilton Philadelphia Center City

18 Interview: Regina Hairston, President & CEO, AfricanAmerican Chamber of Commerce of PA, NJ & DE 19 Interview: Allan Domb, Council Member at Large, City of Philadelphia 22 Interview: Ellen Hwang, Philadelphia Director, The Knight Foundation 23 Interview: Brett Perkins, Senior Vice President, External & Government Affairs, Comcast Corporation 27 Interview: Vail Garvin, President & CEO, Central Bucks Chamber of Commerce 29 A heavy hit: Tourism and hospitality suffered the biggest blows from the pandemic but optimism is rising

34 Tourism in numbers:

37

Professional Services:

38 The future of business: Professional services firms have proven integral to the region’s financial stability 39 Interview: Chris Hegarty, Principal, CliftonLarsonAllen 42 Interview: Jeffrey Zudeck, Regional Managing Partner, MidAtlantic, Marcum LLP

52 Interview: Chris Bruner, Managing Partner, EY 53 Perspectives: Outlook

55

Real Estate:

56 Real Estate in numbers: 58 All-time highs: The e-commerce and biomedical industries are driving industrial momentum 59 Interview: Jerry Sweeney, President & CEO, Brandywine Realty Trust 60 Interview: Gary Jonas, Managing Member, The HOW Group 62 Roundtable: Commercial outlook Steven Cousart, Executive Vice President & Managing Director, Philadelphia, Newmark; Mike Morrone, Executive Managing Director, Philadelphia Market Director, Jones Lang LaSalle; Adam Mullen, Greater Philadelphia Market Leader, CBRE; Douglas Sayer, President & CEO, Colliers International Philadelphia www.capitalanalyticsassociates.com

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CONTENTS

Contents: 65 Perspectives: Vision for the future 67 Interview: Mike McCurdy, Managing Principal, Cushman & Wakefield 68 Interview: David Binswanger, President & CEO, Binswanger Management Corp 70 Roundtable: Developing Philly Brent Celek, Owner, Brent Celek Real Estate; Joan Docktor, President, Berkshire Hathaway HomeServices Fox & Roach Realtors; Bill Glazer, CEO, Keystone Property Group; Jonathan Morgan, President, Morgan Properties 72 Interview: Sean Beuche, Regional Manager, Marcus & Millichap

75

Construction, Infrastructure & Utilities:

86 Roundtable: Energy plans

76 Uncertain times: Residential leads a sector that worked under a cloud for much of the year

Bill DiCroce, President & CEO, Vicinity Energy; Mike Innocenzo, President & CEO, PECO; Emily Schapira, President & CEO, Philadelphia Energy Authority ; Clint Zediak, Vice President of Sales and Marketing, WGL Energy

77 Interview: Dan Gring, CEO, D&B Construction Group 78 Interview: Scott Zuckerman, Principal, Domus Construction 80 Interview: Mike Starck, Vice President, NRG Retail 81 Market voices: Tech use in construction Vaughan Buckley, President, Volumetric Building Companies; Ben Connors, President & CEO, General Building Contractors Association: Todd Lofgren, Executive Vice President & General Manager, Skanska USA Building Company; Bill Santora, CEO, A&E Construction Co. 82 Interview: Craig White, President & CEO, Philadelphia Gas Works 84 Interview: Chuck Hurchalla, President, Evolution Energy Partners 85 Perspectives: Hospitals 6 | Invest: Philadelphia 2021 | CONTENTS

88 Interview: Elizabeth Mahon, Managing Principal, HDR Philadelphia 91 Interview: Christopher Franklin Chairman & CEO, Essential Utilities, Inc. 92 Interview: Dave DeLizza, President & CEO, Pennoni

95

Transportation & Logistics:

96 Hyper linked: Stellar transportation and logistics infrastructure has the region primed for growth 97 Interview: Chellie Cameron, CEO, Philadelphia International Airport

98 Interview: Jeff Theobald, President & CEO, PhilaPort 101 Interview: Linda Mysliwy Conlin, President, World Trade Center of Greater Philadelphia 102 Interview: Jim Moses, Vice President of Northeast Hubs & Gateways and Premium Guest Services, PHL Hub Operations at American Airlines 103 Interview: Scott Petri, Executive Director, Philadelphia Parking Authority

107 Chester County: 108 Growing stronger: Chester County is ready-made to meet the challenges of the new normal 109 Interview: Marian Moskowitz, Commissioners’ Chair, Chester County 110 Interview: Brenda Allen, President, Lincoln University 111 Interview: Paul Redman, President & CEO, Longwood Gardens 113 Interview: Joel Frank, Chairman & Managing Partner, Lamb McErlane, PC Attorneys at Law

129 Interview: Susanne Svizeny, Greater Philadelphia Regional President, OceanFirst Bank, N.A. 130 Interview: Frank Leto, President & CEO, Bryn Mawr Bank Corp.

133 Interview: Rory Ritrievi, President & CEO, Mid Penn Bank 134 Roundtable: Fintech and digital impact Michael Carbone, Regional President, Metro PA/NJ, TD Bank; Angela Moultrie, Executive Vice President & Region President, Penn/Central NJ, Santander Bank; Bryan McCullough, Philadelphia Market Director Banking, Chase; Tom Harper, Executive Vice President & Head of Technology Banking, Wells Fargo Commercial Banking 137 Interview: Chris Martin, Chairman & CEO, Provident Bank

114 Roundtable: Goals and opportunities Josh Maxwell, Commissioner, Chester County; Michelle Kichline, Commissioner, Chester County; Susan Hamley, Executive Director, Chester County Conference & Visitors Bureau; Brian O’Leary, Executive Director, Chester County Planning Commission

121

Banking & Finance:

122 Branching out: Lenders and other financial firms have learned to adopt, adapt, pivot and change.

The results speak volumes 123 Interview: Jeff Schweitzer, President & CEO, Univest Financial Corporation 125 Interview: Rodger Levenson, Chairman, President & CEO, WSFS Bank 127 Interview: Jeane Vidoni, President & CEO, Penn Community Bank

140 Market voices: Priorities and goals Chris Bickel, Senior Vice President & Main Line Market Leader, Centric Bank; Dan Fitzpatrick, President, MidAtlantic Region & Head National Industry Verticals, Citizens; Jordan Space, President, Eastern PA Region, S&T Bank; Jim Whitton, Senior Vice President/Regional Market Leader Greater Philadelphia Area, Tompkins VIST Bank 141 Interview: Bernie Shields, Regional President, Philadelphia & South Jersey, M&T Bank

145 Healthcare & Life Sciences: 146 Battle-tested: The pandemic turned the healthcare system upside down. It could emerge stronger as a result

150 Market voices: Health insurance Bill Green, CEO, Homestead Smart Health Plans; Remy Richman, Vice President, Strategic Programs, Aetna; Dan Tropeano, CEO, UnitedHealthcare of Pennsylvania & Delaware 151 Interview: Thomas Garvin, President & CEO, Waverly Heights, Ltd 153 Interview: Dennis Pfleiger, President, St.Luke’s Quakertown – Upper Bucks Campuses 154 Interview: Donald Mueller, CEO, St. Christopher’s Hospital for Children 156 Interview: Stephen Klasko, President, Thomas Jefferson University, CEO, Jefferson Health 157 Perspectives: Innovation in care 160 Interview: Michael Young, President and CEO, Temple University Health System (TUHS) 162 Roundtable: Life sciences John Crowley, Chairman & CEO, Amicus Therapeutics; John Grady, Senior Vice President, Northeast Region Executive, Wexford Science & Technology ; Eric Green, President & CEO, West Pharmaceutical Services, Inc.; Eric Karas, Vice President and General Manager, North America Commercial, Emergent BioSolutions 164 Interview: Ken Levitan, Interim President & CEO, Einstein Healthcare Network

169 Education: 170 Long-term blueprint: Delivering on the promise of a quality education, secure jobs and prosperous careers 171 Interview: Christopher Fiorentino, President, West Chester University

147 Interview: Gregory Deavens, President & CEO, Independence Health Group

172 Interview: Aaron Walton, President, Cheyney University of Pennsylvania

148 Interview: Carol Irvine, CEO, Abramson Senior Care

175 Interview: Margo DelliCarpini, Chancellor, Penn State Abington

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CONTENTS

Contents:

Philadelphia 2021 ISBN 978-0-9988966-1-8 President & CEO: Abby Melone Chief Financial Officer: Albert Lindenberg Regional Director: Jack Miller Senior Editor: Mario Di Simine Regional Editor: Max Crampton-Thomas Art Director: Nuno Caldeira Executive Director: Josh Greenberg Content Manager: Joey Garrand Writers: Cameron Saunders; Esteban Pagés; Sara Warden Office Assistant: Michelle Orellana Intern: Brendan Meagher

176 Interview: Chris Domes, President, Neumann University 180 Roundtable: Business schools Joseph DiAngelo, Dean, St. Joseph’s University – Haub School of Business; Paul Jensen, Provost, Drexel University; MarySheila McDonald, Dean, La Salle University School of Business 182 Interview: Charles Cairns, Annenberg Dean, College of Medicine Senior Vice President Medical Affairs, Drexel University 183 Interview: John Swartley, Associate Vice Provost for Research Managing Director, Penn Center for Innovation University of Pennsylvania

184 Roundtable: Community colleges; Victoria Bastecki-Perez, President, Montgomery County Community College; L. Joy Gates Black, President, Delaware County Community College; Donald Guy Generals, President, Community College of Philadelphia; Stephanie Shanblatt, President, Bucks County Community College 186 Interview: Marilyn Wells, Chancellor, Penn State – Brandywine

Invest: Philadelphia is published once a year by Capital Analytics Associates, LLC. For all editorial and advertising questions, please e-mail: contact@capitalaa.com To order a copy of Invest: Philadelphia 2021, please e-mail: contact@capitalaa.com All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, without the express written consent of the publisher, Capital Analytics Associates, LLC. Whilst every effort has been made to ensure the accuracy of the information contained in this book, the authors and publisher accept no responsibility for any errors it may contain, or for any loss, financial or otherwise, sustained by any person using this publication.

Capital Analytics Associates, LLC accepts no responsibility for the return of unsolicited manuscripts and/or photographs, and assumes no liability for products and services advertised herein. Capital Analytics Associates, LLC reserves the right to edit, rewrite, or refuse material.

188 Interview: Mike Mittelman, President, Salus University

Photo Credits: Cover: Elevated Angles for VISIT PHILADELPHIA®

pg. 50 – Comcast pg. 52 – Wexford Science & Technology

Contents: pg. 5 – Philadelphia Energy Authority pg. 6 – AKA Serviced Residences pg. 8 – La Traviata Press-Opera Philadelphia

Real Estate: pg. 55 – Keystone Property Group; The Martin Architectural Group, P.C. pg. 58 – Parkway Corporation pg. 60 – Volumetric Building Companies pg. 64 – HDR pg. 66, 72, 74 – JKRP Architects

Economy: pg. 11 – Alan Tansey; The Inn at Penn & DoubleTree

by Hilton Philadelphia Center City pg. 14 – CoStar Group pg. 16 – Cohen Seglias pg. 20 – Wexford Science & Technology pg. 22 – Alan Tansey pg. 26 – Delaware County pg. 29 – David Rosenblum / Philadelphia International Airport Professional Services: pg. 37 – CBRE; The Graham Company pg. 38 – Borough of Phoenixville pg. 40 – SageGlass pg. 42 – CBRE pg. 47 – Cohen Seglias

8 | Invest: Philadelphia 2021 | CONTENTS

Construction, Infrastructure & Utilities: pg. 75 – SageGlass; Hilco Redevelopment pg. 76, 84 – JKRP Architects pg. 78 – Volumetric Building Companies pg. 92 – PECO Transportation & Logistics: pg. 95, 100, 104 – David Rosenblum / Philadelphia International Airport pg. 96 – Philadelphia Parking Authority Chester County: pg. 107, 108, 110 – Chester County Planning Commission

Banking & Finance: pg. 121 – WSFS; CoStar Group pg. 122 – Univest Bank pg. 124 – WSFS pg. 128 – HDR pg. 132 – Mid Penn Bank pg. 136 – The Inn at Penn & DoubleTree pg. 138 – Wexford Science & Technology pg. 141 – Santander Bank Healthcare & Life Sciences: pg. 145, 146, 153 – Amicus Therapeutics pg. 148, 154, 158, 161, 166 – Temple University Health System pg. 157 – Independence Health Group pg. 165 – West Pharmaceuticals Services Education: pg. 169 – Lincoln University ; Bucks County Community College pg. 170 – Campus Philly pg. 174, 178, 182 – Eastern University pg. 180 – Delaware County Community College pg. 187 – Penn State Brandywine

Economy: Like many other major metropolises, Philadelphia endured a heavy hit from the COVID-19 pandemic in 2020, but a strong economic foundation, mature logistics infrastructure and a growing ‘meds and eds’ industry have the region primed for a rebound.

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Economy in numbers: Philadelphia area Economic Summary:

Philadelphia area, Second Quarter 2020:

Unemployment rates for the nation and selected areas

Average weekly wages for all industries by county (U.S. = $1,188; Area = $1,313)

3.4

United States

6.5 4.0

Philadelphia area

Bucks

6.5 Montgomery

4.1

Camden Co., NJ.

7.9

Philadelphia

Chester Delaware

Burlington

3.0 Chester Co., PA

Gloucester

4.2 Cecil

Salem

New Castle

3.3

Camden

4.9

New Castle Co., DE

$900-$999 $1,000 or more

5.4 9.3

Philadelphia Co., PA. 0.0

5.0

Dec-19

10.0

Dec-20

Source: U.S. BLS,Local Area Unemployment Statistics

Source: U.S. BLS,Quartely Census of Employment and Wages

Over-the-year changes in employment on nonfarm payrolls and employment by major industry sector 12-month percent changes in employment United States

Philadelphia area

Philadelphia area employment (number in thousands)

4.0

Jan. 2021

Change from Jan. 2020 to Jan. 2021 Number

Percent

2.0

Total non farm

2,732.0

-228.8

-7.7

0.0

Mining and logging and construction

110.0

-6.0

-5.2

Manufacturing

173.1

-9.7

-5.3

506.9

-22.6

-4.3

49.1

-4.7

-8.7

Financial services

214.4

-3.5

-1.6

Professional and business services

449.3

-14.0

-3.0

-10.0

Education and health services

626.2

-44.9

-6.7

-12.0

Leisure and hospitality

176.9

-90.2

-33.8

Other services

102.9

-19.3

-15.8

Government

324.1

-13.9

-4.1

-2.0

Trade, transportation and utilities

-4.0

Information -6.0 -8.0

-16.0 -18.0 Jan-18

Jan-19

Jan-20

Jan-21

Source: U.S. BLS, Current Employment Statistics

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| Invest: Philadelphia 2021 | ECONOMY

Source: U.S. BLS, Current Employment Statistics

Over-the-year change in the prices paid by urban consumers for selected categories

Over-the-year changes in the selling prices received by producers for selected industries nationwide

12-month percent change in CPI-U, February 2021

12-month percent changes in PPI

4.5

Philadelphia area

U.S. city average

12.0

4.0

10.0

3.5

8.0

3.0

6.0

2.5

4.0

2.0

Telecommunications

0.0

1.5

2.4

1.0 0.5

Hospitals

2.0

3.9

3.6

General freight trucking

1.7

-2.0

1.4

1.0

-4.0 -6.0

0.0 All items

Food

Energy

Feb-18

Feb-19

Source: U.S. BLS, Consumer Price Index

Average annual expenditures, United States and Philadelphia area, 2018-19 $13,165

$11,144

$5,609 $8,168

$5,081 $7,230

$8,813

$8,047

40%

$11,136

$10,507

20%

$25,569

$20,386

Philadelphia area

United States

80% 60%

0%

Average hourly wages for selected occupations Philadelphia area

All occupations

Housing

Food

Healthcare

Transportation

Personal insurance & pensions

All other items

United States

$27.69

$25.72

Lawyers

75.42

69.86

Chemists

46.31

40.46

Budget analysts

35.17

38.61

Brokerage clerks

27.78

26.53

Construction laborers

24.19

20.06

Physical therapist aides

16.38

14.03

Source: U.S. BLS, Occupational Employment Statistics, May 2019

Source: U.S. BLS, Consumer Expenditure Survey

Employer costs per hour worked for wages and selected employee benefits by geographic division

Feb-21

Source: U.S. BLS, Producer Price Index

Occupation

100%

Feb-20

Over-the-year changes in wages and salaries 12-month percent changes in ECI

Private industry, September 2020 Total compensation

Middle Atlantic (1)

United States 4.0

$40.15

$35.95

Wages and salaries

27.58

25.23

Total benefits

12.58

10.72

3.0

Paid leave

3.20

2.63

2.5

Vacation

1.64

1.35

2.0

Supplemental pay

1.45

1.23

1.5

Insurance

3.36

2.86

Retirement and savings

1.43

1.27

Legally required benefits

3.14

2.73

(1)

3.5

1.0 0.5

Philadelphia area

United States

0.0 The states that compose the Middle Atlantic census division are: NJ, NY, and PA.

Source: U.S. BLS, Employer Costs for Employee Compensation

Dec-17

Dec-18

Dec-19

Dec-20

Source: U.S. BLS, Employment Cost Index

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What a year: Few people will ever forget 2020 but the light at the end of the tunnel is beginning to shine What a difference a year makes. At the beginning of 2020, Philadelphia was an economic success story.

Gains in employment, positive population metrics and an expanding reputation as a life sciences hub had made the city and the immediate region an attractive location to live, work and play.

According to a Chamber of Commerce for Greater Philadelphia survey, the Top 5 problems facing its members at the beginning of the year were labor quality, wages, labor-related benefits, poor sales and domestic competition. But the landscape rapidly and drastically changed from March, with the onset of the COVID-19 pandemic. A year later, the chamber’s members had a wholly different view. For 2021, the Top 5 problems are labor availability due to COVID-19, poor sales, firm solvency concerns due to COVID-19, government regulations and financing and interest rates.

It’s a different world in 2021 as a result of the pandemic, and while there is a long way to go before a full recovery sets in, the light at the end of the tunnel is already shining as numerous companies roll out vaccines against the virus, unemployment begins a march back to lower levels and real estate remains a sturdy plank for growth.

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| Invest: Philadelphia 2021 | ECONOMY

Amid such uncertain times, and despite numerous challenges, the local region is well positioned for recovery. Federal Reserve Bank of Philadelphia President and CEO Patrick Harker, in a speech in early January at the Philadelphia Business Journal Economic Forecast virtual event, said he expects a “healthier” local economy to emerge in the second half of the year. “Our region, for better or worse, tends to be roughly a middle-of-the-pack player when it comes to economic trends. We don’t boom like some areas, but we don’t bust like them either,” he said.

Landscape In its annual “State of the City” report released in April 2020, the Pew Charitable Trusts said Philadelphia had enjoyed gains in educational attainment and job growth in 2019. As the population continued to expand to 1.58 million, the organization reported that 30% of Philadelphians have a college degree, an improvement over 21% a decade earlier. Unemployment in the Philadelphia metropolitan statistical area (MSA) was 4.6% in January 2020 compared to the national average of 4.0%, according to the U.S. Bureau of Labor Statistics. But in the month after the COVID-19 ( )

ECONOMY INTERVIEW

Finding balance The city of Philadelphia is strategically working to help residents and businesses, all with less tax revenue

Michael Rashid Commerce Director – City of Philadelphia How do you most efficiently deploy your budget, especially in a time like COVID? The pandemic has put an enormous financial strain on cities and states around the country, and Philadelphia is no exception. We have to balance ways to continue providing necessary services for residents, while at the same time dedicating increased spending to address the pandemic – all with less tax revenue. With the challenges we’re facing on that front, the Commerce Department is strategically prioritizing its efforts to ensure that our most impacted and disadvantaged business owners are not left behind. While we have fewer city resources to do that, we’re focusing our attention on preserving jobs and businesses in the most vulnerable communities, working with our partners in this space to make sure those resources are best applied with a lens to inclusive recovery.

What makes the city a great place to do business?

Philadelphia offers a unique combination of location, affordability, and talent. Philadelphia’s ideal central location on the country’s Northeast Corridor, competitive cost of doing business, and diverse talent pool are all attractive to companies seeking a place where they can grow. By setting up shop in Philadelphia, businesses can reach 60% of the U.S. and Canadian population within a day. Our worldclass cultural institutions, parks, award-winning restaurants, 100-plus area colleges and universities, and diverse housing options help attract talent from around the country and world.

In what ways is the city of Philadelphia excited to be working with the Biden administration?

We are optimistic that the Biden-Harris Administration will be strong partners in our recovery. They have expressed a desire to increase direct aid to state and

local governments, which is desperately needed, and have also been clear about the intent to partner closely with leaders at all levels of government to ensure a strong, speedy recovery. Two specific topics we’re advocating are increasing the minimum wage and investing in infrastructure. Currently, the minimum wage in Pennsylvania is $7.25 an hour, one of the lowest in the country. It hasn’t been increased in nearly 20 years, and the City of Philadelphia is unable, by law, to do it on our own locally. Increasing the minimum wage will bring thousands of Philadelphians out of poverty.

Infrastructure represents an incredible opportunity for the Philadelphia area, and the Biden administration has said it wants to invest billions of dollars in infrastructure improvement in urban areas. We want to be ready for when that investment comes. www.capitalanalyticsassociates.com

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Pam Henshall President Greater Northeast Philadelphia Chamber of Commerce

What are the strongest sectors for Northeast Philadelphia’s business environment?

Manufacturing is prevalent in Northeast Philadelphia in addition to the expansion of distribution centers supporting the e-commerce boom. Northeast Philadelphia is a prime location because we have open real estate and sizable commercial buildings that can be redeveloped and repurposed. Our hospitality industry had been relatively stable, leading up to the pandemic.

Unfortunately, I don’t know what that’ll look like moving forward but I hope that restaurants and caterers will be able to rebound as we progress through the stages of reopening the city. Our restaurants are the glue keeping our neighborhoods thriving. With Philadelphia known as an “eds and meds” city, with biotech and medical sciences and the supporting manufacturing, maybe we can increase production in Northeast Philadelphia.

There may be an opportunity to develop and expand manufacturing as in masks, face shields, or vaccine production. We hope these conversations are evolving throughout the city, and companies will consider Northeast Philadelphia as a prime location.

What initiatives did the Chamber implement to support its members during COVID-19?

As a conduit for information distributed from partnering organizations and the mayor’s response team, we can reach another level of sharing and enforcing content to businesses and professionals. We also serve as a sounding board for owners and leaders, who can contact us looking for resources and guidance while navigating the challenges and processes. Moving forward, we will emphasize our training programs and offer pre-apprenticeship training programs. We are aware that as unemployment benefits run out, many folks will need education and training as their former industry has diminished or folded. We need to make sure that this is an opportunity, not only for highschool seniors but for those displaced workers who are looking for a career change.

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| Invest: Philadelphia 2021 | ECONOMY

Philadelphia has the 6th largest workforce in the United States, many of whom are skilled in life sciences, energy and manufacturing.

( ) pandemic began spreading in earnest across the United States in March, nearly one in six state Philadelphia residents filed for unemployment, according to the Philadelphia Inquirer. April saw the jobless rate hit a staggering 14.8%, the peak for the year.

In addition to contending with a global pandemic, 2020 saw the contested election of President Joe Biden, ousting Donald Trump, a renewed civil rights movement and a U.S. population fractured by politics and propaganda. In Philadelphia, the news trended to the brighter side as the year progressed. By the end of 2020, real estate vacancies were flat on the year at about 13%, while home sales in Center City were up 41%. And while retail sales shifted away from Center City stores, they were down just 0.5% since March. The jobless rate had also improved by December, falling to 6.5%, almost back to pre-pandemic levels.

The median household income in Philadelphia is $46,116, although the largest cross-section of the population earns less than $35,000. Twenty-one percent of the population earns $100,000 or more and 25% of the population lives below the poverty level. According to Pew, this is the economy’s biggest challenge because it increases insecurity, reduces public safety and jeopardizes strong gains in jobs and population in recent years.

ECONOMY OVERVIEW

Among the region’s biggest advantages is its location, flanked by the Delaware and Schuylkill rivers, and within close proximity to New York. Located at the center of the Northeast Corridor, it hosts top hospitals and over 100 universities awarding over 90,000 degrees per year.

It also offers a biotech hub while enjoying a significantly reduced cost of living compared to Boston, New York City, or Washington, D.C. It remains the fourth-largest metro in the Northeast, generating $444 billion in Gross Regional Product and provides the seventh-largest workforce in the region, just over 3.4 million highly skilled workers in life sciences, energy and manufacturing, technology and financial services. Since 2015, venture capital funding in Greater Philadelphia’s healthcare and internet sectors amounted to $3.8 billion, spearheaded by companies in biotechnology, drug development, internet and software.

“2020 was a difficult year. I don’t know any community that had a great year in 2020. But I think that we are beginning to see some light at the end of the tunnel. Our community is very well-poised for a resurgence later this year and next year. In fact, we’ve already begun to see some of that,” said Greg Waks, Township Supervisor for Upper Merion Township, in an interview with Invest:.

“I’m extremely confident from what I’ve heard from

Regina Hairston President & CEO African-American Chamber of Commerce of PA, NJ & DE

How would you describe the status of the chamber given everything that happened in 2020?

I joined the Chamber in January 2021 so my predecessor really worked hard to ensure members had the resources they needed to help contend with the COVID restrictions that were put in place, to help them pivot and to help connect them to resources and grants that would allow them to remain open. The members that have been able to pivot during the pandemic are looking for opportunities to be connected to capital so they can continue to grow. For those who are struggling, they are looking to the latest stimulus bill because that is crucial to helping small businesses stay afloat.

What are some of the new initiatives you are implementing?

Recently, I did a listening tour because I felt it was important, especially coming out of COVID, to understand what our members need from us the most.

One of the key themes that came through was that businesses join us to do business. One of my most immediate goals is to understand the capacity of all our member businesses. I will be soliciting capacity statements from all of those so I can connect them directly to the supply chain of all of the organizations we partner with. Aspiring entrepreneurs should really look carefully at joining the chamber because we can connect them not just to information but to opportunities.

What lessons have your members learned from the call for diversity and inclusion this summer?

For our members, this is a conversation that has always been a part of our ecosystem and DNA. Now it’s at the forefront of the entire corporate thought process.

As we move forward in that space, we’ve found that a true integration of partnerships is needed. It’s not just one conversation or one investment without looking at the whole picture to foster an integrated partnership.

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| Invest: Philadelphia 2021 | ECONOMY

local business leaders that this community is ripe for a very fast recovery after vaccinations become broadly available.”

With its extensive road and port infrastructure and robust population, Philadelphia has revisited its industrial roots in recent years. The available space left by former industrial sites means the city is well positioned within the growing industrial real estate and logistics sectors. Last-mile logistics especially are booming in the Greater Philadelphia area due to the availability of large land parcels that other large cities lack. In 2020, an old U.S. Steel site in Bucks County was bought by NorthPoint Development Inc., which proposed to spend $1.5 billion to turn the 1,800-acre parcel into 10 million square feet of industrial space. Closer to Center City, Philadelphia Energy Solutions sold 1,300 acres to Hilco Redevelopment Partners, which plans to create 15 million square feet of industrial space.

Although an unfolding trend, the surge in demand for warehouses and fulfilment centers was accelerated by the COVID-19 pandemic. And despite a pandemic-related exodus from large urban centers in the Northeast, Philadelphia seems to have emerged relatively unscathed. According to the World Population Review, the city’s population at the start of 2021 remained relatively stable at around 1.6 million people. The steady population, combined with a high proportion of college-level education, directly benefits the local economy as more large companies are attracted to the region. The city is home to companies such as Comcast, which employs more than 190,000 people, Day & Zimmermann, which provides over 41,000 jobs and Clarivate, with over 4,000 employees.

It is no wonder that research has proliferated in the city since George Washington approved the first U.S. patent in 1790, to a Philadelphian named Samuel Hopkins for a better way of making potash.

Philadelphia is home to some of the most prestigious higher education institutions in the country, including the University of Pennsylvania (UPenn), Thomas Jefferson, Drexel, Temple, Bryn Mawr College, Haverford College and the University of the Arts. The Science Center in West Philadelphia is home to more than 30 academic and scientific institutions working on multimillion-dollar research projects.

It is no surprise that companies such as Lockheed Martin, Dupont and Rohm & Haas have large research commitments in the area.

And although neighboring New York City long ago stole the crown of financial capital of the world from Philadelphia, Philly can still boast of being the birthplace of American banking. ( )

ECONOMY INTERVIEW

Mutual success Needs of the government, private sector and residents are intertwined on path to recovery

Allan Domb Council Member at Large – City of Philadelphia What were the major takeaways from the challenges of 2020?

The major takeaways for Philadelphia from the challenges of 2020 are that the successes of the government, private sector and residents are not mutually exclusive. When businesses here do well, so do the city and its residents, and vice versa. This pandemic has brought to light how important it is for the city to make sure our residents are safe and secure and that our businesses make it to the other side successfully. I believe that this starts with education and a more tax-friendly environment for residents and businesses alike.

In January 2020, we passed the Wage Tax Bill.

Research showed that out of the Top 50 cities in the United States, Philadelphia taxes low-income people at a higher level than any other major city in the country. We tax families making less than $32,000 per year 18.1%, while other cities tax between 10% and 14%, including Phoenix, New York, Chicago and Los Angeles.

What was driving that percentage was our city wage tax. We introduced a bill to reimburse a good portion of the wage tax to lower income residents who qualify.

The potential of this bill is that 140,000 of our residents living in poverty could get anywhere from $800 to $1,500 depending on their level of income. The average reimbursement ranges between $800 and $900 for individuals. This can help take people out of poverty.

What are some of the economic recovery issues you would like to see addressed going forward?

A shift in our government’s attitude is top of mind. We need to improve our service toward businesses and residents, ensuring that those that reach out know that we truly care about them and want to help them.

People today have choices on places to go and we want them to choose the city of Philadelphia.

What is being done to provide the talent needed to ensure economic growth?

Prior to the pandemic, Philadelphia’s economy relied heavily on service-based businesses such as restaurants and hotels, which were the ones most affected by COVID-19. We need to diversify the business base in Philadelphia and we need to educate our residents to fill different types of jobs. I believe that all Philadelphia School District students should be taught, from grades K-12, financial literacy, technology, and entrepreneurship. Case in point: pre-pandemic, we paid for 178 teachers in the public school system to take a week-long financial literacy course. They’re now teaching financial literacy to 5,000 students across all school levels in our public schools. We did this as a pilot to show people why measure should be mandatory. www.capitalanalyticsassociates.com

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ECONOMY OVERVIEW

( ) Philadelphia’s financial system adapted to meet the growing demands of a more complex economy, including the establishing of the Corn Exchange and subsequently the Philadelphia Commerce Exchange.

Philadelphia is home to the U.S. Mint, as well as hundreds of financial services firms.

Government Many of the counties that make up the Greater Philadelphia region are governed by a three-person Board of Commissioners, including Montgomery and Chester counties, for example. All the county functions for Philadelphia County, however, are adminstered by the city of Philadelphia under the Home Rule Charter adopted in 1951. The Republican Party won Pennsylvania in the 2016 presidential elections by a margin of less than 1% so the state was set to be a crucial swing state in the 2020 elections, which Biden won by a slim — and hotly contested — margin. In Philadelphia, voting leaned heavily Democratic, with Biden beating Trump 81% to 18%. The increasing diversity in the suburbs could underpin a greater shift toward the Democrats, especially in places like Chester County. Montgomery County is largely safe for Democrats. Ten of the current 11 Row Officers, six of the seven state Senate representatives and 14 of the 18 state House representatives are affiliated with the Democrats.

There are over 37,000 hotel rooms in the Philadelphia region.

Economic Performance According to the Philadelphia Fed’s Third District Beige Book report, March and April were tenuous months for Philadelphia, just like many other cities. Business activity dropped and two-thirds of firms reported a fall

ECONOMY OVERVIEW

Tiffany Wilson President & CEO – University City Science Center

We’re going to come out on the other side of COVID-19 intact and stronger, ready to take advantage of the opportunities to respond to unmet clinical needs that were identified during the pandemic. We’ve seen that the life sciences sector is resilient and at a time when more companies are shifting to remote work, the commercial real estate market as it relates to the life sciences continues to thrive because you can’t do lab science in your kitchen. People have been creative and will have to continue to be in relation to how they move their research forward, all while doing so in a safe and secure manner. Our challenge in the Philadelphia region is to celebrate whenever the underdog wins and not lose the underdog mentality that keeps propelling us forward and provides us that gritty, competitive edge. We need to start to see ourselves as a true industry leader in the country around innovation and entrepreneurship in these amazing life science technologies. in sales in excess of 5%. Although manufacturers were able to stay open, provided no positive COVID tests were identified, there was a weaker backlog of new orders. Tourism virtually stopped and most of Atlantic City’s 26,450 casino workers were laid off. Estimates placed the drop in weekly travel spend at 80% in New Jersey and Pennsylvania. Employment continued to contract sharply into May but as a reopening began in June and July, the outlook began to brighten.

Although end-of-year business activity was far below that of previous years, the city maintained stability and even a small margin of growth into January 2021.

In Philadelphia, small and midsize businesses employed four in every 10 workers in Philadelphia pre-pandemic and paid 50% of all business taxes.

According to Pew research, Philadelphia had the fewest small and midsize businesses per capita in 2016 of a range of comparable cities that included Baltimore, Jacksonville, Denver, Boston and New Orleans. The condition of Philadelphia’s small businesses was found to be more tenuous than others, with underperformance in gross receipts, credit ratings and on-time payments. The silver lining in this was that Philadelphia was cushioned by the impact of the COVID-19 pandemic that annihilated countless small and midsized businesses across the country.

Even though Philadelphia’s small businesses were not hit as hard, there is still a period of uncertainty ahead given the drop in tax collection and the increase

Small and midsize businesses employed four of every 10 workers before the pandemic in public health expenses. Last year, the Senate voted down a House proposal to bolster state treasuries from federal coffers, meaning state and local governments had to get creative to increase revenues. One of the avenues they could take was public-private partnerships (PPPs), especially with real estate developers and investors. The partnerships allow the private sector to shoulder most of the financial burden, while the majority of the risk falls on the shoulders of the government. The National League of Cities estimates that nearly 90% of cities will be less able to meet their needs in fiscal 2021 than in fiscal 2020 and with growing infrastructure needs, PPPs could be just the solution. www.capitalanalyticsassociates.com

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Ellen Hwang Philadelphia Director The Knight Foundation

What is Philadelphia’s most significant challenge regarding social and economic growth?

When it comes to economic growth, there’s a lot more work we need to do in the small-business and entrepreneurial ecosystem. We know that lending practices need to change to better support people who historically don’t have access to capital and lack long histories of credit. We need to identify how we can generate generational wealth for our Black and brown communities.

When it comes to infrastructure, there needs to be consideration of where we are investing and in whom we are investing When long-time residents are not engaged in investment opportunities in their community, it leads to things like displacement and we lose an opportunity to tap into the vibrant culture, important history and strength of that community, which I would argue lead to more equitable outcomes that mitigate the negative impacts of gentrification.

What progress has been made on the investment toward the Smart City Roadmap?

Significant progress has been made since that initial investment. The roadmap was launched in 2018 and since then the city of Philadelphia’s Office of Innovation and Technology has been able to implement a number of the strategies outlined in the roadmap. This includes the Pitch and Pilot program that engages the community in pitching tech-enabled solutions to municipal challenges.

Knight Foundation continues to make Smart City and technology investments that support an informed and engaged Philadelphia. We’ve made investments in gamification as a form of engaging the community in planning decisions, integrating interactive apps to explore public spaces and reimagine our city’s monuments and symbolic places of civic engagement, and how to leverage sentiment data to understand how residents are feeling about different issues in their community.

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| Invest: Philadelphia 2021 | ECONOMY

U.S. News & World Report ranked Philadelphia as No. 2 among “Best Places to Visit in the U.S.”

The Pennsylvania Department of Transport is an example, operating an ambitious PPP program that encompasses bridges, roads, rail and mass transit. The Major Bridges program is designed to tackle backlogs on major interstates and expressways and Partnership 81 focuses on mobility improvements along a 5-mile corridor of the I-81. An effort to focus on clean natural gas fueling stations also caters to private sector fleets and the Rapid Bridge Replacement program seeks to replace 558 bridges across the state that are in poor condition.

The key industries in the Greater Philadelphia area are energy, financial and professional services, IT, life sciences, logistics and manufacturing, according to the Select Council. The metro area alone contributes $444 billion in gross regional product and the city boasts the lowest office rental rates among top metros. It has the seventh-largest workforce, totaling 3.4 million employees and fed by top academic institutions.

Philadelphia has one of the largest concentrations of higher education institutions in the nation. The share of Philadelphians with a college degree has also grown in recent years, reaching 30.9% overall and 45.1% among adults aged 25-34, making the city more attractive to would-be employers. In Philadelphia, education and health; professional and business services; trade, transportation and utilities; and

CONSTRUCTION ECONOMY OVERVIEW

Brett Perkins Senior Vice President, External & Government Affairs Comcast Corporation

government are the four largest nonfarm employers, representing 75% of jobs.

The Philadelphia authorities are well-versed in providing the correct talent pipeline for the city’s key industries. The local government created a specialized Workforce Development Board called Philadelphia Works, Inc., which provides apprenticeships, career opportunities and workforce development training.

Through its CareerLink service, the development board matches candidates with local jobs, builds skills and helps citizens work toward a career. The board offers opportunities for everyone but has targeted the 16-24 demographic that is out of school and unemployed, representing about 34,000 young adults in 2018.

Demographic shifts Philadelphia’s demographics have changed dramatically over the years. The city has traditionally welcomed a diverse cross-section of residents but diversity has accelerated. Philadelphia is home to an increasing number of immigrants, with the number of foreignborn residents having doubled in the most recent census data from a relatively low baseline of less than 7% in 1990. In Pew’s 2018 report, it points out that more than a quarter of Philadelphians are first- or second-generation immigrants. The main country of origin among foreign-born Philadelphians is China,

How is Comcast addressing the needs of the new virtual world?

We took a series of steps to ensure connectivity for everyone. For instance, we opened up our public Wi-Fi hotspots and provided two months free of our Internet Essentials services to new low-income customers.

We’ve essentially focused ourselves on making sure that people are connected to the internet. During the pandemic, we also increased the speeds of the Internet Essentials program for all new and existing customers for no additional fee, and we launched what we called the Internet Essentials Partnership Program. This was really a response to the demand from our partners around the country that were looking for help to sign up large numbers of low-income K-12 students so they could continue to participate in their education from home. Fortunately, our team had been working on this prior to the pandemic, so when the pandemic hit we were able to quickly adjust and create something that has now scaled out to more than several hundred communities around the nation.

How is Comcast addressing the issues of today?

2020 put a spotlight on the pervasive issues of our country, primarily the racial inequality that has persisted in our society. As a company, we’ve been committed to helping drive lasting reform and building a more connected and equitable world for more than 10 years. We’ve had a long-standing and nationally recognized commitment to diversity and inclusion but like everybody else, we’ve realized that addressing these problems is going to require more effort. We made an announcement in June 2020 about the role that we’d like to play in helping to do more, announcing a $100 million commitment to advance social justice and equality. The company is putting the full weight of our resources to really drive substantive and sustainable impact. We know this’s not something that is done easily, but we’re committed to playing a significant role in addressing these pervasive issues. www.capitalanalyticsassociates.com

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ECONOMY OVERVIEW

David Thomas CEO & President – PHDC

Regarding social impact developments, some of the work that we’ve done in the past is residential. We try to get people to be a lot more conscious regarding their activities, their environment and the community in which they are investing. There is a community component to it. For instance, it could be a conversation about providing a healthcare element for the community, if you want to mitigate the lack of access to healthcare in some of those communities. We try to be thoughtful in how we look at things.

When we ask for social impact, we want to know, before we approve something, how your project is going to benefit the community, not just you as a developer. We are trying to build neighborhoods.

followed by the Dominican Republic, Jamaica, India and Vietnam. These changes have had a profound impact on the city and are largely responsible for the growth it has experienced since 2006, Pew says.

Now, data website FiveThirtyEight has found that Philadelphia is one of the cities that best represents the demographic makeup of the United States. In Philadelphia, 43% of the total population is Black or African American, 41% is white, 12% is Hispanic or Latino and 6% is Asian. There are also small American Indian, Hawaiian Pacific Islander and Native Hawaiian populations. The largest cross-section of the population in the city are Black or African American females, followed by white females. The population is young, with a median age of 33. Home ownership is

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| Invest: Philadelphia 2021 | ECONOMY

relatively high, with 324,536 owner-occupied homes recorded of a total 599,736.

Cellicon Valley Philadelphia’s ‘eds and meds sector’ — known as Cellicon Valley — is arguably the largest jewel in the city’s crown. The city is known as the birthplace of cell and gene therapy, not to mention the incubator for many of the critical components in the COVID-19 vaccine and testing process. The gene sequencing component used by some of the most effective COVID-19 vaccines was developed in Philadelphia.

The city’s scientists recognized the value in creating a medical hub to develop this kind of innovation very early on. Now, more than 30 cell and gene therapy

ECONOMY OVERVIEW

development companies and about 80% of all pharma and biotech companies in the United States have operations in the Greater Philadelphia area.

Not only is there a wealth of innovation and energy brought by these companies, but the already-strong pipeline is constantly being fed by the prestigious medical centers in the region. According to Philly Mag, one in every six doctors is trained in Philadelphia. In January 2021, Fortune Magazine named Philadelphia as the fourth-hottest tech mecca in the country beyond Silicon Valley, while neighboring Pittsburgh was named No. 2. The accolade was based on median home list prices, one-year home price growth and three-year tech job growth figures. Philly’s tech job growth was recorded at 6.5%, outpacing all but two of the Top 10 cities listed.

University City is one of the biggest achievements of the city of Philadelphia. The minicity acts as an incubator, bringing together world-class research facilities, economic development, significant investment and the best and brightest of the academic world in one mixing pot. The development makes up millions of square feet and contains housing, transport links, mixed-use projects, public spaces, retail and entertainment spaces alongside medical office spaces and high-spec laboratories. The neighborhood truly offers something for everyone, down to schools, art galleries and dance studios. Pre-pandemic, the pace of job growth was almost impossible to keep up with, R&D investment within the hub reached $1.85 billion and 232 patents were filed by University City companies.

And where the innovation and the talent live, the money soon follows. The Pennsylvania Biotechnology Center of Bucks County recently launched Hatch

More than 30 cell and gene therapy firms and 80% of all U.S. pharma and biotech companies operate in Philadelphia BioFund, which is a venture capital-backed fund to foster innovation in biotechnology. In 2013, Spark Therapeutics was born out of innovation from the Children’s Hospital of Philadelphia and only a few years later was snapped up by pharmaceutical giant Roche.

It is now a global hub in cell and gene therapy with a series of advanced stage clinical trials on everything from haemophilia to neurodegenerative diseases.

Not only this, but the city has enough space to build complex, high-spec laboratories thanks to its industrial past, creating huge hubs where academia, the private sector and investors can grow together.

Philly-based Amicus Therapeutics recently made a $50 million investment to expand its partnership with the Perelman School of Medicine Gene Therapy Program at UPenn, pledging to bring in 200 researchers and scientists to the city. Investors are also arriving from further afield. Chicago-based strategic investor Water Street Healthcare Partners recently committed $100

John O’Brien Executive Director – West Chester Business Improvement District

We are not a government entity so budgetarily, incentives are tough to provide. Our goal is transitioning to a digital marketing strategy. When I came in, we were focusing on a print-based marketing approach but we need to make sure we meet customers and business leaders where they are, which is digital platforms. In the near future, we’ll be relaunching www.downtownwestchester. com, which is a complete rebuild of our website. It will have a lot of resources on setting up a small business in West Chester, as well as inventory of available properties. It will be a one-stop shop to provide entrepreneurs with all the answers they need.

www.capitalanalyticsassociates.com

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ECONOMY OVERVIEW

million to expand Medical Guardia, a medical alerts system and monitoring company.

Global influence Prior to the COVID-19 pandemic, Philadelphia’s economy was positioned for strong growth in 2020.

The city’s conference and events circuit was set to bring in 400,000 visitors across at least 20 events and Philadelphia International Airport was looking to build on its record year in passenger traffic in 2019. After the pandemic hit, the impact was sudden and widespread but certain industries were hit much harder than others — namely those dependent on travel, tourism and foreign investment. Some of the tourism losses were mitigated by a slight pickup in domestic travel from June onward but as the world became much more inward facing, large tourist cities like Philadelphia paid the price. During 2020, lost income from tourism in Greater Philadelphia was estimated at between $3.4 billion and $4.5 billion.

When Donald Trump assumed the presidency, one of the first and most high-profile actions he took was to begin a trade war, primarily with China but also with fellow North American countries Mexico and Canada, South American countries and Europe. A U.S.China Business Council study by Oxford University economists that found Trump’s trade war caused a peak loss of 245,000 American jobs and a study by the Federal Reserve Bank of New York and Columbia University showed the trade war cut the market capitalization of U.S. companies by $1.7 trillion. But the tariffs look set to stay as incoming Treasury Secretary

One of the founding principles for Philadelphia was religious freedom and it continues to welcome people of all faiths.

Janet Yellen was not vocal about overturning them in her confirmation hearing in January.

As of November 2020, U.S. goods and services exports were worth $184 billion and imports represented $252 billion, creating a trade deficit of $68 billion. When COVID-19 struck, many were forced to re-evaluate supply chains given their dependence on imported products. According to Global Trade Mag, Philadelphia’s port is among those making a difference

Monica Taylor Vice Chair – Delaware County One of the areas that we are looking at regarding economic development is reinvesting in our small towns to achieve that Main Street feel. We’re made of 49 municipalities. We have these beautiful small towns, with shops, small businesses and familyowned businesses that have been there forever. During the pandemic, we’ve been trying to help keep them going. But we also want to revitalize those areas. We’re in a great area: close to Philadelphia, two and a half hours from New York City, two hours from D.C. and we have a major airport. We are a great area for businesses to move into. We are looking at the bigger picture revitalizing our small towns and working to attract larger businesses to the area.

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CONSTRUCTION ECONOMY OVERVIEW

Vail Garvin President & CEO Central Bucks Chamber of Commerce

in the local supply chain. The connectivity of the Port of Philadelphia is almost unmatched, and shippers can reach 70% of the nation’s population within 72 hours.

Looking ahead Just like almost everywhere else in the world, recovery from the pandemic will be tough for Philadelphia. But the city has the benefit of a diverse economy, handson authorities and a booming eds and meds sector to bolster growth. COVID-19 vaccines are becoming more widely available and arguably there is no city better positioned to roll out the vaccine due to its comprehensive logistics network and health sector expertise. The Philly Fed’s Harker projected that growth in the second half of the year and through 2022 would be strong.

Further evidence of the region’s positive outlook is the fact the private sector has barely paused its investment in the city. Penn’s Landing, a $2.2 billion, 3.5-million-square foot mixed-use development is due to break ground soon, as is a $56 million expansion of University City in the form of a new 250,000-squarefoot life sciences building. And the city remains popular for new residents. During the third quarter of 2020, 21% of Philadelphia apartment searches came from outside of the city, according to Apartment List.

Even as work-from-home policies linger, Philadelphia remains one key location where work, live and play are seamlessly intertwined.

What have been some of the biggest lessons you’ve learned in the last year?

The biggest pivot that we and most businesses have made is in innovation. We will focus the next year on this concept. Businesses across Bucks County have had to be flexible and creative. COVID created a mindset in every business leader that without innovation, there is a limited future. As a chamber of commerce, it is up to us to help those businesses negotiate those changes. We believe that by June 2021, when “normality” has somewhat resumed, we will maintain many of the business capabilities developed throughout the pandemic.

What are some of the business sectors you’d like to see grow more in Bucks County?

The growth of our manufacturing community is underway. Jobs are available in many family run organizations. The chamber is concurrently communicating these openings to the high schools and community colleges and the Workforce Development Board in the County. The Rodon Group, which manufactures products using injection molding, has added the ability to produce COVID swabs for testing to the company’s production. Another growth product is “Sildry,” a new capability to keep water from entering the home through doors and windows. This is a sign of manufacturing growth.

The biotechnology sector is another major growth sector. The Biotechnology Center, founder of the Hepatitis vaccine, will double in size with the addition of new construction. The Chamber has developed a close relationship whereby the center acts as an incubator, and the chamber then helps link the companies to auxiliary services within the business community.

The banking community has also been a true partner to the business community. We are fortunate that the Bucks County banking community was innovative and worked with the Small Business Administration to bring the PPP programs and the EIDL loan programs to Bucks County. www.capitalanalyticsassociates.com

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A heavy hit: Tourism and hospitality suffered the biggest blows from the pandemic but optimism is rising The COVID-19 pandemic certainly landed a heavy blow to Philadelphia’s travel and tourism segment but the hit does not negate the region’s attractiveness to travelers. The city remains a top travel destination, popular among history buffs and culture seekers alike.

It is one of the major, typically industrialized cities that is using this base as a springboard to reinvent itself for a younger generation, from South Philadelphia’s Italian Market to The Navy Yard — now a 1,200-acre dynamic urban mixed-use development. National Geographic even chose Philadelphia as one of the best cities in the world to visit in 2020.

Still, the impact of the pandemic was stark, just as it was across the country. In 2020, estimates project visitor numbers of around 27-32 million, which represents up to a 40% decrease from 2019, when the region hit a record 46 million visitors. Reduced visitation means less income through visitor spending, and this is estimated to dip by up to 60% versus 2019 levels of $7.64 billion. With a knock-on effect on tax revenue, collections are expected to be down by around 50% on the $1.01 billion from 2019. And with extensive job losses, recovery might be a little farther out than expected. Anticipated travel and tourism job

losses amounted to 52,000 throughout the five-county region in 2020.

Airport and airlines Prior to the pandemic, Philadelphia International Airport (PHL) was Philadelphia’s only major airport and served 32.24 million passengers annually.

Founded in 1940, the airport ballooned from its original capacity of 40,000 passengers and is now home to 16 major domestic and international carriers, including American Airlines, United, Delta, British Airways, Qatar Airways and Lufthansa. The drop in tourism numbers is most clearly evident in the depressed passenger traffic through the airport in 2020. Domestic passenger numbers in the 11 months to November reached just 10.3 million, down over 60% on the year, while international passenger numbers dwindled by over 82% to just over 650,000.

Rather than lick its wounds, the airport made its facilities useful for the management of the pandemic.

The airport launched a partnership with Jefferson Health and Ambulnz in December to launch a COVID-19 testing program operated from the Terminal E Departures building in an effort to give travelers ( ) www.capitalanalyticsassociates.com

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TRAVEL AND TOURISM INTERVIEW

Bouncing back Strategic marketing is underpinning efforts to support Main Street businesses and the results are starting to show

Mike Bowman President & CEO – Valley Forge Tourism & Convention Board

What recent highlights demonstrate the Valley Forge Tourism & Convention Board’s actions during the pandemic?

We’ve been focused more in the past few months on strategic marketing for Main Street businesses affected by COVID-19 in Montgomery County.

We’ve been in every part of the county highlighting everything from bookshops, cafes and any business at all that has felt a direct effect related to COVID-19.

We’ve been marketing through digital, social, TV and other platforms during these promotional efforts.

We’re still talking about our hotels because we’re funded by the hotel tax and we’re all about trying to get people to stay, especially on weekends. It’s more about having a strong emphasis on Main Street and businesses.

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| Invest: Philadelphia 2021 | ECONOMY: Tourism

How are you balancing the need for economic development and health and safety regulations?

Montgomery County is the third-largest county in Pennsylvania. Proximity-wise, we are close to Downtown Philadelphia and the airport. We were the first hit by COVID-19 on March 9, 2020, making us the first area in the tri-state region to shut down. By March 15, the King of Prussia Mall was shut down, as well as Valley Forge National Historical Park and the Valley Forge Casino and Resort. We strategically focused on safety, health, CDC guidelines and ensuring we were 100% aligned with our county commissioners, together with their messaging.

Being the first ones down, we will be the first ones up.

We’re already starting to see that. Into the summer and the fall, our weekend business was getting stronger.

The challenge has been gatherings and gathering numbers, which makes total sense with the science. At the end of the day, we are highly optimistic that our compliance with all CDC guidelines is spot on, all of our businesses are following all the rules and there are many opportunities with over 100 miles of trails, Valley Forge National Historical Park, the best smalltown shopping experience both indoor and outdoor in the country with the Philadelphia premium outlets.

There is a lot to do.

What tourism sectors do you expect to thrive in 2021?

The pent-up behavior connects especially and specifically to the outdoors. It can be shopping, biking, canoeing, airboarding, walking, talking, experiencing the sound of the birds and trees, all while feeling safe and secure in general. We see a strong uptick in those activities. In parallel, we have two hotels in development that are going to be unbelievable, together with a lot of construction going on across the county.

CONSTRUCTION ECONOMY OVERVIEW

( ) greater peace of mind. Asymptomatic travelers flying from PHL can access an antigen test, a PCR test and a rapid PCR test with a price tag ranging from $70 to $130 — one of the most affordable testing programs in the country. And even amid the pandemic, the airport welcomed a new carrier, Eastern Airlines. The carrier provides nonstop routes between Philadelphia and Port-Au-Prince in Haiti and Santo Domingo in the Dominican Republic.

Hotel performance Hotels in Philadelphia saw occupancy rates drop off a cliff in mid-March, with properties reaching 30% or less compared to the typical 85-90%. Some hotels, including The Loews Philadelphia and The Wyndham Garden, began temporary suspension of operations and many more implemented layoffs to keep their heads above water. At one point, hotel occupancy rates dipped below 10% and many had to negotiate with lenders on major loan and mortgage debts coming due.

There was a sigh of relief when the PPP loan program was rolled out, with dozens of Philly hotels securing $150,000 or more, but the industry continues to push for more stimulus.

Even through all the turmoil, there were several major hotel openings in Philadelphia. The $80 million Canopy by Hilton Philadelphia Center City opened in August and the $81 million Hyatt Centric Center City opened its doors in October. The $60 million River House at Odette’s was also inaugurated in Bucks County. And four Philadelphia hotels placed in Conde Nast’s Top 10 in the Mid-Atlantic rankings. To open 2021, Pearl Properties announced it would convert the old Hilton Embassy Suites Hotel into a development of one-bedroom suite residences.

Demand is slowly increasing for regional travel and weekend stays but hotel occupancy midweek remains down, given the lack of business travel. “In the short term, we are capturing the leisure segment,” said Ben Shank, general manager of the Four Seasons Philadelphia. “I am hopeful that not only as a city but as a nation we’re going to rebuild. Times of crisis bring reinvention. We may look back and see a lot of positives emerge from this period.”

The hope is that a successful vaccine campaign will ignite confidence among travelers and spark a rebound.

Looking ahead Until a comprehensive vaccination program is achieved, however, it is unlikely that large-scale leisure travel will resume, putting pressure on tourist

Larry Korman President AKA Serviced Residences

How has AKA maintained its competitive advantage over the years?

AKA has three properties in Center City: AKA University City, the newly renovated AKA Rittenhouse Square and AKA Washington Square. Last year, we also developed two brand new AVE apartment communities in King of Prussia and Bluebell. Those are outside of Center City but are very well connected to the Downtown area.

Other AVE communities include Lansdale, Malvern, Newtown Square and Downingtown. Part of our competitive advantage is the reputation and integrity behind Korman Communities, which incorporates the AKA and AVE brands. We have remained committed to our core values and principles while seeking to find new expressions of our core competencies. We have stuck to our strength, which is residential real estate, and we also take into account what residents and guests want and need.

Why has the extended stay sector been one of the highest-performing during the COVID-19 crisis?

We are even more relevant today and we resonate in this new COVID-19 culture because there has been a flight to quality and a shift toward less frequent travel, with longer lengths of stay. We’ve always championed those elements of cleanliness, high presentation standards; our spacious accommodations with full kitchens are ideal for longer stays. People now want self-sufficient spaces where they can stay in a homelike space without the feeling of staying in a confined hotel room or having to work in the hotel lobby.

How do you expect the hospitality industry to look over the next 12 months or so during the recovery?

In Philadelphia and New York, the market was so slow in the first quarter of the year that I expect some facilities will stay closed until April of next year. From our perspective, we are using July and August to build for a great September and October. www.capitalanalyticsassociates.com

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Gregg Caren President & CEO Philadelphia Convention and Visitors Bureau

How is the bureau sharpening its competitive edge along the road to recovery?

The best way to start is right in Philadelphia’s backyard with our life sciences and medical sectors. We’re still the first and only Convention and Visitors Bureau (CVB) in the country to have a dedicated life sciences division, PHL Life Sciences. For decades, the division has been a proactive way to engage the life sciences community as an adjunct development arm for tourism while leveraging Philadelphia’s incredible medical, academic and scientific community. Once the pandemic hit, the resources available through PHL Life Sciences put us in a unique position to pivot quickly in terms not just of communication and a PR strategy, but a true medicallyguided recovery strategy. We created the PHL Health Pledge, an initiative designed to increase consumer confidence in the Philadelphia travel experience. We also developed an actual pledge that local businesses can sign as a public commitment to implement the health and safety standards recommended by national, state and city guidelines.

How is the bureau leveraging technology to ensure an enhanced visitor experience?

It is all about content – making sure we continuously offer meaningful information to the various constituents we serve. For meetings and conventions, our team works closely with meeting planners to supply destination content they need to power their convention apps and websites. In the lead-up to the event, our team assists with everything from social media campaigns to video assets to make the meeting planners’ job easier.

Being able to support planners in creating authentic experiences, specific to the destination, strengthens our value proposition and keeps planners turning to Philadelphia to host their events. Our social channels are ubiquitous and support both convention attendees and overseas visitors. We offer curated itineraries and destination information, alongside the on-the-ground experience of being in Philadelphia.

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cities like Philadelphia. But some in Philadelphia are not waiting for opportunity to come knocking. Temple University is launching a new Bachelor of Science degree in Event and Entertainment Management to encapsulate the rapidly moving goalposts of the COVID-19 era. The virtual events industry is anticipated to grow from $78 billion to $774 billion by 2030, Temple University says. And the Philadelphia Convention and Visitors Bureau (CVB) partnered with Philly-based animated video production company Motifmotion to create the “What We Never Thought We’d Miss About Meetings” video series.

And for those who miss the historic aspects of Philadelphia, there was good news in January 2021 when the Liberty Bell and Independence Hall began welcoming guests once more after a ban on museum visits expired. The CVB adapted its slogan, making PHL signify perseverance, hope and love. It also rolled out the Philadelphia From Home program that provides access to virtual tours of the city’s top attractions. The Montgomery County Tourism and Convention Bureau sold t-shirts, with the proceeds going to the MontcoPA COVID-19 Response Fund. The bureau is rebuilding business for 2021, with a focus on large youth sporting events.

Still, projections show the hospitality industry is not expected to return to 2019 levels until around 2023.

The recently opened Live! Casino will operate initially on a controlled reservation or invitation only basis, a big blow to revenues. Convention traffic, meanwhile, is trickling back, although big advances were made in 2020 with the Together Again Expo, which attracted 1,400 people wearing masks and socially distancing.

CVB is already building up the 2021 pipeline with smaller events and is looking to the horizon for the big deals. Philadelphia secured the Major League Baseball All-Star Game for 2026 and is focused on bringing the FIFA World Cup to the region.

Leisure travelers, although the first to fall off, are expected to return relatively quickly, with the business travelers anticipated to be the last to return. In the meantime, while the country awaits the international tourists, Philadelphia is positioned to be a hot domestic tourism destination in 2021. With excellent transport links, Greater Philadelphia is within a five-hour drive of 25% of the country’s population. And it doesn’t hurt that in December, Conde Nast Traveler recognized the City of Brotherly Love as a destination to visit on its 2021 Gold List.

“Philadelphia is a close community, and I’m excited to see how we all recover together,” said the Four Seasons’ Shank.

Market voices: Tourism in Philadelphia

Steve Byrne

Executive Director Visit Delco, PA

When the pandemic arrived, we had to start looking at every aspect of our business. We implemented the furlough program and we renegotiated all the contracts we could. Most of the vendors we dealt with were understanding.

We cut where we could, spent prudently and restricted a lot of the marketing because we didn’t know what to market. But we didn’t want to stop marketing altogether because we still needed to have visibility. We printed our magazine digitally instead of physically and we did a lot more online marketing. We found that, with people working from home and businesses being closed, people were gravitating toward the internet. We promoted small businesses in conjunction with the county through the Shop Small initiative. This was a video broadcast to try and get people into the local stores, especially given the growth in e-commerce.

We’ve had some real accomplishments around the company, which is related to us turning into a specialty channel overnight. We went from being focused on complete in-person programming, using 400-year-old methodologies for sound, to starting a digital channel. This was researchintensive and it reached its apex with the release of Soldier Songs. The film has gotten rave reviews and it re-established Opera Philadelphia as a pacesetter. We gained this accolade three years ago with the beginning of our Festival O. Our main goal was to stay artist-focused and meaningful. The channel was never intended as a COVID Band-Aid but something we can offer in tandem and even integrate into the live performance space. Classical arts have perfected the art of exclusion because the entire industry is based on a subscription model. We’re trying to be inclusionary and equitable, so we have invited artists and patrons into Opera Philadelphia who were previously excluded, and this primarily applies to people of color.

Jim Salvo

Complex General Manager The Inn at Penn & DoubleTree by Hilton Philadelphia Center City

David Devan

General Director & President Opera Philadelphia

We have seen our guest survey scoring increase considerably because of the confidence of the traveler. They see that we are mandating face masks, wearing gloves, sanitizing public spaces and the elevators, and practicing social distancing. Hilton has always been at the forefront of innovation related to hospitality, and 2020 has been no different. Digital Key on the Hilton Honors App allows guests to check-in and use their mobile device as a room key, and room service has been reimagined as a contactless experience. Though building relationships with our guests through face-to-face interactions often secures loyal, repeat customers, the option of bypassing the front desk using digital check-in eliminates a touchpoint and leaves many guests with added peace of mind during this unique time.

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Tourism in numbers: Philadelphia International Airport Annual Results:

2019

2020 Passengers

33,018,886

11,865,006

Total Plane Movements (takeoffs and landings)

390,321

220,123

Leisure Demand Forecast 2020-2022: 2020 Forecast:

514,000 leisure room nights,

a 53%

decrease from 2019

Passenger Airlines

29

30

Average Daily Departures

486

218 Top 5 Destinations

Domestic Orlando Atlanta Boston Los Angeles Fort Lauderdale

Domestic Orlando Atlanta Chicago Dallas/Ft. Worth Boston

International Cancun London Montego Bay Punta Cana

International Cancun London Toronto Montego Bay Source: Philadelphia International Airport

2021 Forecast:

830,000 leisure room nights,

a 24%

decrease from 2019

2022 Forecast:

1,038,000 leisure room nights,

a 4%

decrease from 2019 Source: Tourism Economics

800K

830,000

1.09 Million

1 MIL

514,000

600K

0

254,000

400K

200K

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (f) (f) (f) (f) forecast

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1.04 Million

Center City Leisure Hotel Room Nights:

| Invest: Philadelphia 2021 | ECONOMY: Tourism

Source: STR/Tourism Economics

Center City Hotel Performance:

2019

Overall Regional Performance:

2020 projection

2019

2020 projection

Occupancy

76.3%

31.9%,

Saturday night remained the busiest night of the week, with average occupancy at 88.1%.

down 58.2% in 2019

Average Daily Rate

$202.30

Visitation

46 million

27-32 million

trips from the U.S. and international markets — over 39 million of which were for leisure purposes

down 30-40% from 2019

$159.40,

(record)

down 21.2% in 2019

Revenue per Available Room (RevPAR)

$154.39

$50.89,

(record)

Visitor Spending

$3.1-$4.2 billion

$7.64 billion

down 45-60% from 2019

down 67.0% in 2019

Room Supply & Demand

4.58 million

3.7 million

room nights in supply;

room nights in supply, down 18.5% in 2019;

3.49 million

1.2 million

room nights sold

room nights sold, down 65.9% in 2019

Tax Revenue

$500-$600 million

$1.01 billion in state and local tax revenue

down 40-50% from 2019

Room Revenue

$706 million

$189.8 million,

(record)

down 73.1% in 2019

Market Mix One-third for each segment Business (33%), group (32%), leisure (31%), contract (4%)

Jobs Directly supported

Leisure (43%), business (37%), group (14%), contract (6%)

105,460 jobs

Source: Tourism Economics

Source: Econsult Solutions, Inc.

Covid-19 Impact: Lost Travel & Tourism Jobs (Region):

Lost Leisure Hotel Room Nights (Center City):

Lost Group Room Nights (Center City):

52,000 jobs,

696,000 nights,

950,000 nights,

a 27% decline year over year

a 74% decline year over year

a 93% decline year over year

(projected January-December 2020)

(projected March-December 2020)

(projected March-December 2020)

Lost Travel From Canada & Mexico (Region):

Lost Overseas Travel (Region):

Lost Economic Impact (Region):

424,000 visits,

562,000 visits,

a 73% decline year over year

an 80% decline year over year

(projected January-December 2020)

(projected January-December 2020)

$5.8 billion, (projected March-December 2020)

Source: Tourism Economics

www.capitalanalyticsassociates.com

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Professional Services: Professional services players, from accountants to lawyers, have a pivotal role in helping strengthen the region’s financial fabric.

To ensure results in a new post-pandemic era, they are banking on innovation, re-engineered business models and a client-centric approach.

www.capitalanalyticsassociates.com

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The future of business: Professional services firms have proven integral to the region’s financial stability In times of uncertainty and crisis, companies look for expert advice to tackle the shifting landscape, to gain visibility on emerging and potential opportunities and to come out not only on top but also to be ready to compete in the ensuing environment.

During the first months of the pandemic, businesses were laser-focused on cutting expenses to weather the COVID-19 storm. As it became apparent that the ripple effects would last longer than expected, Philadelphia’s businesses pivoted toward more resilient strategies, focusing on cash flow generation, changing consumer demand and the transition to digital that would make their products and services visible in the virtual world.

In parallel, government-backed financial aid, most notably in the form of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and its Payment Protection Program (PPP) loans, was made available to inject air into the financial lungs of the country’s businesses while companies adapted their models to the COVID-19 landscape.

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| Invest: Philadelphia 2021 | PROFESSIONAL SERVICES

For many, especially smaller and midsized businesses, the aid was absolutely necessary but the rollout was an absolute mess. To navigate the rules, along with the challenges and opportunities, businesses and individuals turned to professional services firms, which themselves were forced to adapt to the new environment of remote work and digital innovation.

Landscape Philadelphia’s professional services ecosystem includes a number of household names, such as three of the Big Four – KPMG, Ernst & Young (EY) and Deloitte – Accenture and Grant Thornton, with a footprint of 10 offices and close to 7,300 professionals. These and other firms support businesses with advice and tertiary services like audits, tax, legal and accounting.

A big element of the work for companies like Grant Thornton is risk mitigation and this was especially true during the pandemic, said Sean Denham, ( )

PROFESSIONAL SERVICES INTERVIEW

Tech leverage Foresight to invest in technology proves an advantage in transition to a COVID working environment

Chris Hegarty Principal – CliftonLarsonAllen How is CLA leveraging technology to improve both its next-generation training and client experience?

We’ve developed a series of online tools for our clients, such as our secure online portal, which allows them to safely transmit their confidential information to their CLA service team. Anyone within our teams can access this information, regardless of whether or not they’re in a CLA office. We can work on client information and securely transmit deliverables back to clients through our secured client portal. If our firm had not invested in the technology that is now one click away for every employee, with all the apps installed on our laptops and secondary screens, we could not have done what we did when we all went home in March 2020, virtually digitizing our workflows. Our in-house CLA Intuition 2.0 Dashboard is a consulting tool, initially designed by our healthcare group, which focuses on hospitals, surgery centers, acute care, long-term care, senior living, assisted living and nursing homes. The dashboard was tailored to our healthcare clients with several lines of business to help them project various business line scenarios and how changes would impact their margins.

Which industries have showcased the lion’s share of demand for your services?

Once the COVID-19 crisis started, we were busier than ever, especially with the PPP loan opportunities and pursuing various tax credits. We were able to pull together and get information out to clients across all industries — restaurants, construction, healthcare, nonprofits. Many of our clients and contacts had similar questions. We put together a COVID-19 response team to research the new legislation and help clients navigate the healthcare, payroll and tax related components of the legislation and its various interpretations. Demand for our services skyrocketed

across the board for all the industries we serve as everyone had similar problems and insecurities while still needing to satisfy their audit and tax compliances requirements.

What is your outlook for Philadelphia’s business community?

Philadelphians are resilient. The nonprofit and social services communities continue to serve their clientele — the homeless, the mentally ill, the addicted, children in need, to name a few. Many people have learned to work from home and we anticipate real estate is going to change. The next leases are going to be for smaller footprints. Construction has not stopped, although it poses challenges for backlogs.

Our long-term outlook is certainly positive. www.capitalanalyticsassociates.com

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PROFESSIONAL SERVICES OVERVIEW

During the pandemic, digital transformation for the legal sector meant many virtual depositions and hearings.

( ) Managing Partner of Grant Thornton. “When I talk to organizations, even pre-pandemic, everyone has a strategy, the three or four things that they are focusing on, but very rarely are they prepared for every business risk. The pandemic forced companies to very quickly hit the pause button and re-evaluate their strategy and those risks,” he told Invest:. “We helped them with who they should be talking to, to gather information, digest all of it and then reshape their strategy.”

Mergers and acquisitions are another important segment for the industry and in pre-pandemic 2020.

M&A in Philadelphia was strong amid consolidation in the legal space, including the merger of Atlanta-based Troutman Sanders and Philadelphia-based Pepper Hamilton, announced in January 2020, to become one of the biggest law firms in the country. The merger was completed midyear. In other deals, Philadelphiabased Duane Morris acquired New York City-based Satterlee Stephens while Christie & Young merged with Pittsburgh’s Burns White. Although the pandemic forced a halt to M&A procedures early on, activity is expected to recover as the vaccine continues to roll out and firms dust off their due diligence processes looking for strategic acquisitions.

PROFESSIONAL SERVICES OVERVIEW

George Pallas Managing Partner & CEO – Cohen Seglias

The court systems in New York, New Jersey and Pennsylvania essentially shut down for about four months. The criminal bar was much more affected than the civil bar. Six months into the process, courts started opening using a digital platform. That helped us because it allowed us to get back into the business of practicing law more aggressively. In Pennsylvania, they opened the courts for in-person trials in September. We had 25 people in the courtroom during our first case with everyone trying their best to socially distance and wearing masks. I’m involved in a $35 million piece of litigation that will be entirely digital, alongside two other remote trials. COVID has changed the practice of law and I think some of these changes will be permanent.

On the credit union front, the city’s 10 largest institutions were coming off strong loan and asset growth. According to the Federal Deposit Insurance Corp (FDIC) between March 2019 and March 2020, with an average 10% increase in total assets and 15.6% loan growth, outperforming banks in the same period, with 11% and 7% growth, respectively. Philadelphia’s Top 3 credit unions alone – Police & Fire, Citadel Federal and American Heritage – accumulated nearly $13 billion in assets by August 2020.

Considering the activity of professional services was critical for businesses seeking advice on the best course of action to transition and propel corporate models to a post-COVID landscape, Philadelphia deemed these businesses as essential as long as they observed social distancing guidelines. Professional services firms were instrumental in the CARES Act and PPP rollout and securing access for the Quaker City’s businesses. During the first PPP round in April 2020, 81,000 businesses within the Philadelphia region received close to $10 billion of federal aid, preventing 787,000 jobs from being lost in Pennsylvania and South Jersey, equivalent to one out of every three jobs in the region. “When the pandemic first hit, we helped thousands of our clients apply for their PPP loans. Now, we’re working with them on the forgiveness aspect of those loans. The PPP loans were certainly a lifesaver for many companies, but the process remains a little more complicated than it needs to be,” said W. Bradley Baturka, U.S. Northeast Market Leader and Partner at Wipfli.

Moreover, the shift to remote work accelerated demand for effective virtual collaboration tools for

businesses to avoid losing productivity, which in turn raised concerns over cybersecurity. The design of new client engagement models in the virtual environment will be a critical factor in the post-pandemic era. This effort will also entail navigating new technologies and platforms that are best suited to cater to customer needs throughout the uncertainty. To this end, professional services firms are also acting as technical advisers to provide a tailored business continuity plan to clients, powered by innovation that guarantees future growth.

“With more and more companies working remotely, they are seeking cloud solutions, strong cybersecurity and software solutions, both enterprise and CRM. No matter what they’re seeking, they all want more than what they can buy off the shelf so they are seeking unique solutions that break down silos and pull all their data together,” said Baturka.

In fact, cybersecurity was on everyone’s mind in 2020 as all the companies and businesses whose models enabled them to go fully remote have done so since March 2020. Insurance companies, fully aware of this predicament and to cater to this new need from their clients, started offering cyber liability insurance.

This new product covers companies from the damages caused from violations of the Health Insurance Portability and Accountability Act (HIPAA) or other privacy protection laws and regulations at the state, federal or foreign levels. To be effective, the insurance considers broad definitions of Personally Identifiable Information (PII) and Protected Health Information (PHI). In short, businesses are protected from the liabilities inherent to a data breach relating to sensitive www.capitalanalyticsassociates.com

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Jeffrey Zudeck Regional Managing Partner, Mid-Atlantic Marcum LLP

How has demand for your services changed in the last year?

In Philadelphia, we were fortunate to experience a very good year. When COVID-19 hit, we were in the middle of our traditional busy season, so our deliverables were already scheduled. For our industry, the pandemic’s impact would have been dramatically different had it started in June instead of March. We all would have been undeniably crushed because we would have had to try to figure out how to fully employ our people. From a timing perspective, while COVID-19 created an initial delivery scare, we were able to flip the virtual switch and have our 2,600 professionals up and running without missing a beat. COVID-19 took over the busy season, we all kept on doing what we were doing, the government stepped in and extended some of the deadlines so that shored up our workload, and we had plenty of work to do through at least July, which was the tax deadline. What we did definitely see was a real spike in advisory services relating to PPP loans and helping our clients through that, not only in Philadelphia but nationally. We created a COVID-19 task force that assisted clients with PPP loans and that then continued into the mainstream lending programs. Our newly deployed COVID-19 online resource center was heavily utilized.

What is your near-term outlook?

We anticipate the remote environment will remain in effect until a vaccine is widely distributed and implemented. For the first four to six months of 2021, we’re going to be continuing to operate this way.

It’s going to continue to affect professional services across the board, including banking, private equity, legal and all the other centers of influence that we, as accountants, generally interact with. From an operational perspective, we’re going to continue to rely on some of the innovative new ways we’ve been using to connect with our clients. As we enter into next summer, we expect to get back to business as usual.

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| Invest: Philadelphia 2021 | PROFESSIONAL SERVICES

customer information, such as social security numbers, credit card numbers, account numbers, driver’s license numbers or health records. “The cyber space is rapidly changing due to an increase in frequency and severity of ransomware events, and that’s only going to increase. What we do know now is this is no longer an emerging risk. It’s real, it’s happening and it’s going to continue. Just like buildings, fleet, people, and machinery, computer systems and digital data are assets we need to help our clients protect. Our Cyber Practice Group is laser focused on helping clients understand their cyber exposures and what preventive measures and insurance coverage they need to have in place to protect their organizations,” Kenneth Ewell, President and COO of Graham Company, told Invest:.

On the accounting side, gauged by their local certified public accountants (CPAs), Philadelphia’s Top

Philadelphia had 1,260,828 square feet of office space under construction in 2020.

PROFESSIONAL SERVICES OVERVIEW

Lloyd Birnbaum Co-Managing Member – Lauletta Birnbaum

There’s capacity in our work environment to include both a physical space to collaborate and the flexibility to work virtually with platforms such as Zoom, Bluejeans or any of the others we found ourselves on. In the legal business, it’s important for people to be able to collaborate. There are a few firms out there that started as virtual firms but those organizations have lacked the collective creativity that you find in a group of people who collaborate physically. We would not venture to say goodbye to the physical office on any permanent basis.

5 accounting firms include KPMG, EY, Deloitte, Baker Tilly and BDO USA, totaling 1,422 CPAs. The fact that three of the Big Four firms are among the Top 5 attests to the significant accounting and tax advisory activity ongoing in the Quaker City. 2020 proved to be a real test for these accounting firms as businesses navigated shifting tax provisions and deadlines. Between April and December 2020, the city of Philadelphia published 16 different guides, updates and revised guidance.

Amid the turmoil, accounting players in the region continued to cement their future growth. For example, King of Prussia-based tax automation technology company Vertex went public with an IPO in July 2020 that raised $401 million. The company moved to its current headquarters in 2017 and obtained $1.2 million in Pennsylvania state grants and tax credits in exchange for creating 225 new jobs toward 2022.

Legal As in most industries across the board, the pandemic has fundamentally changed how the provision of legal practice is delivered. Forbes contributor Mark Cohen has found that the acceleration of digital transformation has shifted legal delivery away from differentiated legal expertise and practice and closer to any and every aspect of legal delivery except practice.

What he calls “business of law capability” includes a strong focus on tech, process and access to capital.

Labor-intensive, lawyer-centric, insular and monolithic models of legal education and practice, which used to be the mainstream, are on the cusp of becoming a thing of the past. Industries are accelerating customer-centric business scopes and accelerating their implementation.

Legal clients are going to expect something similar. www.capitalanalyticsassociates.com

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PROFESSIONAL SERVICES OVERVIEW

Legal firms received the most PPP loans of any local industry, totaling at least $110 million from around 667 loans Philadelphia’s top law firms include Morgan, Lewis & Bockius, Cozen O’Connor, Marshall Dennehey, Fox Rothschild and Ballard Spahr. These five firms alone have a total of 1,328 local attorneys. They are not insensitive to the ongoing seismic shifts occurring across the country. Zoom trials and virtual meetings are but the tip of the iceberg. Legal firms are dabbling in sophisticated technologies to make their practice more efficient in both cost and time, as well as using different tools and applications to create new prospect channels.

AI, robotics and data rooms, deal management platforms, client portals, automated reporting and e-signatures are making a slow yet decisive entry into the legal realm, and Philadelphia’s firms are no exception.

The Philadelphia region has an established midsized legal community, offering opportunities in virtually every practice area. Georgetown Law counts nearly 20 AmLaw 100 firms with a footprint in the city. Moreover,

Philadelphia has a significant corporate practice, nurtured by 12 Fortune 500 companies. Georgetown Law has detected a lack of development of large law firms in the nearby corporate center of Wilmington, further fueling Philadelphia’s growth in the segment.

The city’s law-focused higher education institutions are tremendously diversified, including household names such as Penn University, Drexel and Temple. It is an important differentiator to have for the local practice considering the available talent pool is among the first factors companies look at when thinking about either relocating or expanding toward other markets.

The other leading practice areas among Philadelphia firms include intellectual property, insurance and healthcare, labor and employment, antitrust, real estate and municipal and bond work. Litigators, with niche practice areas, are also in high demand, especially in the COVID-19 environment. A surge in bankruptcy service looms for 2021 as well because companies ill-prepared to face a year-long pandemic are running out of options other than filing for Chapter 11.

Legal firms themselves were not immune to the COVID financial impact. According to areport by the Philadelphia Office of the Controller, law firms were awarded the most PPP loans of any local industry, amounting to at least $110 million from close to 667 PPP loans during the first months of the pandemic.

Private equity/hedge funds The pandemic has pushed private equity firms toward a more hands-on approach with their portfolio companies to consolidate them into future-proof business models. They are sparing no expense in using every tool in the shed, including accelerating ( )

Market voices: Growth areas

James Bartolomei

Principal HBK CPAs & Consultants

The one area where we saw significant growth and inquiries was our IT company, HBK IT, which specializes in managed support services for small business networks. The rest of the uptick lies in advisory services for companies to get through the pandemic: adjusting budgets and forecasts and trying to predict what 2021 is going to look like. This pandemic has picked winners and losers depending on industry. Those running thin on capital faced a tougher landscape. The real estate industry is on the verge of significant change, particularly in terms of retail space repurposing and office downsizing.

We had nice growth in some of our consulting areas, including our Process, Risk, and Technology Solutions. This group works on robotics process automation and automating manual processes. We also have The Center for Family Business Excellence, which works closely with family-owned businesses. They are business psychologists who work with businesses on transition planning, estate planning, and strategic planning. They are working with many middle-market, family-owned businesses to help manage the impacts of COVID-19 and the related recovery.

Kimberly Dula

Managing Partner Philadelphia Friedman LLP

Paul Dougherty Partner-in-Charge EisnerAmper

Our greatest strength as a traditional public accounting firm is without a doubt the great expertise that we have in very niche areas. From a firm perspective, we are lucky to have strong team members who are specialized in these various disciplines. Our forensic litigation and valuation practice has continued to grow, not only in Philadelphia but also in our South Jersey and New York offices. With the environment we are living in right now, I think this will continue to be an explosive area going forward. We also have a specialized cybersecurity team that provides effective assistance to clients.

We entered the year with plans to invest in a variety of areas within the practice. For instance, we added talent to our business advisory practice, including assigning one of our top partners as the leader. We’ve had tremendous success building that practice, with growing demand for a wide range of services, including exit planning, succession planning and valuation.

We’ve also assembled one of the strongest M&A teams in the area and have seen continued growth in that practice.

Christopher Meshginpoosh Managing Director Kreischer Miller

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PROFESSIONAL SERVICES INTERVIEW

Reducing risk There’s no one size fits all when investing. Weathering whatever storm all comes down to proper planning

Ted Durkin Director, Pennsylvania Market Head – UBS Financial Services Inc.

How has UBS Financial Services pivoted and adapted to the current landscape in the Philadelphia market?

The biggest change or revolution for us has been technology. This situation has forced us into a place where we’ve tested whether or not we can accomplish what we need to from a technological standpoint to be able to maintain the relationships that we need. I’d say, overall, we’ve done a pretty good job of that.

The technology has held up really well. UBS made changes prior to the pandemic that put us in an optimal position to make the transition to the new work-fromhome world we see today. We went cloud-based a while ago and that has been fantastic throughout this. It means that if there’s a shutdown, if there’s a situation, we don’t have to go back through the desktop. We can resolve the issue remotely to get back up and running almost immediately.

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| Invest: Philadelphia 2021 | PROFESSIONAL SERVICES

What new investment strategies have you introduced to your clients’ portfolios to reduce risks?

We have UBS Asset Management, research-driven portfolios and 6,000 financial advisers. We have distinct leaders in this particular market. You can’t ignore technology and a lot of things that are serviceoriented or technology-oriented. From an educational standpoint to facilitating communications, you have to be there. In terms of strategies, we continue to look for cyclical rotation. Overall, growth has outperformed value for the past two years in the United States. There has been real trade inside fixed income. That remains very much a strong backdrop. But when you see interest rates, in essence, at zero, you have to find the right opportunities to be able to invest.

It really comes down to a customized and individual decision in response to the client’s needs; it’s really all about planning. There’s no one size fits all, whether it’s risk tolerance, time horizons or financial obligations that you’re looking to meet. That’s really the way you need to set up your investment portfolio, with the confidence that you’ll weather whatever storm you need to weather.

How hard has it been to preserve confidence with the limitations created by a virtual landscape?

It was confusing at first. It was new to everyone. Our advisers continue to age and our clients continue to age.

A lot of the wealth in America is in the hands of people who aren’t necessarily as adaptable to the technology as others. I’m incredibly impressed with the resilience that everyone showed. We didn’t even know what Zoom really was a year ago. It’s one thing for an 18- to 24-yearold to be able to adapt like that but when you’ve got the whole United States and the world adapting that rapidly, it’s pretty impressive.

PROFESSIONAL SERVICES OVERVIEW

Philadelphia’s Center City is considered the third-most populous downtown in the country.

( ) the companies’ digital transition, injecting announced in October 2020 that it had closed a new capital for strategic investments or acquisitions and $1.8 billion fund to continue investing in tech and restructuring the business model or operational healthcare companies. The firm’s portfolio totals 43 framework of the company to adapt to a post-COVID companies, six of which are based in the Philadelphia area. The LLR 6 fund has its eye environment. Communication on lower middle-market growth has never been more important companies. across all levels to set a clear Data analytics-focused companies path and a set of specific goals also are hot items. Malvern-based and objectives to not only edtech company Frontline Educacome out unscathed from the tion announced its first acquisition pandemic but ready to compete of 2021: Forecast5 Analytics, a in a dynamic and technologically data analytics software company heavy environment. majority-owned by Riverwood PE firms are also looking at Capital prior to the sale. possible M&A activity to add more weapons to their companies’ arsenal in terms of a diversified Challenges product and services portfolio, Prior to the pandemic, profesmarket footprint, synergic partsional services firms were already Bradley Baturka, nerships or increased financial facing challenges to which the Northeast Market Leader & Partner, Wipfli capacity. Going forward, PE firms virus only added another layer are expected to add companies of complexity. The transition from COVID-resilient industries into their portfolio, to a remote world poses a whole new facet of effective such as healthcare, biotech and software-development and successful talent onboarding and retention. Talent companies. retention starts as early as the onboarding process.

Case in point: Center City PE firm LLR Partners Employees in a remote setting are finding it ( )

Our biggest challenge is how to manage, coach and keep our workforce engaged while they are working remotely.

www.capitalanalyticsassociates.com

| 47

®

oundtable:

Lessons learned One year after the pandemic started, leaders in the legal sector spoke with Invest: about their key takeways and lesssons learned, as well as the milestones reached despite COVID-19.

Rachael Bushey Partner Troutman Pepper

What was the greatest lesson learned from the past year and how are you applying it now?

For Troutman Pepper, COVID-19 has reinforced the importance of working as a team under any conditions.

We’ve embraced Zoom and other meeting tools to collaborate virtually, both internally and with clients. Even so, online collaboration does not replace the value of face-to-face communication with colleagues. For some of our newer associates working alone at home, we’re reaching out to make sure they continue to feel included and part of the team.

How would you characterize the past year for the firm?

Despite all the challenges, our firm had a successful year. During the pandemic, we had a merger — Pepper Hamilton merged with Troutman Sanders, and we are now Troutman Pepper. Trying to merge during a pandemic is not easy. In addition to the administrative changes, we still needed to stay ahead of constantly changing COVID-19 legislation and regulations affecting our clients in every state. We developed several resources to help our clients make the best business decisions during incredibly uncertain times. The firm also created a new Client Care Office, which has been transformational.

Our client care team gathers and shares client feedback to create value and client experience programs that strengthen the client’s relationship with our firm. We have also stood out as innovators, constructing and delivering tools for our clients to better manage their legal matters and data so that we can provide more value. We’re utilizing technology to measure progress, to track legal spend, and to keep our clients informed.

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| Invest: Philadelphia 2021 | PROFESSIONAL SERVICES

Lawrence McMichael Chairman Dilworth Paxson LLP

What were some of the biggest takeaways and industry changes in 2020?

One of the things that we learned is that the law firm operates extremely well remotely. We’re even more productive. Lawyers are billing more time. We’re getting things done faster and we’re able to handle things while sitting in our homes. Non-jury trials are going almost as well as they would have if we were in an actual courtroom. We figured out that technology can help us work around the pandemic. What we have to be careful of is the loss of the ability to just walk down the hall and engage in one-on-one interactions with our colleagues.

Thinking through legal issues collectively is a great benefit to clients.

How would you gauge the activity of your bankruptcy practice going forward?

It’s up. Bankruptcy is an interesting business because it’s not only cyclical, it also tends to lag when you think it’s going to occur. Bankruptcies often lag the onset of recessions. They are often seen as the business equivalent to open heart surgery: it’s a last resort for most businesses. When a business gets into trouble, their first thought is getting more time from lenders, renegotiating leases, cutting back on expenses, conceiving and implementing a turnaround plan and, in a more dire circumstance, resorting to layoffs. That’s why chapter 11 procedures tend to lag economic downturns.

We are seeing chapter 11s definitely starting to pick up. Statistically, the filing rate is increasing dramatically now over where it was a year ago.

PROFESSIONAL SERVICES ROUNDTABLE

Lori Miller

CEO & Senior Partner Goldberg, Miller & Rubin

What were GM&R’s significant milestones of 2020?

We’ve been on an incredible growth trajectory, both geographically and in terms of practice areas. We opened a northern New Jersey office and added 10 attorneys to our portfolio. Our New York office was just exploding with growth, so much that we had outgrown our physical space. On the practice area side, our diversification extended to transactional work, real estate, wills and estates. We also launched a counseling and consulting division for small businesses. That’s an area where we identified a significant growth opportunity and we’ve started to use our expertise to work with these smaller companies. In addition, as a diversity leader, I am proud to say that with all of the growth that we’ve had, we continue to maintain a firm with almost 50% women professionals.

How have you maintained a home-grown culture throughout the pandemic?

This has been one of the biggest challenges for our firm. Our whole model is related to a family culture.

That’s what set us apart in competing with all the other firms. Even though we were growing both in terms of headcount, market footprint and practice areas, culture is what really defined us. The initial hurdle to overcome was ensuring the health and well-being of our team, as Philadelphia, New York and New Jersey were all among the worst hotbed areas for the virus in the country last spring. Fortunately, in the last few years the firm had been working on disaster plans in the event of an unforeseen disaster. The pandemic was, unfortunately, the perfect opportunity to execute on the many hours we spent planning.

Stephanie Resnick Managing Partner Fox Rothschild LLP

What have been the firm’s key highlights and takeaways from the past year?

The pandemic has highlighted the wisdom of our business model, which is grounded in a diversified and national practice. We don’t rely on a handful of large clients and that makes us more stable. As a result of our strength throughout the United States, we’re able to capitalize on a number of internal resources throughout the firm. I attribute much of our success to the tremendous resilience of our employees. I’ve taken great comfort from that fact that we’ve managed our people and our clients so well during this time. In the middle of this pandemic, we had a merger in our San Francisco office that brought on 21 new lawyers effective Jan. 1. It was a terrific win to achieve such synergy during a world pandemic. We’ve had significant success in litigation and corporate transactions. We’re doing court arguments and a lot of the closings virtually.

We haven’t really missed a beat.

What are some of the unique opportunities you see in Philadelphia compared to other regions?

Our cannabis group is very busy, and I expect that industry will continue to generate a great deal of momentum. The regulations are changing state to state and there is more need for lawyers who are very well versed in that area. We were one of the first big law firms to establish a robust practice in the cannabis space.

Many other firms were nervous about how clients would react. We have now become one of the leading firms in that practice area and companies seek us out from all across the country. www.capitalanalyticsassociates.com

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Kevin Fiumara Managing Director CBIZ - Philadelphia

How much of a shift have you observed in companies’ willingness to co-source or outsource their tax functions?

Outsourcing or co-sourcing a company’s tax needs can be a very efficient and cost-effective option. I see more and more companies taking advantage of one or both of these options by engaging a consulting company such as CBIZ. Outsourcing is the complete subcontracting of the tax department needs, whereas co-sourcing augments existing resources by integrating an external team of tax professionals into your tax department. Co-sourcing can range from providing support with difficult or complex tax projects to department assistance in times of high staff turnover.

Co-sourcing differs from full outsourcing in that it provides a wider range of flexibility based on the company’s specific needs, giving a company the ability to maximize the value of their tax function while minimizing extraneous costs.

How is having an office in the Philadelphia region advantageous for CBIZ’s operations?

The Philadelphia region has a little bit of it all. There is a very strong private equity and public company presence in Philadelphia, which has allowed for CBIZ to continually enter into new markets.

CBIZ continues to focus on construction, real estate, private equity, financial services and manufacturing in the middle market and has successfully grown in those industries. We now have the skillset in-house to grow a corporate tax consulting practice and we look forward to creating a new revenue stream as well as provide an additional area for our professionals to broaden their tax technical expertise. Additionally, being the only tax and accounting provider in Philadelphia to be able to offer insurance, employee benefits consulting, and retirement plan consulting and administration makes CBIZ attractive to public entities as well.

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| Invest: Philadelphia 2021 | PROFESSIONAL SERVICES

In the time of the pandemic, it has never been more crucial for students to have access to technology.

( ) difficult to bond with their fellow colleagues and risk feeling excluded or disconnected from the company culture. Employment perks must be reimagined for talent retention within the new parameters. These may include service and utilities payments, optimized remote working spaces, flexible schedules, career growth advocacy through equal access (on-site or remote) to training materials and resources for upskilling. The required skill set for the work of the future is not linear. Professions and talent need to become accustomed to continuous formation and ongoing specialization. “Our biggest issue is how to manage, coach and keep our workforce engaged while they’re working remotely. That’s where we have been spending a lot of energy: thinking about ways to keep our associates engaged,” said Baturka.

Generating new leads in the digital world will also require creative solutions that can be a mixture of revamped marketing plans, virtual conferences, discussion panels, or a well-thought-out referral program. As consumer needs and demands will grow increasingly dynamic in the virtual landscape, the

PROFESSIONAL CONSTRUCTION SERVICES OVERVIEW

Matt Taylor Chairman & CEO Duane Morris LLP

sales funnel for professional services firms needs to be equally nimble.

Moreover, as the Biden administration rolls out the platform it campaigned on at all levels of government, professional services firms will need to be on the lookout for any regulatory changes that might impact their clients and be the first to advise them on what it means for their business. Professional services firms also have before them the daunting task of securing sustainable cash flows for their clients as financial aid mechanisms launched across the United States through the CARES Act and the PPP loans are expected to halt at some point. However, they are only meant to act as a palliative measure to prevent companies from resorting to layoffs without fundamentally changing or modifying the companies’ business model or approach.

As businesses look to redefine their offerings in such a way as to secure long-term growth, professional services firms will need to display all of their expertise and forward thinking to accompany Philadelphia’s businesses in what probably is the single most critical

What innovations do you expect to stick postpandemic?

I can’t predict exactly what will go back to normal and what will change. However, I think technology, and the ability to get the job done remotely, will stay with us and drive efficiencies. I think people are thankful that they could work remotely and be so efficient, and they will probably want to have that option going forward at some level. But, they also realize how much they miss not being able to collaborate face to face. Zoom does not do it in terms of real collaboration. The thing I worry about the most is our younger lawyers and properly training them. They’re missing so much that would be gained sitting right next to someone. In person, you can study body language, facial expressions, tone of voice and just how people generally operate. Understanding all of that is a learned behavior for younger lawyers and they’re missing that, but missing out on this is necessary until we’re safe and everyone is comfortable.

How has demand for litigation shifted?

Litigation in general is one of the areas that was most affected by the pandemic, one reason being the courts have been closed. Once the courts and judges became accustomed to utilizing technology, things got much better. Activity picked back up, and toward the end of the year, demand was nearly back to normal. I also think there is a great deal of pent-up litigation that will flood the market after things open back up.

Where are the opportunities in Philadelphia?

There is a lot of activity in Philadelphia in certain industries. The health and life sciences areas are booming. Construction is also an area that we serve at a very high level. We also have a robust education practice.

That’s an area, especially with COVID, that is going to be significantly changing at all levels of education, which will generate further activity in Philadelphia. I think Philadelphia is a great spot right now to be as a law firm, especially with such a great talent pool. www.capitalanalyticsassociates.com

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Chris Bruner Managing Partner EY

What is your takeaway from EY’s operations in Philadelphia throughout 2020?

It has been a positive year for us. The last quarter will prove challenging due to the unfolding environment and the inherent struggles our clients are having related to COVID-19. Notwithstanding, the firm has had a good year, be it from the global, regional or local standpoint.

We have continued to invest heavily in our advisory practice over the last decade. Every year, we make a point of continuing to do new things. It’s a direct result of adding valuable talent to our ranks. In the past, if we were involved in a large consulting project, going up against the likes of Accenture or Baker McKenzie, the Big Four firms did not always have those resources to compete and now we do. We’re even looking to reconfigure our office space once social distancing measures are lifted as we are rather tightly jammed in our facilities. When we moved into our office space in 2012, we had around 640 people. To date, we are 1,500-strong in Philadelphia alone.

Which among your services is undergoing a demand uptick?

Two areas stand out. First, cybersecurity. In 2018, it seemed overexposed as it dominated both business conversations and strategies. To date, it has continued to explode. The presence of malicious and hostile software keeps increasing, which continues to provide opportunities to assist our clients in protecting themselves. Second, is the company talent agenda.

While there was already a whole array of variables to contemplate within the realm of workforce dynamics, COVID-19 will only accentuate those issues with employees working remotely and the use of video conferences. This particular spectrum keeps our people advisory services group quite busy. At the end of the day, we all know that everything we do is related to people.

How to attract, motivate and retain talent is going to be at the forefront of corporate agendas for the foreseeable future given how the workforce is going to change.

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| Invest: Philadelphia 2021 | PROFESSIONAL SERVICES

Philadelphia is renowned for its educational opportunities, with many top public, private, and charter schools calling the region home.

pivot they have ever had to make. “I think every business, some more than others, has been required to make sacrifices and major changes in the manner in which they operate. The restaurant business, for example, has just been destroyed and it is getting hit harder and harder as time goes on. But I think everybody has been doing the exact thing we have been doing, and that is accommodating the situation, adjusting to it, making the best of the situation, because that is the only alternative we really have,” said David Braverman, founder, president and managing member of Braverman Kaskey Garber.

Nicole Tranchitella, senior managing director and Philadelphia office managing director at Accenture, adds that change is not only positive, it is necessary.

“We view change as something you have to embrace, not something you should try to fight. Having that

PROFESSIONAL SERVICES OVERVIEW

Perspectives: Outlook Marc Tepper Managing Shareholder, Philadelphia Office – Buchanan Ingersoll & Rooney PC After graduation, more of our graduate students are staying in Philadelphia than ever before. That is something we are very proud of and it is not by accident.

The jobs are here as are the opportunities in various industries such as healthcare, energy finance and biotech. Philadelphia remains a city of neighborhoods, all great, all with something unique to offer.

Jane Scaccetti Shareholder & CEO – Drucker & Scaccetti Philadelphia is a friendly town. It’s not so big that people cannot embrace a community. It has that neighborhood feel and flow. Philadelphia also is not heavily immersed in industries that may take years to recover, such as the airline and cruise industries. We have significant hospitality related businesses, but our education, healthcare, bio and tech areas are also very strong.

Todd Bavol Co-Founder & CEO – Integrity Staffing Solutions The outlook for the industry in 2021 is good. There are still some sectors, such as hospitality, that are still struggling.

I think hospitality, travel and leisure will continue to struggle until we get closer to herd immunity, but once that happens, the war for talent will become even more fierce. Other than that, I think other sectors are going to see, not robust, but steady growth this year.

mindset is not only relevant during crises, but it also needs to be part of your daily routine. Ensuring you have a disruptive way of thinking around what you are doing, constantly disrupting yourself. It is what we have found to be critical for the health and success of companies. If you fail to do so, somebody else is going to disrupt you. It’s your choice to take the steering wheel and create that disruption to change existing processes and do business in a different way,” Tranchitella told Invest:.

Looking ahead As the United States continues to roll out the COVID-19 vaccine and the Biden administration implements its plans for economic recovery, professional services firms need to capitalize on the strengths of Philadelphia to grow existing business and attract new clients.

Some firms, particularly in the legal world, are cementing their growth by looking outward. A recent advisory report by Citi Private Bank and Hildebrandt Consulting revealed that business leaders in Philadelphia are betting on outside high-growth markets such as New York, Chicago, Boston and California to secure their 2021 growth through both a diversified footprint and a balance of high in-demand practices – litigation, bankruptcy and financial restructuring – with industry expertise to inject competitiveness into their service portfolio and overall business strategy.

Overall, professional services firms will continue playing the critical role as go-to partners to guide businesses to the other side of the pandemic, tackling its devastating ripple effects by deploying strategies and business models that support Philadelphia’s businesses in the march to a brighter future. www.capitalanalyticsassociates.com

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Real Estate: When it comes to real estate, the story is a tale of two segments, industrial and residential. Both have benefited greatly in response to COVID-19, while office and retail have taken a pandemic-sized beating.

Overall, the market is thriving but the region will need to overcome challenges like affordable housing to ensure a bright outcome.

www.capitalanalyticsassociates.com

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Real Estate in numbers: State Housing Permits New Jersey, Delaware & Pennsylvania: 250 United States

225

Delaware

New Jersey

Pennsylvania

200 175 INDEX

150 125 100 75 50 25

Last month plotted: February 2021

0 2008

2009

2010

2011

2012

2014

2015

2016

2017

2018

2019

2020

2021

Source: U.S. Census Bureau

Q4 2020 U.S: Average Lease Terms (Years): 10 Years 9 Years 8 Years 7 Years 6 Years 5 Years 4 Years 3 Years 2 Years 1 Years 0 Years Q1 2015

Q3 2015

Q1 2016

Q3 2016

Q1 2017

Q3 2017

Q1 2018

Q3 2018

Q1 2019

Q3 2019

Q1 2020

Q1 2020

Source: JLL, Research

Q4 2020 Office Inventory by Market: 457,282,128 s.f

New York

334,502,694 s.f

Washington, DC

254,556,717 s.f

Chicago

193,491,643 s.f

Dallas

189,172,520 s.f

Los Angeles Houston Boston New Jerey Atlanta Philadelphia Denver

179,773,779 s.f 169,687,134 s.f 157,825,729 s.f 150,970,837 s.f 139,387,602 s.f 115,659,275 s.f Source: JLL, Research

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| Invest: Philadelphia 2021 | REAL ESTATE

February 2021 Philadelphia Metro Market Activity Data as of March 4, 2021: Med Sale $

Med Sale $/ Sqft

Closed Sales

Med Days on Market

Months of Supply

New Listings

Active Listings

New Pendings

7,811

6,453

Feb 2021

$260.0K

$159

5,040

14 days

1.10

6,589

vs. Feb 2020

$237.0K 11.8%

$142 12.0%

$4,445 13.4%

41 days -27

2.14 -48.4%

8,667 -24.0%

14,857 -47.4%

7,574 -14.8%

vs. Jan 2021

$275.0K -3.6%

$161 -1.2%

5,871 -14.2%

13 days 1

1,18 -6.5%

6,910 -4.6%

8,323 -6.2%

6,878 -6.2%

6,000 $182.5 K

$185.0 K

$190.0 K

$193.0 K

$265.0 K

$218.5 K

$195.0 K

$196.0 K

$208.5 K

4,281

4,424

4,259

4,360

4,445

Feb. 2016

Feb. 2017

Feb. 2018

Feb.2019

Feb. 2020

$237.0 K

4,000

2,000

0

2,902

3,183

2,971

Feb. 2012

Feb. 2013

Feb. 2014

3,619

Feb. 2015

5,040

Feb. 2021

Source: Bright MLS

Median Sales Price for the Month vs. Same Month Year-ago: February 2021

vs. February 2020

YTD’ 2021

YTD’ 2020

Bucks County

$355.0K

17.2%

$355.0K

12.4%

Burlington County

$252.0K

21.0%

$260.0K

24.4%

Camden County

$225.0K

27.1%

$220.0K

25.0%

Chester County

$369.8K

10.1%

$382.3K

9.5%

Delaware County

$237.5K

5.6%

$239.9K

13.2%

Gloucester County

$230.0K

18.0%

$237.3K

23.0%

Mercer County

$287.0K

22.9%

$295.0K

20.4%

Montgomery County

$330.0K

4.8%

$341.0K

11.4%

New Castle County

$255.0K

8.1%

$263.0K

13.6%

Philadelphia County

$239.8K

6.6%

$240.0K

9.1%

Philadelphia Metro

$265.0K

11.8%

$270.0K

13.2%

Salem County

$180.5K

59.7%

$180.0K

46.3% Source: Bright MLS

Philadelphia Metro Ten Year Trend: New Listings: 10,000

8,617

8,667

8,154

8,000

9,177 6,761

8,285

Feb. 2014

Feb. 2015

9,476

8,954 6,589

8,198

6,000 4,000 2,000 0 Feb. 2012

Feb. 2013

Feb. 2016

Feb. 2017

Feb. 2018

Feb.2019

Feb. 2020

Feb. 2021

Source: Bright MLS

www.capitalanalyticsassociates.com

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All-time highs: The e-commerce and biomedical industries are driving industrial momentum The real estate story in Greater Philadelphia is a tale of two segments, housing and industrial, with the pandemic impact on office and commercial space providing the main plot twist. But industrial is the lead protagonist, described throughout by the well-used phrase, “all-time” – all-time lows for vacancy rates, all-time highs for price per square foot, much of it spurred by the pandemicinduced boom in e-commerce and logistics needs.

Residential is similarly characterized, with leaps in median house prices, yet with those prices remaining in an affordable range. In fact, a Kiplinger’s Personal Finance report accorded Philadelphia an affordability index rating of 1 out of 10, placing the city among the most affordable cities to buy a home in the United States – and making it an attractive choice for those looking to leave pricier areas like New York City behind.

Office and retail represent the great unknowns in this story as a result of COVID-19-related shutdowns that kept consumers away from retail outlets and workers away from their offices. That could change as the vaccine rolls out, instilling confidence in consumers and employees and spurring a return to normalized levels, although few expect the landscape for these segments to look like they did pre-pandemic.

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| Invest: Philadelphia 2021 | REAL ESTATE

Overall, Philadelphia’s real estate market is thriving, with an enviable demographic and a prime position to serve e-commerce needs.

Fundamentals The Philadelphia metro area is among the oldest established region’s in the country and it is undergoing an impressive rejuvenation. Between 2008 and 2018, the region did an outstanding job in attracting the millennial population, which grew as a percentage of its total population from a little over 5% to 41% in that time. The region’s reputation as an eds and meds hub has helped attract that demographic.

This has helped underpin home prices in the metro area, with strong support from historically low mortgage rates and tight inventory. Norada Real Estate reported that Philadelphia homes sold for higher prices in 2020 than they have in over a decade.

While predictions for 2021 should come from a place of cautious optimism given the tremendously dynamic and constantly evolving landscape brought about

by COVID-19, the National Association of Realtors expects the region’s residential real estate market to remain strong throughout the year. ( )

REAL ESTATE INTERVIEW

Plan of attack Identifying real danger points became the first element in the plan to deal with the pandemic

Jerry Sweeney President & CEO – Brandywine Realty Trust How did your firm’s 2020 strategy play out?

Anyone who had a 2020 business plan laid out in 2019 had to pivot hard. Real estate is a cyclical business anyway, so we’re used to dealing with systemic shocks.

COVID-19 has clearly been a sizable shock but we’ve always approached these situations from both a danger and opportunity standpoint. The first piece of our attack plan in terms of dealing with the pandemic, and its impact on our business and communities, was identifying where the real danger points were. From a business perspective, we shut our office down in midMarch 2020, like everyone else, so our employees could work remotely. Our essential employees continued their daily on-site operations, so our buildings could remain ‘doors open, lights on’ for tenants to use as they deemed fit. As it became clear that the situation proved more pervasive than anybody had thought, we spent significant amounts of time as a management team covering the danger side of our equation: ensuring we had good rent collection, that we were able to provide for our tenants’ need for financial relief and understanding the impact on our parking and hotel business. We then analyzed our four capital commitments to see where we were and what we needed to adjust.

That consumed a fair amount of time early on but once we had the danger side covered, we could focus on the opportunity side. We dramatically accelerated the growth of our life sciences business and we have made significant inroads into getting all of our approvals perfected on all of our development projects.

How has the Philadelphia mixed-use and office real estate market evolved?

Every physical space has been impacted. As we look at it thematically, the rate of technological growth has changed the office anyway. We’ve been in this decadelong shift of mobility. If you recognize that reality,

you start to think more creatively about what physical spaces can do for companies. Physical spaces help companies define their culture, which helps define their brand. If their brand is positioned well, they will attract and retain the right employees, showcasing higher levels of productivity. Our actual physical platform is just a vessel for them to accomplish their objectives.

That predicates what we’ve been focused on since COVID-19, which is our high-quality portfolio product.

We have upgraded several of our building systems for either UV or MERV-quality filtration systems that are clearly a step up from our competitive set. Every single project we had on the drawing board for development was revisited to inject a post-COVID capacity, whether through increasing ventilation, larger elevator cabs or touchless environments. www.capitalanalyticsassociates.com

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Gary Jonas Managing Member The HOW Group

How has the pandemic impacted the concept of coliving spaces?

Multifamily and generational living are much better settings for people socially and for the country. We’re not convinced that space will stop growing. It might pivot somewhat but we do believe we will continue to see co-living models gain traction. One of the things that happens in an environment like this is that it slows down production of permitted projects. It slows down the ability to get financing. When that happens, it creates an additional supply constraint. That’s going to force prices up, making co-living increasingly viable as an option.

What is the landscape for affordable housing?

We are 100% bullish on that. A $400,000 new construction house can be built in almost any neighborhood and will sell immediately. Since 2019, we’ve probably sold 30 units that fit in that space. We’re planning on doing significantly more in that segment.

We do believe that it is heavily underserved. The key issue in a city like Philadelphia is finding a way to serve people who need $150,000 to $250,00 houses because that is what they can afford. Those require coalitions of people to get together and make it happen. In cities across the country, it will take the public sector, the private sector, the nonprofit sector working as one big group to successfully serve that need.

What is your outlook for the real estate sector?

Our focus is on continuing to buy assets outside of the core of Center City so that we can provide a quality apartment with a little less amenity package at a B rent. That will continue to be our business model as we move forward. The challenge to that approach will be to provide that with land costs going up. We’ll have to be innovative in our construction cost and our other costs to provide that. Our utmost priority is to ensure we control the things we can and continue to provide quality units to the middle portion of the market.

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| Invest: Philadelphia 2021 | REAL ESTATE

In 2020, there were over 9,000 fewer new home listings compared to 2019, pushing supply to an all-time low.

( ) Although median home sale prices increased by $40,000 year over year, Philadelphia remains an attractive market with a median sale price of $280,000 in December 2020, up 13.4% year over year, according to The Bright Report Philadelphia for December 2020 from Multiple Listing Service (MLS).

Another strong element of the housing market is the rental segment. In fact, the development of rental housing is outpacing that of housing for sale. Renters can find attractive options in the region as 40% of rental units range between $1,001 and $1,500 per month, placing Philadelphia among the Top 100 best cities for renters by WalletHub. Unsurprisingly, the region also benefited heavily from the nationwide boom in e-commerce and its consequent development of last-mile distribution infrastructure, which lit a fire under the industrial segment. According to Cushman & Wakefield’s MarketBeat Philadelphia Industrial Q3 2020 report, leasing activity in the Philadelphia MSA totaled 3 million square feet with leasing in the year to date (Q3) at 8.3 million square feet.

REAL ESTATE OVERVIEW

That is 117.1% above the year-before period. Vacancies dropped 150 basis points to 2.8%.

Office leasing, on the other hand, fell 38.5% below the average for the previous three years, Cushman & Wakefield said in its Philadelphia - CBD Q4 2020. The report cited tenant caution on long-term deals in the face of the COVID-19 pandemic.

Residential One of the major takeaways from the pandemic for Philadelphia’s real estate market is lifestyle. The Somers Team’s 2021 Philadelphia Real Estate Forecast highlights that its clients are increasingly insisting on more space for where they live to better accommodate home office or their children’s online learning.

Moreover, the report welcomes new market entrants, including younger generations of millennials and Gen Z, as this contingent will act as a catalyst for new and improved tools to either buy or sell a home, capitalizing on the massive digital migration of real estate transactions.

With COVID-19, Philly has been able to position itself as the third-leading destination — behind only Miami and Los Angeles — for people looking to flee New York City’s dense boroughs. “Philadelphia has gained from the weakness of New York since most people can work remotely now. Inventory in the suburbs is very low right now but in Center City, this is drifting slightly higher,” said Chris Somers, Owner & CEO at The Somers Team, in an interview with Invest:.

Between January and September 2020, 7,500 people moved from New York to the City of Brotherly Love. But this is not a new trend. The pandemic only bolstered a year-on-year phenomenon that started in 2015, when Philadelphia registered a net migration gain. Since then, Center City District reports that Philadelphia has continually added more new residents from the Big Apple than it has lost. A big part of that has been jobs growth, which had been gaining ground consistently until the pandemic hit. “The job growth has been in tech and biotech,” added Somers. “Philadelphia has a strong presence in healthcare and in universities ( ) www.capitalanalyticsassociates.com

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®

oundtable:

Commercial outlook From retail to office and industrial, leaders in the commercial real estate segment discuss their views on demand trends and hotbeds of activity.

Steven Cousart

Executive Vice President & Managing Director, Philadelphia Newmark

What are the main areas of growth you see in the Greater Philadelphia area?

I would say University City, King of Prussia and Conshohocken are still growth drivers, although the order has been restacked. University City is one of the few office submarkets that has seen organic rent growth throughout the pandemic, which is propelled by new life sciences and high-tech focused tenant demand.

It’s very difficult to find space there to the extent that many of the tenants that want space within the city have been looking on the peripheries. King of Prussia and Conshohocken are still strong but are facing the same challenges of any office submarket that is not anchored by a strong nexus of life sciences and medical institutions.

How is the demand for office space changing?

I think the smartest answer is that we just don’t know yet, despite all the information we have. Either there will be a major reduction of space going forward or there will be demand for more space. We have to reach the point of herd immunity before we can understand what will happen. It’s very difficult to build a culture over Zoom, so I see a continued need for office space. Typically, in our office market about 15-20% of transactions are renewals annually. In 2020, renewals were almost 50% of the total transaction activity, which is indicative of companies’ uncertainty. Those that can push back decision-making will, and they already have, until there is real clarity about the situation going forward. I’m afraid 2021 will be a little more of the same as companies try to figure out what they need.

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| Invest: Philadelphia 2021 | REAL ESTATE

Mike Morrone

Executive Managing Director, Philadelphia Market Director Jones Lang LaSalle

What shifts in demand have taken place?

Nationally, real estate demand has clearly favored industrial. Velocity in leasing for this sector is up over 20% from where it was last year. From a capital markets perspective, industrial has again been the leader. People want products faster and the last mile of e-commerce is really taking off as a consequence of the pandemic.

This is boosting industrial to new heights. Healthcare and life sciences were also accelerated. They’ve been good industries for us as a company. Office real estate is down and retail is really down. Retail needed to adjust itself and the effects of the pandemic have accelerated the adjustment. I think retail will come out of this pandemic strongly but the result will be smaller stores for retailers of hard and soft goods in the presence of strong e-commerce.

What are some hotbeds of activity in Philadelphia?

There’s a lot of interest in the life sciences segment, which has always been an industry strength for Philadelphia regionally. We’ve had some of the biggest pharmaceutical companies call our region their headquarters, if not their second home, for decades. We have world-class cell and gene therapy segments in University City and the Navy Yard, and there is a lot of original, cutting-edge scientific research being produced, even supporting COVID therapies and vaccines. Philadelphia is having a moment where we will begin to attract out-of-market companies for the first time in our history as those companies desire to be close to the talented scientists we have here. This will spur new construction, development, submarkets and so forth.

REAL ESTATE ROUNDTABLE

Adam Mullen

Greater Philadelphia Market Leader CBRE

Douglas Sayer

President & CEO Colliers International Philadelphia

How would you describe the strength of the industrial and commercial markets?

Greater Philadelphia has always been seen as a core logistics market but it has gone through a major transformation due to the COVID-19 pandemic as big e-commerce companies lease greater amounts of space in urban Philadelphia and Southern New Jersey. CBRE is tracking development and investment around the former PES Refinery site and in locations not normally considered for last-mile logistics. CBRE predicts even more demand in the industrial sector in 2021.

Developers are trying to refit large commercial spaces from defunct retailers. These transformations won’t work in all instances, as there are some challenges when considering factors such as large trucks replacing cars in the traffic flow around a traditional mall, or the rents paid for typical industrial or infill space versus prime urban commercial space. CBRE expects to see opportunistic shifts toward either 100% last-mile or hybrid brick-andmortar/last-mile facilities wherever favorable factors align.

How would you characterize the strength of the commercial real estate sector in the last year?

I haven’t been surprised by recent trends as we began to see some in play prior to the pandemic shutdowns.

Our retail division has been repositioning various types of retail property including big box stores and malls struggling from previous rounds of retailer downsizing.

Of course, office space had already been impacted by technology that has decreased office sizes and allowed workers to work remotely. The pandemic has simply accelerated some of these changes. Weaker retailers will go out of business, e-commerce will further accelerate along with technology in the contactless world but these changes were already underway. It was not that long ago that the K-Mart’s and Walmart’s, along with the “category killers,” were impacting local retailers and changing the retail landscape. Now, it’s clearly e-commerce fostering change. The real estate market has always reinvented itself. For example, executive offices previously were on the window line, but now they have moved further inside the office space with glass walls.

What are the emerging hotbeds for industrial?

In the last 12 months, New Castle County, Delaware and Burlington County in Southern New Jersey have become major focal points for users seeking industrial space in the Northeast. The reason for this shift is because industrial users are thinking a lot more critically about the widening of the NJ Turnpike, labor availability and access to Philadelphia’s urban core, while still being able to support logistics operations for the greater Northeast region.

What is your outlook for the commercial real estate segment?

I think it is reasonable to assume there will be a brief downturn in transactions only because decision-makers have pushed the pause button in order to carefully evaluate employee configurations and space needs. Additionally, unemployment has reduced disposable income and uncertainty has impacted spending. However, once it is felt that a vaccine is near development, we will regain momentum. www.capitalanalyticsassociates.com

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REAL ESTATE OVERVIEW

Sally Guzik General Manager & Executive Director – CIC Philadelphia

Our bread and butter is that we’re a real estate company that manages office, coworking and laboratory space across the world. In Philadelphia, we’re part of what we would consider an innovation knowledge community. We have Drexel and University of Pennsylvania in close proximity to our building. We have a mixed use of space, including coworking, which is shared-use space, private office space and shared and private lab bench space for scientists. In the Philadelphia market, we’ve seen a great demand and benefit to having lab space, both shared and private. I will say we play a very specific role in the market for lab space in that we’re kind of in the middle of the life cycle of where a life science company grows.

( ) and so it is bound to attract some of these related companies. Financial services are also doing well, as are smaller tech companies. The areas that are hurting are hospitality, hotels, travel and leisure. It may take a little time for fear to subside, but people are social creatures. These industries will come back because people want to enjoy experiences and live in the center of the city. There is no reason for this activity not to return as the virus subsides.”

Also supporting the housing market have been record low mortgage rates while low inventory has boosted prices. In 2020, there were over 9,000 fewer new home listings compared to 2019, pushing supply to an all-time low of 1.3 months. In December, houses stayed on the market for a median average of 11 days, down from 29 days in December 2019. The average 30-year mortgage rate remained below 3% at the beginning of 2021, according to the Bright MLS report.

Home sales for the year reached a 10-year high with the best year-over-year gain since 2012, totaling $24.7 billion — an 11.7% increase compared to 2019. Although the market was somewhat impaired by early pandemic shutdowns and low inventory, buyers still managed to snatch up close to 84,000 homes in 2020 across the 11 counties of the Philadelphia area covered by the Bright study, a 1.7% increase from 2019.

This is not to say that the Greater Philadelphia residential landscape is not without difficulties.

Primary among those are the drop in listings and shrinking inventory. Inventory in the region did not surpass the two-month bracket throughout 2020. Multifamily is not without its hurdles either.

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In 4Q20, Philadelphia had a 11.7% increase in office vacancies and the highest level of availability in the city’s last 10 years.

REAL ESTATE OVERVIEW

Millennials were already showing pre-COVID “aging out” relative to their urban lifestyle, experiencing further disenchantment during forced lockdowns.

Suburban relocation is now top of mind for this demographic. But some observers believe this is a trend that will revert once the pandemic fears subside.

“Many people live in the city for the experience.

They care more about what’s outside their door than inside,” John Connors, principal at Brickstone Realty, told Invest:. “After the onset of the pandemic, the first thing that emptied out was the one-bedroom highrise market because the reason they were there was for the experience. The pandemic ruined that. People don’t pay for a nice apartment in Downtown Philadelphia for the nice apartment. They pay for that apartment because they want the experience. So, we need that to come back, and I think that will happen. Evidence is mounting that the Roaring Twenties may be upon us sooner than we think.”

Perspectives – Vision for the future Timothy Henkel Principal & Senior Vice President – Pennrose We believe Philadelphia has always been a city of somewhat untapped potential. The COVID-19 pandemic is accelerating this potential and we are seeing a lot of neighborhoods take off. We anticipate several waves of residents charging into neighborhoods and reigniting small businesses, retail stores and restaurants.

Christopher Maus Managing Partner & President – CAMCO For us as a company, we still believe there is a lot of opportunity to expand our reach, and we are looking to expand further into New Jersey and west toward Harrisburg and Pittsburgh. The last year has been challenging and we’re focused on helping our managers and staff balance their professional and personal lives a little bit better as we adapt to a new normal.

Adrian Ponsen Director of Market Analytics – Philadelphia – CoStar Group I think office is going to be one of the more resilient sectors to what’s playing out today. We’re seeing a slowdown in companies that are willing to sign leases in new buildings.

Almost everyone is renewing their existing lease on a shortterm basis, to wait and see how things play out. That makes complete sense.

Ken Wellar Managing Partner – Rittenhouse Realty On the investment sales side, I think that as long as interest rates stay where they’re at, there’s pent-up demand for multifamily from investors trying to put capital out there. There’s a huge appetite for deals. For the most part, when we put a deal out in the market, we get multiple bids, even five to 15 bids on a site, and that will continue.

Mike Wojewodka Executive Vice President & Partner – MRA Group Overall, the market was a little bit behind schedule on having available space for the life sciences sector, but there is growing momentum and competition in the market now. Many traditional retail and office landlords are looking to convert existing vacant space into offices and labs for life science companies. Additionally, there are many outside investors coming into the region.

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REAL ESTATE OVERVIEW

As of December 2020, Philadelphia remained primarily a buyer-oriented market as 54% of housing units are owner-occupied versus 45% of renteroccupied households. The pandemic could have potentially complicated the precarious situation posed by COVID-19 for renters in terms of looming evictions. In June 2020, a $150 million assistance program directed at rental payments on behalf of struggling Pennsylvanians raised concerns over its rollout being too near to the moratorium expiration date established on July 10, 2020. In the specific case of Philadelphia, however, eviction moratoriums were further pushed until end-of-year 2020.

Amid historic low interest rates that could strongly incentivize home purchases, mortgage lenders also are looking to shield themselves against the prevalent uncertainty in the credit and real estate markets by demanding higher minimum credit scores, higher down payments, stringent and numerous employment status checks and even removing certain loans from their portfolios, according to a report in the Philadelphia Inquirer. These measures are expected to disincentivize first-time home buyers while they wait for more favorable mortgage vetting conditions.

Industrial The real story in the market, however, remains industrial. The segment is an unstoppable locomotive that continues to advance full steam ahead. Cushman & Wakefield reported that 2020 was the first year where industrial construction completions were significantly outpaced by net absorption. Seventy-five percent of the 7.6 million square feet under construction in 3Q20 was already pre-leased, while vacancies plummeted from close to 5% to little more than 2% throughout the year.

For the boom to continue unabated, Cushman & Wakefield, a global real estate services firm, cautions on the lack of land availability and the arduous entitlement process that could limit supply of spec developments in the market. Newmark complements the analysis for 4Q20 by highlighting 2.61 million square feet worth of new industrial leases, with Amazon leading the charge at 1.3 million square feet, followed by Elogistic at 710,000 square feet, TJX Corporation with 283,000 and Jillamy at 317,000. On the sales transaction side, Clarion Partners, Prologis, GLP Capital Partners and Velocity Ventures can boast a combined sale price of $307.25 million for a total 2.46 million square feet.

Philadelphia’s flagship industrial location, Roosevelt Boulevard, was showcasing a bevy of industrial developments from the outset of the pandemic, totaling 66

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Outdoor and recreational spaces in apartment and office buildings saw an incredible increase in demand due to social distancing and other COVID protocols.

3 million square feet in various stages of development.

Should the pipeline go to market, Philly’s industrial real estate market will boast a submarket of 20 million square feet. Although 5% of the city’s industrial space — 900,000 square feet — remains unoccupied, this space does not match the needs of warehouse and distribtuon centers, considering they are dated assets that require higher clearances and better loading areas.

The e-commerce segment, which skyrocketed with the pandemic, has injected significant value into the region’s warehousing assets. Case in point: a 283,000-square-foot warehouse bought in September 2019 for $16.75 million was purchased in January 2021 by an entity affiliated with GLP Capital Partners for $71.5 million. The warehouse is slated for lease by Amazon.

The health of Philly’s industrial market is further

CONSTRUCTION REAL ESTATE OVERVIEW

Mike McCurdy Managing Principal Cushman & Wakefield

How would you rate the strength of the Philadelphia commercial real estate market?

Industrial is a strong asset class and remains even stronger amid the COVID-19 environment. Retail was challenged and is taking a big hit. The impact on the office space requires deeper diagnostics as it could move in a few different directions. People are reserving their decision-making for the short term as they are unsure about the future. We tend to take a comprehensive view of the work environment. There was a pre-COVID-19 trend where the environment was already flexible. Many offices were creating open-floor plans and tight seating. That might change as now social distancing needs to factor into the equation.

How will the pandemic affect the co-working niche?

We’re taking our own internal polls among Cushman & Wakefield employees, as well as with our clients, and it’s split right down the middle between remote and office work. To that extent, it’s difficult to anticipate which direction it will go in.

exemplified in the M&A space, as Exeter Property Group, a global industrial property powerhouse, entered into a deal to be acquired by Stockholm-based private equity firm EQT AB, for $1.9 billion.

A submarket within the industrial real estate market, which is heavily focused toward logistics and distribution, is also gaining tremendous momentum: cold storage. With just shy of 16 million square feet, demand for cold storage is tracking higher, putting the segment hot on the heels of its bigger e-commerce cousin, which holds around 20 million square feet.

Nearly 70% percent of Philly’s cold storage space is held by third-party logistics companies while the remainder is user-occupied. Online grocery shopping, pharma and COVID-19 vaccines created the perfect storm for refrigerated distribution infrastructure. ( )

How is the pandemic providing lessons for a stronger real estate industry?

We are fortunate within Philadelphia as it provides an economy that is extremely strong on the industrial front, as well as in eds and meds and life sciences.

Those sectors are going to be strengthened and enhanced as a result of COVID-19’s developments.

Philadelphia has never benefited from the highs of the highs and the lows of the lows, remaining in the steady end from an economic diversity standpoint. It sets the stage for a strong and quick recovery. In this environment, people are realizing we need to work harder, be more educated and collaborate more. If you operate in isolation, you are going to be left behind.

We need technology, we need collaboration and we need to be ahead of the curve in terms of all the trends and changing environments. The Philadelphia region continues to be on the move. www.capitalanalyticsassociates.com

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REAL ESTATE INTERVIEW

Shifting trends Real estate adviser keeps its finger on the pulse of changes in the office and industrial spaces

David Binswanger President & CEO – Binswanger Management Corp What advantages does Philadelphia offer for business as compared to other regions?

I think the No. 1 factor for Philadelphia in today’s world is the life sciences. I believe we have more teaching hospitals than any other city in the world and we certainly have the base of many large pharmaceutical companies. Biomedicine is the future and the pandemic has only pushed us into thinking about those things in a larger way. Our ability to service those kinds of businesses is a huge opportunity and I think it’s a major growth area.

On the industrial side, we’re seeing people reassess how to get the size of buildings and composition of buildings with larger ceiling heights to have more opportunity to get things closer to market. That could take older, large retail facilities repurposed for distribution. The good news for Philadelphia in the office market is that we didn’t overbuild, so we are not in a situation in which we expect to see large vacancies.

What have been the major changes in your business with the pandemic?

It’s been an interesting time because it has been a tale of two cities for us. We spend a lot of time with corporate America and obviously there are certain corporations that are having to deal with a variety of issues, and others that are booming. We’re seeing a company like Comcast, that runs theme parks and movies and television, have a reasonable percentage of its business extremely affected. We’re also representing companies like AstraZeneca and other pharmaceutical companies that are doing extremely well in this time. We’ve seen sort of a shift in our work, where for example, with office space, people are trying to understand what to do to move forward. On the other side, industrial in both Philadelphia and the country is booming.

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Which areas within the distribution industry are seeing the most growth?

There’s a whole wave of people looking at the old retailers and using the facilities not as large, big box retail but as distribution and pick-up locations. We know Amazon and those types of major companies are doing exactly that. The pandemic has sped that up and I see that as a major opportunity here because Philadelphia has that kind of infrastructure. People are also looking at the fact that the large, big box stores and the million-square-foot buildings are making way for locations that are closer and closer to the customer. Distribution is changing substantially as a result. Instead of having one really large building, having a distributed network or smaller business with true access and the ability of loading and loading very quickly is a definite trend.

REAL ESTATE OVERVIEW

David Hammond CEO – CSI International

Now that people are reopening ... there is more attention being paid to day services because of the touch points, ensuring all those touch points are getting cleaned much more frequently. We do a lot of spray sanitation and use the Clorox 360 system. We’re now working toward getting our GBAC (Global Biorisk Advisory Council) certification as a GBAC service provider and will be one of the first companies to be a Certified Service Provider. Several buildings and airlines have opted for the International Sanitary Supply Association’s GBAC building or corporate certification to ensure they are sanitizing the right way. We anticipate this certification requirement will become permanent down the road, considering sanitizing regulation is in the works after the observation that several companies out there are not doing it the right way.

( ) Office As Philadelphia’s office real estate market comes to grips with the advent of mainstream remote work, the market is in wait-and-see mode regarding how companies will react to hybrid models combining remote and in-office staffing. JLL’s Philadelphia Office Insight of 4Q20 found a year-to-date net absorption of minus-524,241 square feet, representing an 11.7% increase in vacancies and the highest level of availability in the city’s last 10 years. Renewed leases without specific footprints are now common currency.

Moreover, a wave of office closures has exposed the weaknesses of the Central Business District’s value proposition, which will become more apparent once offices gradually open back up and employees look to bypass crowded spaces – trains, streets, building lobbies, elevators.

Despite the uncertainty, outside investments demonstrated the value and opportunity that Philadelphia’s office real estate has to offer. The city’s 2021 flagship project in that space is Recovery Centers of America founder J. Brian O’Neil’s $103.3 million acquisition of 2.3 million square feet of a former GSK complex. The project in Montgomery County is poised to become a network of lab and office buildings to be occupied by life sciences tenants. The move is rooted in Philadelphia’s consolidation of a robust biomedical sector: last year alone, the area received a record $514 million in venture capital funding from gene and cell therapy companies. Philadelphia now ranks

third behind Boston and New York in total volume of National Institutes of Health research funding.

While it is common to see a bevy of New York firms closing real estate acquisitions in Philadelphia that turn into development projects, 2020 was a landmark year with two of the Big Apple’s largest real estate companies’ adamant in their commitments. First, the Durst Organization will lead the development of Penn’s Landing, soon to be the location of a $2.2 billion, 3.5-million-square-foot mixed-use project. Second, Silverstein Properties Inc. announced a $56 million investment in 3.0 University Place, a 250,000-squarefoot life sciences building in University City.

Technology will certainly have a part to play in injecting certainty in the face of the unknown for the future of office space in Philadelphia. Companies across Philly’s economic landscape have realized the cost-saving benefits of having their teams work from home, and the development of collaborative digital tools is bridging the gap of isolation and collaboration between colleagues. “We need the inflow of capital to rethink and re-imagine how people live and work with the influence of technology because technology has played a big role. Technology has completely dislocated where we live and how we work. We need to take these changes into consideration,” Ahsan Nasratullah, president, JNA Capital, Inc, told Invest:.

The likelihood is that the pandemic will unlock new ways of using office space, just as it has re-centred the focus and conversation of office space toward ( ) www.capitalanalyticsassociates.com

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®

oundtable:

Developing Philly Real estate investors and developers remain optimistic on Greater Philadelphia. Leaders in the sector spoke with Invest: about the impact from the pandemic on their areas of expertise.

Brent Celek

Owner Brent Celek Real Estate

What was the greatest lesson learned with regard to residential real estate over the past year?

You never know what to expect. We thought what was going to happen with the pandemic would hurt was going on. Instead, interest rates went lower and people started refinancing. People are trying to buy.

People are trying to get out of the city and move into the suburbs, especially those with kids. It’s tough to be in the city when the reason why you live there is to go to restaurants and all of them are closed. Supply is being hurt by what’s going on with the pandemic. When you think about lumber costs and even getting appliances on time, it’s literally impossible at present. When you have low interest rates and people are trying to buy houses and you find yourself with no supply, it truly becomes a seller’s market. What happens because of all of that in 2021? We’re hoping that what was coming with regard to development is able to continue to work its way through this. We have yet to confirm if we will see the effect until 2022-23. We do believe 2021 will be a good year and that rates will stay low.

What areas are up and coming in Philadelphia?

Anywhere in the suburbs, such as Media or West Chester. The further you get out of the city, people are looking in areas that have good schools and some open space, they want to have their own home, a bit of grass they can walk on. Generally speaking, all the suburbs are exploding. West Chester is going to blow up. That is definitely a city that is ripe for what’s going on in the pandemic. If they can get some development out there, it’s going to blow up.

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Joan Docktor

President Berkshire Hathaway HomeServices Fox & Roach Realtors

How has COVID 19 impacted the real estate business in the city?

In March, there was a stay at home order and so we went totally virtual and sent everybody home.

We have about 700 employees, besides our agents.

We gave everybody computers and we didn’t miss a beat. We focused on making sure that our sales associates learned everything they needed to do to be virtual including holding virtual open houses – and we held more of those than any other broker in the marketplace.

We did a lot of education to make sure our agents didn’t miss a beat. We found that some people did buy homes sight unseen. It was quite a scary time. We didn’t really know how long it would last but we did everything in our power to keep everyone engaged. At the end of May and the beginning of June, we were able to open up and sales took off. Sales just went through the roof.

What does the surge of interest in the suburbs mean for Center City?

I think that it’s not like New York at all, where people are flocking to the suburbs and leaving the city. We’ve seen condo sales slow in the city but at the same time, there are high rises going up in the city with $2 million to $4 million condos. There are some young families wanting to get out of the city, looking for more space for kids to run around outside, but you’re still seeing the sale of homes in the city at a steady pace. It’s not like in the suburbs, but things are selling in the city. I think the situation is temporary.

REAL ESTATE ROUNDTABLE

Bill Glazer

CEO Keystone Property Group

What are your takeaways from 2020?

2020 is a year that everyone will want to forget. It posed a much greater threat on the front end with so much uncertainty in March and April, which caused wild swings in every market. I think things have settled and the best players are well-positioned, as with all downturns. We were very fortunate in that we were positioned well going into this with a number of terrific tenants in our portfolio that have strong balance sheets. We’ve had a handful of tenants that were hit by the economic impact of the pandemic and we did whatever we could to try and help them. The worst impacted has been the restaurant business. There will be continued fallout in that industry for a while.

Keystone has a very broad-based group of tenants across most industries. There is still the question mark of how office space will evolve and how much space will be needed. We know there will be an evolution, and we’re planning accordingly. There will be some changes but having now lived in a virtual environment, the importance of the physical office environment stands out now more than ever.

How is the migration away from urban areas in the Northeast hurting the Philadelphia market?

I think the impact is less in Philadelphia. The majority of the risk lies in New York. Florida will be an important landing spot for asset managers. In Philadelphia, we have a booming life sciences industry because of all the intellectual engines of the universities. These companies will see more upside in Philadelphia for this reason. Eds and meds will not be fleeing Philadelphia.

Jonathan Morgan President Morgan Properties

How would you characterize the growth of the multifamily landscape in Philadelphia?

It’s becoming more institutional and attracting some outside ownership. A lot of New York investors look at Philadelphia but they don’t understand the market. We have local knowledge and we’re confident in the ROI that drives our investment decisions. We have boots on the ground and this has given us an advantage over the competition. Every deal we acquire must have three primary attributes. The first is that we like the basis and that the purchase price relative to replacement cost makes sense. The assets we acquire are 50-60% of replacement cost. We also look at the all-in basis cost after all CAPEX. The second criteria is the opportunity to generate more operational efficiencies. Having the concentration we now have in Philadelphia allows us to generate these operational efficiencies. The third criteria is that we need to be able to add value to that portfolio through interior unit renovations and by enhancing the communities.

Where do you see the multifamily sector heading?

The last downturn was very financial-focused, but this one has been all-consuming. Initially, when we were closing off our common areas and amenities, this was a challenging decision to make but it was the right decision. We had daily meetings with our executive team to look at the plan going forward. We realized there is a great deal of opportunity in multifamily from this forced, uncomfortable change that we have decided to embrace.

We are exploring opportunities to have a centralized leasing system and to really leverage technology. Going forward, I feel optimistic about the multifamily industry. www.capitalanalyticsassociates.com

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Sean Beuche Regional Manager Marcus & Millichap

How was the real estate market behaving in Philadelphia before COVID-19?

Before March, we were on a very aggressive growth pattern for the Philadelphia office market, not only in market share – our core focuses being apartments, retail, office and industrial – but also in sales volume.

What our agents care about mostly is their business growth, which is measured in commissions, number of transactions and market share. Across the board, we were seeing double-digit growth for our agents, year over year. We were in a strong upward trend and during the majority of the first quarter we were on track to enjoy 20-40% year-over-year sales volume growth.

What are the main drivers of your company’s success in the Philadelphia market?

We grow in a variety of ways, including ground-up talent. through organic recruiting, new entrants to the sales force and our company has demonstrated that it is very motivated to hire entry-level investment sales associates, which is not as common in the investment sales market. But because we invest heavily in training and mentorship, we’re better equipped than some brokerages to hire at that level. We immediately began seeing those new agents supporting our sales volume and commission growth and establishing themselves as relevant members of the commercial real estate fabric.

Another feature that led to substantial growth in the first quarter of 2020 was senior agent recruiting. We had multiple senior agents who came aboard and are not going through our training program. They’re bringing their book of business, either from operating their own shops or coming from another brokerage. There is a fair amount of lateral movement out there, but we’ve seen a net positive in the number of agents that have come aboard in the past few years.

The third way that we grow is our existing agents growing their book of business and further establishing themselves year over year. Specifically, of our Top 15 agents in 2019, 70% had their best years ever.

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Grocery and healthcare anchored retail plazas fared better during the pandemic than most traditional retail locations.

( ) wellness, health and safety more than ever before.

JLL’s Q420 office insight report noted that 929,000 square feet of office space were under construction despite the availability of 524,241 square feet, meaning that the demand for such spaces will remain alive and well and that 2021 could showcase significant pent-up demand. What remains to be seen is how employee preference will shape the evolution and future of such spaces.

Retail Philadelphia’s retail market is highly concentrated in Center City. The location enjoyed more than 20 years of mixed-use development — convention centers, hotel and tourism — that resulted in the buoyant pre-COVID-19 market, with 311,500 workers, 193,000 residents, 3.5 million occupied hotel room nights and 110,000 college and graduate students, which together generated more than $2.9 billion in retail demand per year. Center City’s retailers include 747 boutique,

REAL ESTATE OVERVIEW

independent and local retailers, as well as 231 national retailers. The industry employed 14,100 people in 2019.

Without a doubt, retail has been among the hardesthit sectors from the pandemic. Colliers International reports 27 chains with regional locations declared bankruptcy, which translated into a 10% increase in vacancy rates during 4Q20. It is the highest vacancy surge in 10 years. Yet, not all is bleak in this new landscape. CBRE reported that employment held steady at the end of 2020 as the recovery continues, demonstrating the importance and effectiveness of the federal aid programs, such as the CARES Act and the PPP loans, combined with local aid through Philly’s COVID-19 Small Business Relief Fund.

Moreover, growth in grocery spending has outpaced growth in total consumer spending by 18.6%. Still within the realm of good news, retail sales year-to-date in 4Q20 decreased just 1% compared to 4Q19. Without considering food services, retail sales were actually 3% higher. Technology has injected resilience into some of these businesses as they transitioned toward the digital space and restaurants found and used alternate means to distribute their products, whether through online ordering, home delivery, curbside pickup or adapted outdoor space.

A major ace up the city’s retail sleeve is its demographics and residential density. Combined with the in-migration from other parts of the United States there is pent-up demand for retail services as soon as lockdowns and closures are relaxed. “We are highly bullish on the retail industry. In the transactional,

Jerry Holtz President – Provco Real Estate

We have made several significant investments both through direct investments and funds, with the former taking the lion’s share of our investment appetite. We have found some great sponsors that are great at finding the next big technologies and business models. We ride on that, on the coattails of sponsors that bring us these deals. It has been exciting to see some of the opportunities we have been presented with. The performance has been great, there is a lot of money out there chasing a lot of deals and the economy remains strong so the performance is warranted. There is still significant opportunity within the private equity markets and we are going to continue to make those investments, both locally and nationally.

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REAL ESTATE OVERVIEW

Forty-five million people live within 200 miles of Philadelphia, providing many real estate investment opportunities.

brokerage space, we are able to monetize market movement, whether it goes up, down, contracts or expands. People relocate, downsize, and grow.

When the market is completely frozen solid, devoid of transactions, that is when it becomes tough,” said Douglas Green, Principal at MSC Retail. “We believe in a world where the landlord and the retailer have become partners more than they ever were, through higher percentage rent leases, or shorter-term leases with longer options, knowing how a retailer operates, how it makes money, and what other factors aside from rent cause them to be profitable or unprofitable is going to become highly critical.”

Affordable housing Although Philly showcases competitive housing prices compared to the rest of the country, it also has the highest poverty rate of any major U.S. city, at nearly 25% of its total population, meaning its comparative advantage in home prices does not necessarily mean they are affordable for the entirety of its population.

This specific market trait explains why, in contrast to other major real estate markets ripe for investment across the country, townhouses will dominate Philadelphia’s residential market for the foreseeable future. At present, townhouses for sale in Philly represent nearly 67% of the city’s listings. On the plus side, Mashvisor says this type of asset offers the highest return on investment for both traditional Philadelphia 74

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investment properties and Airbnb Philadelphia rentals.

The Pew Charitable Trusts conducted an in-depth analysis of housing data from Philadelphia in 2019 relating to housing affordability, focusing on the concept of cost burden. The Census Bureau and the U.S. Department of Housing and Urban Development define cost burden as a household spending 30% or more of its income on housing costs: rent, mortgage payments, utilities, insurance and property taxes.

Using this frame of reference, Pew found 231,000 Philadelphia households, equivalent to 529,000 people, were cost-burdened in 2018. In short, 40% of the city’s households were cost-burdened.

Nationally, there are two specific types of housing affordability issues in urban America. First, high housing prices. Second, low-income levels. In Philadelphia, the latter is more the root cause than the former. The issue is particularly difficult for renters with incomes below $30,000 per year: 88% of that strata is cost-burdened, with 68% severely cost-burdened, spending at least 50% of their income on housing. Moreover, Pew found the city’s supply of low-cost units inadequate to meet the needs of this large group of households: there are close to twice as many low-income renter households as housing units they can afford.

Fully aware of this difficult predicament, the Philadelphia Housing Authority (PHA) extended the eviction moratoriums until March 2021. In addition, the PHA was awarded a $30 million Choice Neighborhood Implementation Grant from the Department of Housing and Urban Development to continue its work in the Sharswood Community. The PHA broke ground on a $52 million development that counts nearly 100 housing units, added to a supermarket, bank, restaurant and healthcare facility. In parallel, housing advocates are in talks with city council officials to enact legislation that prioritizes the use of vacant city-owned property for community development to counter the devastating effects of the pandemic.

Looking ahead The Greater Philadelphia region finds itself with the utmost necessity to capitalize on its strengths to counter its weaknesses, exacerbated by COVID-19. Strong demographics, cost-competitive real estate, burgeoning and diversified industries, recovering employment, to name a few, should serve to shield vulnerable communities from the devastating effects of the pandemic, particularly in rent relief and housing prices. The pandemic experience has left lessons learned and major takeaways for the city to draft an ambitious blueprint for the region’s future.

Construction, Infrastructure & Utilities: Uncertainty plagued the construction industry in 2020 as the pandemic put a cloud over the commercial segment. But predictions of a dire fallout failed to materialize, and by the end of the year, there was optimism that the spark would return before the end of 2021.

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Uncertain times: Residential leads a sector that worked under a cloud for much of the year For the Philadelphia construction sector, this has been a time of uncertainty tempered by cautious optimism. In the last decade, the city had experienced a construction boom the likes of which had not been seen since the end of World War II but, with COVID-19, that all came to an abrupt stop. Many at the time feared a dire economic fallout. That did not materialize, and there are signs that the market could once again be robust by the end of 2021.

Major residential projects are in the works or are set to begin; infrastructure projects continue apace, with the added optimism of a new presidential administration that hopes to make infrastructure growth one of its signature legacies; and, finally, Philadelphia is fast becoming one of the national leaders in the life science industry, pushing a slew of construction in the field.

But industry observers are still unsure about where the year will go. Many of the projects underway had long since been in the pipeline. Furthermore, there is worry about unforeseen, longer-term effects the pandemic may have on the economy, or what might happen if the vaccine is not speedily rolled out.

Landscape Until the COVID-19 pandemic, the Philadelphia 76

construction sector was considered to be on stable ground, having moved from strength to strength since the last recession in 2008-2009. This is attested by a number of metrics: there had been more than double the amount of permits issued in 2018 than in 2009; by 2018, the sector was employing a decade-high number of people, a 24% increase since the last recession.

Altogether, there was a 7.6% annual growth rate in the industry from 2009 to 2019, according to the Economy League. Much of this development had been spurred on the commercial side by Philadelphia’s growing attractiveness as a repository of highly skilled labor, and, on the residential side, the return of the middle class to the inner-city after decades of “white flight.”

Among the marquee projects showcasing the boom of the last decade are 40 N. Broad Street, in the heart of Center City, where Tower Investments is redeveloping the old Inquirer building to serve as headquarters of the Philadelphia Police Department; Sora West, a $325 million office complex that Keystone Property Group is building; and the Durst Organization’s $2.2 billion Penn’s Landing development along the Delaware River.

Like everywhere, however, the pandemic has severely shaken the industry. On March 20, ( )

| Invest: Philadelphia 2021 | CONSTRUCTION, INFRASTRUCTURE & UTILITIES

CONSTRUCTION, INFRASTRUCTURE & UTILITIES INTERVIEW

Sector shifts Multifamily is booming while retail is facing significant changes

Dan Gring CEO – D&B Construction Group What is the state of residential demand in the Greater Philadelphia region?

Right now our biggest sector is multifamily. Multifamily is booming. We have projects in the pipeline from now until 2024 and we’re involved in preconstruction services for many of them at this time.

There are some cool trends in multifamily right now.

Concerning amenities, we’ve seen an expansion of coworking spaces in response to the current times. Some business owners have found their staff to be just as efficient working remotely as they are in an office. That’s been a big amenity shift for us in the multifamily sector.

How has retail transformed over the course of the pandemic?

Retail is changing significantly. Many retail projects are on hold but some are trudging forward. The layouts of the stores are changing. For instance, more cash registers are being put into the stores to reduce the size of lines and assist in social distancing efforts. Some retail stores are also downsizing. We had one project downsize by about 40%. COVID-19 has accelerated the use of e-commerce. People have become accustomed to ordering things online. Retail owners have had to strategize and adapt to our current times, as well as what they could be in the future.

Why are developers beginning to implement a designbuild approach?

Because of our big push in multifamily, we’re doing a lot of design-build. Developers are starting to realize that they need to get their general contractors in early instead of the old traditional full bid out, competitive bid situation. When we’re involved with the architects and engineers early in the project, we’re able to make it a more successful project for the developers. This helps to better deliver their vision.

How is demand for office space faring?

Certain markets are still performing. For instance, in the Bucks County market, we’re still seeing an abundance of demand for new space or updated space. In Philadelphia, demand for office space has dried up. Concerning office demand, there’s not much in Downtown Philadelphia. It’s great in Bucks County and completely dead in Reading.

What is your outlook for D&B Construction Group?

We are one of Greater Philadelphia’s fastest-growing businesses, and we’re tripling our space. Although the pandemic has posed a variety of challenges for us, we’re continuing to expand our presence and deliver.

We were also voted best place to work in PA by the Central Penn Business Journal. www.capitalanalyticsassociates.com

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Scott Zuckerman Principal Domus Construction

Where do you expect to see the most new development emerge in Philadelphia?

I think what we’re going to see is a lot of repurposing.

“Repurposing” is going to be a big buzzword in the real estate industry. I believe office space and restaurants in Philadelphia are going to take a hit. A lot of companies are going to realize that the workstation concept does not work with social distancing and in many instances their employees can work efficiently at home, reducing their square footage needs. I don’t know how those spaces will be repurposed but the office model that people followed 15-20 years ago, where everyone comes into the office everyday, is going to go away.

Universities are another area that will change. I think they’re going to be looking for more student housing.

Gone, hopefully, is the model where universities try to fit five or six kids into a dorm room. They are going to want to split that up and have maybe two or three students per room. So I feel that we are going to see some demand for additional student housing.

Philadelphia is a little tricky because we have more commuter colleges but there is a significant population of students who live on those various campuses.

What kind of impact do you think COVID protocols will have on residential developments?

I don’t know if it will have a huge impact on multifamily.

I think you will see some reduction in lobby space where people traditionally congregate and some shared amenity spaces and you will see an increase in surfaces that are easier to disinfect. I expect to see improvements in ventilation systems. There has been a lot of talk about UV systems to help kill bacteria in the air. For the most part, layouts are going to remain the same in the multifamily sector.

I have this discussion every day. People are social creatures and they want to be socially interactive.

They’re not going to want to be locked up in their offices or homes like they currently are. People are going to crave interaction.

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| Invest: Philadelphia 2021 | CONSTRUCTION, INFRASTRUCTURE & UTILITIES

State housing permits in Philadelphia have started to recover to almost pre-pandemic levels.

( ) Gov. Tom Wolf halted all non-essential work in the state, which included any construction projects that were not regarded as medical-related, emergency work or, in limited cases, residential construction.

This move in itself was controversial, as Pennsylvania was one of the few states in the country to deem construction non-essential.

The industry struggled. With nearly 20,000 construction jobs in Philadelphia alone – plus two indirect support jobs for every one direct construction job – everyone knew the stakes were high. The government, which derives a significant amount of revenue through fees related to construction permits, licenses and inspections, worked with the industry to help keep it afloat, either by supporting furlough pay, by granting waivers that would allow certain construction projects to continue work, or by issuing safety guidelines protecting workers on site. Even with the help, supply chains were affected, as was access to labor.

With stringent safety measures now put into place, the industrywide shutdown gradually began to be lifted on May 1. While analysts are now looking to predict what the recovery will in fact look like, one thing is for certain: the dynamics and trends that had

CONSTRUCTION, INFRASTRUCTURE & UTILITIES OVERVIEW

marked the industry over the boom of the last decade are irrevocably changed. The speedy recovery after the 2008 crisis was largely driven by middle class professionals or millennials moving to inner cities.

There are still many questions as to who or what will drive the post-pandemic recovery. This is true especially in regard to the tourism and hospitality industries. Typically, these are big drivers of largescale construction projects but they are also likely to be the slowest in returning to pre-pandemic levels.

Still, as the rapid vaccination drive is unrolled and a massive relief package makes its way through Congress, there is plenty of reason for optimism.

Not least among these is the rapid decline of unemployment in the region, which was at 14.8% in April during the height of the lockdown. From there, the rate embarked on a steady improvement, falling to 6.5% by December.

Furthermore, certain trends accelerated by the pandemic bode well for Philadelphia’s construction sector. The last few years have seen a number of corporate relocations to the city. Healthcare and life sciences, already a big driver of construction in the region, are poised to see growth in the coming years.

Indeed, some forecasts show that construction in these sectors will provide the most growth in terms of total construction market volume over the next two years.

Such forces will continue to draw young professionals to the area. It has a high quality of life, a vibrant city center and is a much lower cost alternative to nearby New York City and Washington, D.C., both for living and construction, a fact that makes it an ideal location for development on the Eastern seaboard. The exodus away from such high-priced cities was notably absent in Philadelphia. The move toward online and remote work, greatly accelerated by the pandemic, dovetails nicely with Philadelphia’s status as a city for younger, highly skilled professionals. In light of these trends, it makes sense that, over the past five years and for at least the next two years, the residential sector will continue to deliver the highest market volume for the construction industry.

Performance The performance of the Philadelphia construction sector has been driven by projects in healthcare, multifamily residential complexes, data centers, corporate offices, industrial construction and the

Mike Starck Vice President NRG Retail

How have client needs evolved in recent years?

As customers become more educated on energy there are different priorities for energy consumers. Some are focused on the renewable aspects while others are focused on the benefits they can get from being a retail customer, which can come down to a company’s values. We have product offerings with 100% green, renewable energy certificates and we have farm-tomarket offerings. We also offer carbon offsets for customers who are unable to install solar panels on their homes but still want to play a role in protecting the environment. Everyone wants to have access to renewable and sustainable products and people are thinking about how to use energy wisely. On the more commercial side, capital investment plays a large role in decision-making. Our team is trying to focus on creating solutions that are less capital-intensive for some of our customers. Everyone wants to have fully renewable power but there are issues such as reliability, large initial investment and time. Our plan allows customers to make those choices without necessarily having to make a large upfront investment.

How does the carbon offsets program help combat climate change and also benefit customers?

We provide a simple website with a carbon footprint calculator that allows users to calculate their carbon production on a monthly basis. Our carbon offset offering allows our customers to do things that offset daily activities with something that benefits the environment, such as plant trees. Our goal with this program is to allow customers to offset impacts when they are not necessarily able to make a huge investment.

Those that are able to install solar panels or purchase an EV are often those with a lot more means, and we want to make carbon offsetting attainable for all. A few years ago, we partnered on an event with South by Southwest to take responsibility for its carbon offset. This is really important for large events, but we are taking this concept and making it more accessible to everyone.

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| Invest: Philadelphia 2021 | CONSTRUCTION, INFRASTRUCTURE & UTILITIES

renovation of older structures. Throughout 2020, the sector’s ability to survive was marked by an adaptability to oncoming challenges. Foremost of these was in the area of worker safety. As construction is one industry that depends on people showing up to the site, the sector had to address this challenge head on. In order to meet the unprecedented challenges posed by the COVID-19 pandemic, an initiative was spearheaded by the General Building Contractors Association (GBCA), the Philadelphia chapter of the Associated General Contractors of America, to ensure the safety of workers on-site. In addition to providing training, the GBCA recommended new protocols concerning workers’ personal responsibilities, health screening, social distancing and personal protective equipment.

The permitting process for new construction in Philadelphia has made the jump online. Ironically, that move was due to take place on March 20 – the day the COVID-19 lockdown began – and it went off without a hitch.

Since construction was allowed to resume in midMay, many have been wondering what the direct impact of the coronavirus pandemic will be on the industry in 2021. While construction seems to have returned to prepandemic levels, many of these projects were already underway – or, at least, the financing had already been secured – before the crisis struck. There have been telling signs of a slowdown moving forward. For instance, demolition work dropped by more than half over 2020, suggesting that there may be a slowdown in building in the coming year or two and that the fallout from the pandemic may take longer to manifest than previously expected. Many on the commercial side fear that the emergence of remote work, a trend that was catalyzed by the pandemic, will reduce demand for office space.

Overall, and not surprisingly given the pandemic, construction volume fell year over year in 2020, according to the Cumming U.S. Construction Market Snapshot Q4 - 2020 report. Total volume amounted to $16.9 billion for the year, down 2.3% from 2019.

Residential took the lion’s share of the market, at $4.8 billion, rising 1.0% from the prior year. The segment was one of only two areas that saw growth. The other was infrastructure, which gained 2.4%, although Cumming expects this segment to decline by 8.3%, 5.1% and 5.0% in 2021, 2022 and 2023. Manufacturing saw the biggest volume loss, falling 11.2%. A similar decline is forecast for 2021. Construction spending in Philadelphia was lower than the U.S. average but above the state of Pennsylvania. The reading of the Construction Spending Index was just above 1.0 for Philadelphia. The U.S. average was just above 1.2. ( )

Market voices: Tech use in construction

Vaughan Buckley President Volumetric Building Companies

As we move further into health and safety considerations that have come up around the pandemic, we’re going to see many more smaller, private units. The large common amenity spaces are shifting toward larger units with space inside them. Technologies that allow us to save space, whether that is a construction method such as modular construction or design implications and potential future technologies such as stackable furniture and movable divider walls and things of the sort, they are all high-potential products as we move forward with new technology.

We doubled down on other strengths and expertise and training. We built out, in a very short time, a very robust online training platform, including live webinars,video-training, and self-directed learning, with different tracks.

One was COVID-19 related: We provided a free, open resource on how to deal with COVID 19, the protocols and laws that came along with it, and we saw well over 2,000 registrations through that series.

Ben Connors President & CEO General Building Contractors Association

Todd Lofgren

Executive Vice President & General Manager Skanska USA Building Company

Internally, we utilize our data harvesting and benchmarking tool – Skanska Metriks – which provides us with accurate benchmarking budgets based on comparable data from hundreds of projects in the markets we serve. Skanska Metriks delivers an early benchmarking budget to our clients to help guide budget discussions and design systems. Our focus on relevant details enables us to arm project teams with critical information during the early phases of design, which ensures your project budget compares appropriately to similar projects. This tool allows us to better inform ourselves, our partners and our clients.

Our office is now touchless. In the restrooms we have a single fixture faucet with built in soap, wash and dry all within the sink. There are foot pedals to open and close push/pull doors. Employees working in the field have access to our project management software with their smart devices. Time sheets are electronically sent to our payroll system through a customized app. A&E utilizes a paperless system for receipts and invoices and electronic signatures whenever possible. Our job sites are monitored with surveillance cameras. All of this technology is available in today’s construction world.

Bill Santora

CEO A&E Construction Co.

www.capitalanalyticsassociates.com

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CONSTRUCTION, INFRASTRUCTURE & UTILITIES INTERVIEW

Clean push Philadelphia utility is focused on initiatives related to carbon recapture and maintaining a healthy environment

Craig White President & CEO – Philadelphia Gas Works Another important investment is our ongoing castiron replacement program. We have approximately 1,300 miles of cast iron pipelines remaining in our system. We are replacing this with welded steel or plastic, which in both cases completely eliminates methane escape. From 2005 to 2019, these upgrades have lowered CO2 emissions by 86,000 metric tons, which is equivalent to the emissions of a passenger vehicle driven over 211 million miles. A fourth area we are looking at is our own building footprint and we are consolidating a lot of older facilities. The final area we are looking at is the further development of our liquefied natural gas (LNG) assets, which can replace dirtier fuels such as coal. We will continue to pursue and expand those initiatives.

What are the utility’s main ongoing initiatives?

We have a lot of initiatives that we want to continue addressing. These include those issues related to carbon recapture and keeping the environment clean and healthy. PGW and a lot of other utilities have been way ahead of the game in terms of reducing our carbon footprint. Of our 500,000 customers, around 480,000 are residential. These customers used approximately 35-40% more natural gas when I started than they do today, largely due to the increased efficiency of appliances. We also offer energy audit programs for lower-income customers to ensure energy efficiency enhancements are made. Since 2010, PGW has weatherized nearly 22,000 low-income customer homes and over 22 multifamily buildings where the majority of tenants are low income in Philadelphia.

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What opportunities have you identified in the utilities sector?

We are about 85% saturated in Philadelphia with natural gas being used to heat homes. The market for us is still pretty significant but where we are expanding is in the combined heat and power market. It’s much more efficient and we can create situations where we can serve multiple clients from the same location.

Our product is our tariff, which is a rate structure that has been approved by the public utility commission. We have created a series of incentives for businesses to move to a cleaner incentive. We are also working on a diversification study for Philadelphia Gas Works in cooperation with the city of Philadelphia’s sustainability department. We’re evaluating every option and we want to do something that is both financially viable and has a significant positive impact on the environment. Our financial future is very much tied to the city’s well-being, so we have to make smart decisions.

| Invest: Philadelphia 2021 | CONSTRUCTION, INFRASTRUCTURE & UTILITIES

CONSTRUCTION, INFRASTRUCTURE & UTILITIES OVERVIEW

( ) Residential As usual, the residential segment underpinned the industry, bouncing back after the market froze during the COVID-19 lockdown in spring 2020. There are thousands of new homes being developed. The market remains strong: houses sold quickly even during the dark days of the spring lockdown. For the year, houses stayed on the market for a median 15 days, a 10-year low. Much of this growth is the result of young professionals and middle-class workers moving to the city, attracted by high-skilled jobs and a cost of living that is relatively lower than other city centers.

There is a strong demand for multifamily housing complexes. As well, the neighborhoods in the vicinity of Philadelphia’s many universities have seen a high occupancy rate in spite of the coronavirus pandemic sending many students home.

On the whole, the numbers appear strong. While there is something in the idea that during a pandemic, people will not want to live in a densely populated area, this is not completely founded: the vacancy rate in the suburbs may have seen a jump to 5.2% in June 2020, up from 3.8% a year prior, but in Center City there was also a slight increase to 4.5% occupancy. While rent

growth is expected to be lower than the average of the past few years, it is expected to grow nonetheless.

Additionally, Philadelphia is second in the nation for apartment conversions in historical structures: in the last decade, 85 properties converted into multifamily housing produced 11,266 new housing units.

So there is a demand and the construction industry is working to be meet it: the Southfields of Elkton is a $700 million, 600-acre mixed-use development that will contain residential units as well as retail and office; on South 12th Street, next door to the Camac Baths building, there is a tower going up with 448 residential units; on 22nd Street, another will contain 341 units.

Given the pandemic, it can be difficult to gauge the forces behind this growth. Depending on the metric, some of it can be attributed to a gradual reopening of the construction sector generally as many projects already in the pipeline were put on hold. A case in point would be the Zoning Board of Appeals (ZBA).

While construction restarted in May 2020, the ZBA only started hearing cases again in July after being shut down for four months. On the board’s docket were 50 hearings scheduled for developments containing at least five units, amounting to 2,436 new units if they all

Chuck Hurchalla President Evolution Energy Partners

How have you seen the demand for renewable energy change over the last couple of years?

The demand for renewables is definitely becoming more and more critical on the supply side through the adoption of sustainability initiatives. It’s a positive sign to see that in many cases our points of contact are now directors of sustainability, whereas in the past it might have been a plant manager or a CFO. Only a few short years ago, the position of director of sustainability was unheard of, so this has been a significant change. In the past, our business model was primarily focused on helping our customers reduce their energy consumption and lowering costs purely for the economic benefit of doing so. Now, as mindsets have expanded, the green of the dollar is not the sole driver anymore. The green of the environment is also imperative.

What trends are you keeping a close eye on?

From an energy perspective, the increase of shale production of natural gas has been game changing for Pennsylvania. It has created an enormous amount of growth for the energy business as well as lowering the cost of operations for manufacturing and commercial accounts in respect to their energy expenses.

We are also seeing states and cities creating laws and regulations to mandate energy efficiency and sustainability. State and local governments are requiring government-owned and privately-owned commercial buildings over 20,000 or 50,000 square feet to benchmark their energy use and carbon footprint and to make improvements to both within specified time frames or else be penalized. On the utility side, states are requiring that a percentage of the grid’s electric load be generated through renewable energy sources such as solar, wind and hydro. The government requirements combined with companies’ corporate sustainability mandates and the need to cut costs will absolutely result in significant carbon footprint reductions across all sectors and we are looking forward to helping our customers and doing our part.

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| Invest: Philadelphia 2021 | CONSTRUCTION, INFRASTRUCTURE & UTILITIES

Philadelphia is considered one of the Top 19 knowledge capitals in the United States and Europe.

pass. That is not bad when compared to pre-pandemic 2019 (4,566 new units) and 2018 (3,239). Additionally, this only includes units that have to pass the zoning board; the true number certainly is higher.

One area in which the city is continuously lagging is in the construction of affordable housing. The pandemic has only underscored the inequities in Philadelphia’s housing as it has disproportionately affected low-income renters and homeowners. To help fight this, the city has launched a number of initiatives to encourage the construction of homes for Philadelphia’s lower income residents. Among these are a 1% development impact tax, the proceeds from which will go to build affordable housing; to delay the reduction of a 10-year tax abatement; a reduction of the tax abatement for commercial construction; and, finally, a $400 million bond package that would help fund the construction of affordable housing.

Commercial and industrial The big question affecting the commercial construction sector is whether or not people will be returning to the office after the pandemic sparked a revolution in at-home working. The general consensus at this

CONSTRUCTION, INFRASTRUCTURE & UTILITIES OVERVIEW

Perspectives: Hospitals Carl Davis CEO – Array Architects Health systems have suffered throughout this pandemic market as elective surgeries, their path to profitability, have been on hold. Hospitals can’t survive without elective surgeries. Additionally, care has been postponed, causing an additional strain on health systems. At some point, hospitals will have to deal with this issue. When this happens, many of our projects will come back online. There are various opinions on the rollout of the COVID vaccine and its impact on healthcare overall. I think this will resume a great deal of normality.

Angelo Perryman CEO – Perryman Construction The marketplace is coming back slowly but surely. There may not be new demand for healthcare as a result of the pandemic, but there is higher demand for a skilled and prepared workforce. We are not sure about the quantity of demand for all service providers, but there is a huge focus on the ability to deliver in a safe and organized manner. For every type of project, there has been more demand for providers who can deliver on health and environmental safety.

point is that it is too early – the data is too sparse – for there to be anything conclusive. Furthermore, it could go both ways: just as there could be a trend toward more working from home, there could also be demand from employees at the office for more physical space, a result of needing to feel safe in the workplace. “The big shift that folks are anticipating is that anybody who was in the market for new office space is now kind of second guessing their search, because they already are seeing more demand for suburban office and environments.

This is for two major reasons. With anything in urban areas, a large portion of employees typically use public transportation, which has now become a major risk. The other major disruption is elevator capacity. In a taller building, most people use the elevator to get to their office on the 20th floor. Under the new guidelines, an elevator designed for 15 people might only be allowed to carry four people. If you have to wait one hour to get on the elevator, that’s going to cause disruptions for those people,” Matthew Cleary, territory manager at SageGlass/Saint-Gobain, told Invest:.

One factor is evident regarding office spaces, and that is that technology developments are influencing demand in every way. “Technology has tended to

lower the demand curve, whether through allowing for higher density or allowing for remote work. Moving forward, we will likely see these trends continue. It means that traditional office space developed over the last 75 years has increasingly become obsolete, in terms of what it looks like, the features it offers and where it’s located. Companies are realizing that, for a host of reasons, different workplace environments are necessary going forward. So, while total aggregate demand will be dampened, it does not mean that there will not be demand for new facilities. In many respects, that is a new opportunity for creators of space who can understand those features that are desired,” said John Gattuso, president and CEO of Gattuso Development Partners.

Also emboldening the sector is the possibility that there is pent-up capital – on both the debt and equity sides – that investors have been sitting on during the pandemic and who are now keen to invest in commercial real estate projects. The possibility of pent-up savings waiting to be unleashed also applies to the retail sector, and some analysts are bullish that 2021 will be the beginning of a strong consumer cycle.

Both of these outcomes are predicated on the ( ) www.capitalanalyticsassociates.com

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®

oundtable:

Energy plans Energy utilities play a pivotal role in daily and business life. Here is how market leaders are making a difference in the region.

Bill DiCroce

Mike Innocenzo

President & CEO Vicinity Energy

How is Vicinity Energy helping to reduce carbon pollution and maintain a clean environment?

In Philadelphia, our district energy system and combined heat and power (CHP) plant are the largest in the state at nearly 170MW. We distribute clean, low carbon energy to over 400 buildings, totaling 96 million square feet of building space in Downtown Philadelphia — equivalent to 61 Comcast Technology Centers. Our district energy system can exceed 80% efficiency as compared to traditional modern power plants that are only 50%-60% efficient. Annually, that carbon avoidance is over 300,000 tons per year. As Philadelphia develops, for every million square feet of building space that signs up with us, approximately 3,500–5,000 short tons of carbon will be avoided annually compared to conventional methods.

Going forward, we have various initiatives to further our green imprint on the community. For example, this year, we’ve entered into contracts to eliminate use of heating oil in our facilities and replace it with locally sourced biofuels.

What is your biggest challenge in the region?

Getting people to understand who we are and what we do is our biggest challenge. Along with communicating and educating the business community, we’re also working with the government so that they understand what we can offer and how they can use us as an existing infrastructure in achieving their net neutrality goals. As the city grows and attracts new types of industries, like the life sciences, our system will be able to reduce carbon by up to 5,000 tons of carbon for every one million square feet annually.

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President & CEO PECO

How are your green initiatives impacting the region?

As the needs and expectations of our customers and communities grow, we must continue to grow with them. A key focus of creating a greener and more sustainable region across Greater Philadelphia is renewable energy, such as solar and other resources, and the electrification of transportation.

We are taking several steps to help grow and promote electric vehicles in our region. PECO’s fleet includes approximately 1,200 hybrid, natural gas, electric, flex fuel and biodiesel vehicles. We are also supporting Senate Bill 596, which would establish a state goal of a 50% increase in transportation electrification by 2030 and would enable us to build out a broader electric vehicle charging network.

We put together a team that is dedicated to solar and renewable energy resources, which ensures that we make it easy for customers to make the decision to install solar energy infrastructure, through an online application process and project tracker. We are working on further legislation that would increase some of the solar electricity targets for the state of Pennsylvania.

How is PECO working to improve its treatment of weather-related outages?

We know that more severe weather is impacting our region and our infrastructure. Two of PECO’s Top 10 storms in company history occurred this year, with the June Derecho and Tropical Storm Isaias in August. We are continuously working to enhance our system to make it more resilient and better withstand extreme weather.

| Invest: Philadelphia 2021 | CONSTRUCTION, INFRASTRUCTURE & UTILITIES

CONSTRUCTION, INFRASTRUCTURE & UTILITIES ROUNDTABLE

Emily Schapira

President & CEO Philadelphia Energy Authority

Clint Zediak

Vice President of Sales and Marketing WGL Energy

What role does the PEA play within the Philadelphia region?

The PEA is an independent municipal authority. In 2016, we launched our marquee initiative, the Philadelphia Energy Campaign, a 10-year, $1 billion investment in clean energy and energy efficiency projects to create 10,000 jobs. We’ve helped launch over $150 million in projects since the launch of that campaign and through 2019, we created about 1,300 jobs. We view our role as helping to create a robust, equitable clean energy market in Philadelphia, and we’ve seen that market really begin to blossom.. We’ve been able to create and implement several tools that help the market move forward, like Commercial Property-Assessed Clean Energy financing (C-PACE), a commercial-industrial financing tool, and with Solarize Philly, a residential solar discount program that helps fund solar training for youth and access to solar for low and moderate-income homeowners. We have helped foster significant change in the way people think about the energy market here.

How is WGL Energy impacting Philadelphia’s energy sector?

WGL Energy is a competitive retail supplier serving the mid-Atlantic region. We have been in business in this area for over 20 years and we serve approximately 200,000 customers. Here is where WGL Energy fits in to Philadelphia’s energy sector. When you think of your electricity or your natural gas bill, the local utility will distribute the commodity. However, in a competitive market like Pennsylvania, the generation and transmission of that commodity is open for competition, and consumers have the ability to shop for that service. That is what we provide. We offer those competitive retail services to energy consumers in the Philly area, everyone from residential consumers to the buildings of the city of Philadelphia itself, including the airport. We also offer consumers the ability to green their commodity purchases by adding 100% renewable wind energy to their electricity purchases or adding 100% carbon offsets to their natural gas supply.

How would you characterize the dynamic between clean energy and public health?

Clean energy drives public health by improving both indoor and outdoor air quality. Our reliance on fossil fuels has led to Philadelphia having one of the highest rates of childhood asthma in the nation, which will be greatly reduced by the recent closing and current redevelopment of the East Coast’s largest oil refinery.

And as we’ve seen with COVID-19, indoor air quality and healthy conditions at home are more important than ever, and energy and utilities have a huge role to play.

What is your outlook for the industry in Philadelphia?

I think there is a lot of opportunity for consumers to take control of their energy spend as COVID restrictions are lifted. Philadelphia is located in the PJM deregulated energy territory, which is supplied by a variety of generation fuel sources and has a different market structure than ERCOT in Texas. The diverse fuel mix and longer-term PJM market signals give consumers a better opportunity for grid reliability, but energy efficiency and resiliency will still be important as Super Storm Sandy is still a recent memory for some of us. www.capitalanalyticsassociates.com

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CONSTRUCTION, INFRASTRUCTURE & UTILITIES INTERVIEW

Digital advantage The prevalent use of technology and the ability to work in the cloud proved pivotal in the pandemic landscape

Elizabeth Mahon Managing Principal – HDR Philadelphia near real time. We also use Bluebeam Revu to mark up the drawing sets to both coordinate information within our team and with our consultants. These tools have allowed our teams to transition into remote work fairly seamlessly.

What modern trends in building engineering do you expect to emerge in 2021?

I think some trends will probably be more pronounced, such as prefabrication or off-site fabrication. We’ve already started to incorporate that into some of our projects. It’s becoming more and more important as contractors get more accustomed to it since it helps shorten the construction period, which equates into financial savings. Really anything that saves time or makes it more efficient for construction will find a way to be incorporated. The industry is also being pushed to innovate with smart buildings, sustainable designs and other touchless technology, and HDR is collaborating with our clients to make this goal a reality.

HDR specializes in design through digital technology.

What technology do you use and how is it used?

We use building information modeling (BIM) and project information management tools throughout our project delivery. Specifically, we create our design and documentation models using Autodesk’s Revit platform, which is common in the industry. Fortunately, when projects permit, our work can be done using cloud-based collaboration. This has really helped us, especially now, while our teams may be distributed and need access to the same model(s), regardless of whether they are sitting in the office, the jobsite or at home.

This type of BIM collaboration really streamlines our workflows and makes it possible to make alterations in 88

What are some of the challenges or unique opportunities for the architecture industry in Philadelphia?

One of the main challenges for the architecture and engineering industry in Philadelphia is the cost of construction and labor. Construction and labor costs are quite high but leasing rates are relatively low in comparison to other major cities. So it’s difficult for clients or developers to be able to get the return they need relative to the investment they require for a new building. So that is always a challenge.

Architects design to a certain budget, which can limit the types of materials or palette they are able to use.

However, I’ve found that our architects at HDR enjoy the challenge. That’s where creativity comes into play.

| Invest: Philadelphia 2021 | CONSTRUCTION, INFRASTRUCTURE & UTILITIES

CONSTRUCTION, INFRASTRUCTURE & UTILITIES OVERVIEW

Robert Zuritsky President & CEO – Parkway Corporation

Congestion and taxation were the main threats before the pandemic. As the world transitions from retail purchasing to delivery purchasing, the limited roadways we have will have to deal with all those deliveries. Uber and Lyft are another challenge.

They’ve been given free reign of our streets with almost no regulation. Only New York has limited the number of drivers they will allow to sign up, while taxis are completely regulated.

Taxation at 25% of our gross plus Use and Occupancy taxes, make development of new parking cost-prohibitive, so I fear shortages as development reduces supply and increases demand. These challenges fuel our commitment to innovate faster and operate better than our peers.

( ) successful rollout of the vaccine. “Obviously, retail is struggling right now. I do not believe that online shopping will be the end of brick and mortar stores. What is needed is to provide a great user experience for shoppers. We have been active for 20 years with the redesign of struggling malls into lifestyle centers to include restaurants, apartments, medical offices, entertainment, and public activity spaces. These redevelopments provide a unique opportunity to introduce outdoor areas for seating with passive recreation, dynamic outdoor dining areas for restaurants, and healthy lifestyle activities, amenities with walking trails and dog parks. I believe this trend will only get stronger,” said Jim Riviello, principal and partner at The Martin Architectural Group P.C Philadelphia is also among the vanguard cities of a life science construction boom across the nation, where there is a low laboratory vacancy rate at the moment and up to 36 million square feet of new construction expected in the coming years, all indicating great demand. In the United States, life science investment as a percentage of total office volume reached 16.4%, more than double the previous year. Philadelphia is poised to take advantage of this boom. Thanks to its many universities, healthcare institutions and a legacy of pharmaceutical manufacturing, the industry performs well here on a number of metrics: market maturity, wet lab inventory, rental rate, vacancy rate, tenant demand and venture capital funding. Currently, there are more than a million square feet of life science space

under construction in the city and – with rising tenant demand – growth is expected in 2021.

In industrial construction, too, Philadelphia is looking strong. The pandemic did not have a huge effect on manufacturing levels generally; employment in the sector is below 5% and output is at or above pre-pandemic levels. The numbers speak for themselves: active industrial construction rose by 15.4% since 2019 to 21.4 million square feet by the end of 2020 and 50.3% of this is preleased. Industrial delivery construction did extremely well, setting records in demand, which is outpacing supply, and leasing, despite the pandemic and the subsequent downturn. The industrial market regionally had a very strong year, too. While the vacancy rate increased in the last two quarters, this was mostly due to 12.5 million square feet of speculative construction being completed; one-third of this has already been leased.

Additionally, the supply of legacy space has become increasingly limited.

Despite a serious battering from the pandemic, even the hospitality sector managed to score some victories, with a few marquee projects opening during these hard times: the Hyatt Centric Center City Philadelphia, an $81 million hotel with 332 rooms located in the heart of Rittenhouse Square, and the 510,000-square-foot, $700 million Live! Casino & Hotel Philadelphia both opened during the pandemic.

While this is surprising, it should also be noted that such projects groan under mountains of debt and developers are unsure of the way forward. All of this, again, depends on a speedy rollout of the vaccines. ( ) www.capitalanalyticsassociates.com

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CONSTRUCTION, INFRASTRUCTURE & UTILITIES OVERVIEW

Jeremy Grey Executive Vice President, Industrial Development – Hilco Redevelopment Partners Even during this pandemic, the demand for the life science, light industrial, research and development, e-commerce and light manufacturing market sectors have been strong. The coronavirus pandemic has put these asset classes at the forefront. The pandemic has pushed many shoppers to make their purchases online and has changed the way consumers purchase goods.

The spread of the virus and resulting economic volatility has highlighted the significance of the life science sector. While office has declined, that represents a very small sector of Hilco Redevelopment Partner’s platform.

( ) Legislation On the legislative side, there was a 10-year tax abatement on new residential construction that was scheduled to expire on Dec. 31, 2020. To help spur the continuation of residential construction through these uncertain times, the Philadelphia City Council proposed legislation that would delay this by several years. Already, there had been a rush to secure permits prior to the abatement. This in itself shows confidence in the market: if a company secures the site and breaks ground now, it will take up to two years to deliver the finished product and, by then, the housing market will be up to strength.

The city, as detailed by Plan Philly, is also levying a “Development Impact Tax” of 1% on all “construction or improvement costs” that require a permit. The tax applies to anything from building a new building to just getting a new certificate of occupancy. The hope behind such a move would be to raise funds that would help develop affordable housing. The city government has a plan to finance $400 million in new bonds for housing and other anti-poverty measures.

The implementation of this tax has been delayed until Jan. 1, 2022, and it will not apply to projects that have completed their approval processes and applied for building permits prior to this date. There are some exemptions to this tax, such as sites benefiting from the Keystone Opportunity Zone, from purely public charity tax status, or “preparing an existing residential rental unit for turn-over to a new tenant.”

Tech innovations Many in the construction sector, hoping to best position themselves for a post-pandemic economy, 90

are looking at including aspects of servitization in their design; that is, developments that include an array of services to offer its customers (not just office or residence space). Such features should help ensure a revenue stream for property owners through hard times such as these. According to the Engineering News-Record, construction companies are now transforming from their traditional iteration to “asset lifecycle service providers, able to provide through-life service, facilities management, and maintenance to their clients.” In Philadelphia, this trend is manifested in the groundbreaking of the first tower at the Brandywine Realty Trust’s $3.5 billion “innovation hub” at the Schuylkill Yards development.

This multifunctional project will include luxury apartments, life science and office space, indoor and outdoor amenities, retail, a lifestyle club and groupworking spaces.

Challenges Besides the obvious challenges of an uncertain market in a global pandemic, the industry has been facing a lack of available talent, according to a study in which 80% of contractors were having problems filling craft positions. To meet this challenge, construction companies and the GBCA have engaged educational institutions on an unprecedented level to ensure a steady stream of talent. Among these are the ACE Mentor Program of Greater Philadelphia, in which highschool students are encouraged to look toward careers in architecture, engineering and construction; Mercy Career & Technical High School offering programs that educate in the building trades; and other apprentice programs for construction and carpentry. ( )

| Invest: Philadelphia 2021 | CONSTRUCTION, INFRASTRUCTURE & UTILITIES

CONSTRUCTION, INFRASTRUCTURE & UTILITIES INTERVIEW

Transformation Utility completes a transformative 2020 while remaining committed to providing safe, reliable services

Christopher Franklin Chairman & CEO – Essential Utilities, Inc. What were some of Essential’s significant projects in the Philadelphia region during this past year?

2020 was a transformative year for Essential. In February we changed our name from Aqua America to Essential Utilities. Our New York Stock Exchange ticker is now WTRG and we will celebrate 50 years on the NYSE in 2021. In March, we closed the acquisition of Peoples and became one of the largest water, wastewater and natural gas utilities in the country.

Aqua is our water and wastewater brand and Peoples is our natural gas brand.

The closing of the Peoples acquisition happened on the same day our company transitioned to a work from home model due to the COVID-19 pandemic. As essential workers, about two-thirds of our employees stayed on the job and worked with new safety protocols and PPE. Although it is not necessarily a project, it is truly one of the most significant achievements of 2020.

Another very exciting project that started in 2020 is the construction of a brand new, state-of-the-art water quality laboratory that will sit at the site of our Bryn Mawr headquarters.

How is Essential helping to reduce pollution and maintain a healthy environment within the region?

Essential has a long-standing commitment to environmental stewardship and sustainable business practices. It is part of the company’s mission and vision. In early 2021, we announced our commitment to substantially reduce Scope 1 and 2 greenhouse gas emissions. By 2035, Essential will reduce its emissions by 60% from its 2019 baseline. This reduction is roughly equivalent to the emissions from 76,000 cars on the road over the course of the year. Our water utilities in New Jersey, Pennsylvania, Ohio and Illinois will buy all of their power from renewable sources beginning next year.

What are top priorities for Essential within the Philadelphia region for the next 12 to 18 months?

Continuing to provide safe and reliable water, wastewater and natural gas service to our customers will remain top priorities for Essential. All other priorities are designed to support that commitment.

Over the next 12 to 18 months we wil invest approximately $1 billion in our communities’ water and gas main infrastructure across Essential’s 10-state service territory; work toward our emissions reduction targets; increase our employee and supplier diversity; actively pursue acquisition opportunities; invest in our communities by making targeted contributions from The Essential Foundation; and continue to keep our employees safe and the company strong through the pandemic. www.capitalanalyticsassociates.com

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Dave DeLizza President & CEO Pennoni

What is the outlook for public sector projects?

One of our concerns going forward is funding for public sector projects. For example, toll revenues are down for toll agencies, and that’s how they pay for their projects. Coming into the second half of 2020, we were concerned about public sector projects stopping, and while some construction did stop, the good news is that it was only temporarily delayed. This year, as we look at our budget, we still have some concerns about the public sector. We are cautiously optimistic and our public sector clients are taking things the same way. As vaccines roll out and people get back to work, I think you’ll start to see that pent-up demand in the second half of the year.

How is Philadelphia approaching sustainability and resilience?

As engineers, when we build projects, we build them to last 50 years or more. We’ve always built things to be sustainable and resilient. Those words have become buzzwords not only in construction but in every business. We have a lot of clients that are looking at sustainable and resilient development. We approach this by providing a cost-benefit analysis of various construction options, and then they can make a financial decision on what works best for their project, which our engineers take into account. Resilience in Miami, for example, is a bit different than resilience in Philadelphia.

What are some examples of Philadelphia’s redevelopment?

There are entire blocks being demolished and replaced with new housing in the neighborhood I used to live in.

The city is improving and creating new infrastructure, transportation, bikeways, roads, and renewing many utilities as well. There’s a great deal of interest among investors to redevelop sites within Philadelphia. Real estate is still reasonably priced compared to other metropolitan areas.

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Philadelphia has initiated a “Climate Action Playbook” that has committed the city to becoming carbon neutral by 2050.

( ) Gentrification, as in major cities across the country, poses its own challenges. As higher-skilled workers move into denser urban neighborhoods, residential and economic dislocation of long-standing residents – too often ethnic minorities – ensues. One Philadelphia real estate firm is hoping to meet this challenge by seeking to raise $1 billion over the next decade to redevelop Black neighborhoods across the country. Its first project is Tioga in North Philadelphia.

This firm, TPP Capital Management Group, is planning to develop 1,400 residential units, 172,000 square feet of retail space and 92,000 square feet of street improvements.

Infrastructure & utilities Infrastructure, second only to residential in terms of market volume, is another area poised to keep the

CONSTRUCTION, INFRASTRUCTURE & UTILITIES OVERVIEW

Philadelphia construction sector humming for the foreseeable future. In terms of construction value, five out of the 10 largest projects in the region are in infrastructure. These include the 30th Street Station District, the King of Prussia Rail Project, and the Norristown High Speed Line. The 30th Street Station renovation project is a massive $400 million renovation overseen by Amtrak that will bring amenities, retail, offices and traffic improvements to the rail network’s third-busiest station.

The state government is encouraging such projects, and, at the beginning of 2021, Gov. Wolf announced 26 rail freight improvement projects worth $31.3 million and 200 jobs. On the city level, too there is encouragement, with the Office of Transportation, Infrastructure, and Sustainability starting initiatives such as Transit First, an interagency effort that hopes to make the transportation system more efficient.

The agenda of the Biden administration bodes well for more infrastructure projects. One of the president’s signature policies is the Build Back Better initiative, a broad, multitrillion-dollar program that hopes to initiate projects aimed at updating the country’s aging infrastructure. Many are also hoping for more federal support from the Department of Housing and Urban Development to help with affordable housing.

Water infrastructure, too, is looking at an upgrade in the coming year. The city of Philadelphia received a $100 million loan to construct a 300-million-gallonper-day treatment facility that will include a structure to reroute wastewater from existing sewer interceptors and have a grit removal system.

The pandemic also put undue strain on the ability of people to pay their utility bills. This is a problem

CONSTRUCTION, INFRASTRUCTURE & UTILITIES OVERVIEW

nationally with payments for water, gas and, increasingly, broadband and telecommunications affected. To avoid a crisis, the Pennsylvania Senate passed a $912 million coronavirus pandemic recovery aid bill, the majority of which ($570 million) would be divided among counties to help people pay utilities and rent.

Alternative energies are also on the agenda.

Philadelphia has initiated a “Climate Action Playbook” that has committed the city to becoming carbon neutral by 2050. According to the city, a full 75% of Philadelphia’s emissions come from buildings and industry.

The playbook outlined these key goals and metrics: • Reduce carbon pollution from the city-owned buildings and street lights 50% by 2030.

• Reduce city operations’ energy use 20% by 2030.

• Generate or purchase 100% of all electricity for city operations from renewable resources by 2030.

• Provide critical long-term home repair in 25,000 low and moderate income single- and multifamily homes by 2026.

• Provide energy and building improvements for 2,500 small food and grocery businesses by 2026.

• Reduce school district energy use by 30% by 2026.

• Create 10,000 jobs in energy efficiency and clean energy projects by 2026.

• Achieve a clean electricity grid by 2050.

In 2020, Philadelphia looked into ways its infrastructure and governance could be improved by integrating

“smart city” components into the city’s fabric, especially in using data and technology to confront inequities. The city launched a pilot program with the University of Pennsylvania and a data company, State of Place, in which 150 urban data points would be placed through the city, collect information and then inform the government of where work and resources need to be distributed.

The private sector is also doing its part when it comes to the envrionment. “There are many things going on in regard to environmental sustainability and we are doing our best to eliminate our carbon footprint,” said Joel Crouse, director of Stanwich Energy Advisors, in an interview with Invest:. “We’ve started to partner with a few select groups that provide energy efficiency programs to meet the needs that we are starting to see in New Jersey and here in Philadelphia. Customers are realizing the benefits associated with that, from an LED upgrade project to potentially putting up solar on their properties to eliminate that carbon footprint, basically because there has been legislation over the past few months regarding carbon emissions.”

Looking ahead As the region remained mired in the depths of a pandemic at the outset of 2021, many of the problems the sector faces are within the power of Philadelphians to conquer. It is reassuring to see that they are, whether it be embracing green technologies, keeping alive tax breaks for construction or engaging the community to train a labor force up to the task of continuing to build the region. Certainly, the picture looks far brighter than it did in the middle of the lockdown.

Transportation & Logistics: Among the many lessons learned from the pandemic is the importance of having a reliable transportation and logistics industry.

Thanks to its stellar road, rail, air and sea connectivity, advantageous location as a distribution hub and burgeoning biotechnology and pharmaceutical sectors, Greater Philadelphia has emerged as one of the country’s leaders in getting things where they need to go.

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Hyper linked: Stellar transportation and logistics infrastructure has the region primed for growth Transportation and logistics go hand in hand. Without an efficient transport network, significant investment and well-maintained transport links, logistics will fail to gain a foothold in any area. But Philadelphia has long been seen as a strategic location, thanks to its proximity to several large urban centers such as New York City, its strong connectivity both domestically and internationally and a large, educated and growing workforce.

The city is served by Philadelphia International Airport, which has six cargo facilities, the Delaware River Port Complex, which handles 70 million tons of cargo per year and it is also at the apex of the I-95, I-76 and the Pennsylvania and New Jersey turnpikes. Not only this, but two Class I railroad services are provided

by CSX, Norfolk Southern and Canadian Pacific.

This already-strong positioning has been accelerated by a new look at the international supply chain after widespread disruption related to the COVID-19 pandemic highlighted the dependence of world trade on China as a manufacturing hub. President Joe Biden is expected to double down on a Buy American strategy that will boost domestic manufacturing and, by extension, strengthen the country’s transport and logistics infrastructure.

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Philadelphia’s connectivity means it is well positioned to take advantage of the drive. The region has the country’s 14th-largest port by TEU (Twenty Foot Equivalent Unit) volumes, the 18th-largest airport in terms of passenger numbers and is within a five-hour drive of 25% of the country’s population. The pandemic has also driven the need for better transport and logistics infrastructure in other ways. The growth of e-commerce has spurred industrial real estate demand in large urban centers, including Philadelphia, while reluctance to travel internationally has placed much more importance on the country’s road network.

Landscape Logistics and its associated industries depend on Philadelphia’s transport links to continue creating value for the economy. The region continues to make improvements to ensure it is positioned at the forefront of logistics and e-commerce growth. At the heart of the decision-making process is the Citywide Vision 2035, the 25-year plan launched in 2010 that continues to guide various local government offices on issues related to economic development, transportation and natural resources. ( )

TRANSPORTATION & LOGISTICS INTERVIEW

Safety first Using innovative tools and industry-first approaches, Philadelphia International Airport is planning for new heights

Chellie Cameron CEO – Philadelphia International Airport What were your major 2020 takeaways?

2019 was our best year ever in terms of passengers, with over 33 million people traveling through Philadelphia International Airport. We were making great progress in terms of destinations and amenities for our guests. We have been particularly hard hit by the pandemic. Our April numbers show we were down by 94% year over year. It was like a ghost town. As per our forecasting, we think it’s going to be multiple years before we come back.

As we went through the spring and into the summer, we started to pivot, focusing on keeping the airlines and our stakeholders in a place where they can continue to offer services to passengers, recover and even grow.

Our second priority was finding new ways to serve our guests. We put in place an industry-first incentive program where we were able to take away some of the risk from the airlines in bringing back service sooner.

It was a critical advantage for us to be able to bring back that service first. Through our unique program, we incentivized the airlines to either bring back the service they had before or even start new service.

We were even able to attract a new carrier, Eastern Airlines, in the middle of the pandemic.

What opportunities have you identified for cargo given the e-commerce boom?

In contrast to our passenger numbers, our cargo from July through November was up 4% year over year.

It is crystal clear that e-commerce is a big thing. We are in a fortunate position because we secured some land a few years ago that ultimately is in our airport planning as far as being developable for cargo. We are accelerating the preparation of that land so we can jump on it and start to do some of that development in the near term.

What are the airport’s primary goals, looking at the near term?

At present, we need to make sure that we refocus on the things that are essential. First, making sure that we foster a culture of safety and equity for employees, stakeholders and guests. We started a guest experience counsel in the middle of the pandemic.

Second, grow the number of airlines, nonstop destinations, cargo operations and seats offered through our airport. Third, tightly manage the airport’s finances.

Finally, we want to advance our cross-functional initiatives focused on recovery. Our transition and recovery team has been given free rein to brainstorm and reimagine what the guest experience could be like in Philadelphia. www.capitalanalyticsassociates.com

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Jeff Theobald President & CEO PhilaPort

What were some highlights for PhilaPort in 2020?

In the last year, we completed our 100,000-square-foot vehicle processing center (VPC). Major OEMs Hyundai and Kia will be present in the operations of the facility.

This may be one of the most advanced VPCs on the East Coast. On the container side, we finished berths four and five and all five cranes ($12 million a piece) were operational and commissioned. We have some of the largest ships on the East Coast berthing in our port.

We also built a new 110,000-square-foot warehouse, mostly for pulp and paper from Brazil, which has seen a huge increase in demand lately. ish more substantial multimodal services, including rail for the port. We also opened a specialized food inspection warehouse for perishable products in the last year. We are also breaking ground on a new $50 million 200,000-square-foot warehouse: PhilaPort Destitution Center, located at 3rd and Pattison Ave. What role does the Southport Terminal play?

We see our location as a real advantage. We are in the center of the richest consumer market in the world, from Virginia all the way up to Boston. Some of our competing ports are not as centrally located for distribution. Most of our accounts right now are import accounts, which is why it is so important to be right in the center of these demand pockets. We are very bullish on the development of Southport as a result.

How will the Intermodal Cargo Growth Incentive Program help PhilaPort compete?

We have had tremendous growth of over 12% CAGR in the last eight years. The majority of that is by truck.

Our intermodal or train volumes are below average, in fact, but in Philadelphia we have three Class One railroads. Since we have the infrastructure in place, we want to take more advantage of discretionary cargo services. We are essentially trying to provide direct services both on the ocean side and on the inland cargo side.

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( ) Among its many strengths and advantages, Philadelphia has been seen as a hub for East Coast food processing and distribution thanks to its capacity for cold storage and rapid distribution. The 686,000-square-foot Philadelphia Wholesale Produce Market is the largest fully enclosed, fully refrigerated produce distribution terminal in the world. Combined with the Port of Philadelphia’s specialization in the importation of perishable and USDA-regulated cargo, such as fresh fruit, meat and cocoa beans, and worldclass food inspection capabilities, this is one area of growth for the city. The same cold storage network has proven an indelible advantage as Philadelphia sprouted burgeoning biotech and pharmaceutical industries, with the ability to transport temperaturesensitive cargo across the United States and to Canada and Western Europe within a matter of hours.

Thanks to Philadelphia’s industrial past, it has much more opportunity for industrial real estate development compared with similar cities. The city is built around huge warehouse spaces that have boosted last-mile distribution significantly. Philadelphia has nearly 1,300 acres of cleared, industrially zoned land suited for logistics, distribution and e-commerce, including tracts of land closely located to the airport and port. Just a year after a huge explosion shuttered the Philadelphia Energy Solutions-owned Philadelphia refinery, the land was snapped up by Hilco Redevelopment Partners in a $225.5 million deal and is being turned into a mixed-use industrial park.

COVID-19 While logistics, manufacturing and international and national transport links thrived during the pandemic, local transport services were among those that took a hit from the pandemic. Given that public transport is a service based on population density, it did not take long for ridership to fall off a cliff amid a pandemic involving a highly contagious virus. Philadelphia is served by the Southeastern Pennsylvania Transportation Authority (SEPTA), which runs rail, buses and trolley services across Bucks, Chester, Delaware, Montgomery and Philadelphia counties. Pre-pandemic, SEPTA ran 2,800 vehicles, providing 1 million trips across the region and generating an economic impact of $1.8 billion per year.

The transportation authority saw ridership of over 20 million per month pre-pandemic, making it the country’s seventh-largest transit system. But in April and May, ridership was down close to 90%. As the 2021 fiscal year began, the authority was haemorrhaging $1 million per month, compared to typical revenue of $40

TRANSPORTATION & LOGISTICS OVERVIEW

million per month. Most bus routes have been running close to original schedule since the reopening in May, while Regional Rail has been operating on a reduced schedule. Even with a slight pickup in ridership as the economy reopened and $644 million in federal CARES Act funding, the numbers don’t add up for the system.

As of January 2021, an additional $252 million was committed in federal funding but the agency said it continued to look for ways to control costs, including potential layoffs and service reductions.

Access to public transit also has a huge impact on economic growth and equity. The vast majority of SEPTA riders earn less than $75,000 per year, while six in 10 riders are female. Not only this, but a lack of public transit use could cost the state critical manufacturing jobs due to spending cuts on vendors. Even a lack of passengers on public transit in other states is having an impact. New York’s public transit spending cuts will impact Pennsylvania vendors with contracts worth $1.4 billion, including Bombardier, Mitsubishi Electric and ArcelorMittal Steel.

Even with the vaccine rollout underway, it is difficult to see how SEPTA will return to normality in the immediate term. The SEPTA COVID-19 Travel

Survey released in September showed riders felt safer going to a grocery store or visiting family than riding SEPTA and one of the biggest concerns was mask enforcement. As of January, Regional Rail ridership was down 85% from pre-pandemic levels and experts think one of the solutions is to integrate the system with the trolleys, buses and subway network. Another idea focuses on reduced fares and monthly or weekly travel cards. Many argue this could also have the inadvertent effect of democratizing Philadelphia’s public transit.

Investment The silver lining is that during the downtime, the city was able to plough ahead with new capital improvement projects. In December, SEPTA reaffirmed its commitment to a $2 billion project to extend its rail service to King of Prussia between 2025 and 2027. Work continued on SEPTA’s restoration of service on the Media/Elwyn Regional Rail Line from its terminus at Elwyn Station to US Route 1 in Middletown Township, which was halted in the 1980s. The $178 million project is due to be completed by the end of the year. Amtrak is also leading the redevelopment of the William H. Gray

TRANSPORTATION & LOGISTICS OVERVIEW

Philadelphia International Airport is home to 16 major domestic and international airline carriers.

III 30th Street Station, with work set to commence in 2021 and finish in 2025. Work also is underway on subway and trolley improvements on 30th and 31st. Studies are ongoing regarding the viability of extending the Broad Street subway line into the new Naval Yard development.

While transport investment generally comes from the government, the private sector is throwing money toward logistics infrastructure in Philadelphia. Industrial leasing did not slow down even at the beginning of the pandemic. In April, over 2 million square feet of warehouse space was leased in Philadelphia and neighboring Southeast Pennsylvania and South Jersey counties.

In January, Amazon leased 94,000 square feet of last-mile distribution warehouses in Philadelphia.

And industrial and multifamily housing developer NorthPoint Development bought the 10-millionsquare-foot bulk logistics complex from US Steel for $160 million. The site is an inland port with an industrial park fed by 75 miles of rail service and tenants across various industries. NorthPoint will install manufacturing and e-commerce spaces on the site. Over the Christmas period at the UPS Philadelphia Air Hub, staff were estimated to be moving 75 million to 80 million packages per day, while Amazon alone was handling 14 million packages daily.

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spending to come. The proposed budget for SEPTA for fiscal year 2021 totals $640.22 million, with the 12year capital improvement program standing at $7.4 billion. Most of the funds come from state coffers, with $219.29 million in federal funding, $60 million in SEPTA capital financing and $11.65 million in local financing.

Among the major capital improvements planned for the year are $47.65 million in communications, signaling and technology improvements, $49.38 million in maintenance of shops and offices, $184.9 million in vehicle acquisitions and overhauls and $31.62 million in substation and power improvements.

However, as SEPTA loses money due to low ridership, it is uncertain whether the funding plans will be fulfilled. That is why in October, Philadelphia Mayor Jim Kenney asked voters for authorization to raise $134 million in loan funds, adding to the city’s $5.5 billion debt. The ballot was approved with a 75% majority and the money was allocated to transit, streets and sanitation, parks, recreation and museums and economic and community development.

Education E-commerce globally is projected to be worth $4 trillion by 2021 and logistics to support this demand include industrial real estate, a large labor force and significant growth in last-mile distribution ( )

TRANSPORTATION & LOGISTICS INTERVIEW

New plan New strategic plan targets growth and prosperity for Philadelphia’s businesses and communities

Linda Mysliwy Conlin President – World Trade Center of Greater Philadelphia How has the World Trade Center of Greater Philadelphia served the needs of businesses in greater Philadelphia?

This past year, the WTC Greater Philadelphia went through the development of a new strategic plan that reinforced our belief that we play a significant role in generating economic growth and job creation for the Greater Philadelphia region through global trade and investment. Our new mission statement reflects the new strategic plan to specifically bring growth and prosperity to businesses, communities and neighborhoods in Greater Philadelphia through global trade and investment. Last year, we worked with companies to provide trade counseling assistance, educational programs, and to connect companies with one another and with WTC partners worldwide.

Companies that are part of the organization reported that we were able to help them generate $128 million in incremental exports. This translates to an increase of about 1,600 new jobs in the region. Since 2002, when WTC Greater Philadelphia was launched, we have helped companies increase their sales by about $2 billion, with about 26,000 new jobs being added. Our mission statement underscores the role we play helping companies be successful globally and helping to create jobs and economic growth for greater Philadelphia.

What are some of the market trends and international factors that you are looking at?

In 2019 before COVID-19, there were movements against globalization. This has been noted nationally as well as internationally as countries want to protect their domestic companies. The WTC feels very strongly about advancing U.S. global competitiveness.

That said, the United States operates in a global economy, where our companies benefit from access to global supply chains and from selling their products and services to global customers. Open markets,

free and fair trade advances their global sales and competitiveness. As a member of the World Trade Centers Association (WTCA), many of my fellow WTCs are also concerned about antiglobal policies and sentiment that emerged during 2019, and worry that this sentiment will continue to rise because of COVID-19. We operate in a global economy with 95% of the world’s consumers outside of the United States.

Companies that export experience greater growth and profitability. These companies tend to innovate more, provide higher wages and have better bottom lines than companies that don’t export. This is the message we want to convey to businesses in the Greater Philadelphia region to help increase their profitability and their contribution to the region’s return to economic growth. www.capitalanalyticsassociates.com

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Jim Moses Vice President of Northeast Hubs & Gateways and Premium Guest Services PHL Hub Operations at American Airlines

What does it means for Philadelphia to be a hub for American Airlines?

Philadelphia plays an important role for American because it is centrally located in a highly competitive region where customers have choice. As one of the only airports in the Northeast without slot restrictions, PHL offers strong connecting opportunities for customers — and room for growth. To ensure we can compete, American has partnered with the airport and other stakeholders to invest in the overall customer experience. We remain committed to PHL, the city of Philadelphia and the surrounding region because we know if we are competitive in Philly, we’ll be competitive throughout the Northeast region.

Do you see cargo-only services continuing?

When we launched cargo-only flights from PHL in March, we were flying three trans-Atlantic flights out of Philadelphia each week. Since then, we’ve adjusted the number of flights and markets served. Our cargo team has been successful in developing business, leveraging our fleet of idle Boeing 787 and 777 aircraft to serve pent-up air-freight demand. Through the month of August, we were operating 11 weekly flights to Amsterdam, Zurich, Frankfurt, Milan and Rome. We were able to repurpose our fleet, using the bellies of aircraft to haul much-needed cargo around the world.

We are very happy that Philadelphia has been a recipient of those cargo-only flights.

After the pandemic ends, our hope is that much of our international flying will return. However, we also know that international flying is not planned to return to 2019 levels for a few more years. We plan to continue cargo-only flights while opportunities persist to utilize idle aircraft. With continued government travel restrictions and uncertain international passenger demand, it remains to be seen how long cargo-only operations will go on. If we have aircraft that we can use for cargo-only, I think you’ll find American Airlines taking advantage of that.

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( ) capabilities. Philadelphia is able to offer all three, as well as strong connectivity to both national and international markets. Philadelphia stands out as a city that takes the training of its workforce seriously, and because of that, several new degree programs have emerged over the years for specialization in supply chain management and logistics.

At least 18 colleges and technical schools in the Greater Philadelphia area offer logistics and supply chain management degrees. The Community College of Pennsylvania offers a $149 six-hour course in logistics and distribution that can be taken online.

Temple has a bachelor’s program with a major in supply chain management and Drexel has gone even further by offering a master’s in science on the subject.

Not only do Philadelphia’s educational institutions offer training to fit the needs of people at any life stage but Philadelphia Works in November partnered with Prologis and nonprofit JFF (Jobs for the Future) to launch a new training program that provides skills in transportation, distribution and logistics. The selfpaced 30–45-minute courses can even be taken via an app and are designed for adults of all ages.

Public-private partnerships During a time when many governments around the world will find themselves with budget shortfalls due to lower tax collections, one of the solutions for a city like Philadelphia could lie within public-private partnerships (PPPs). Already they are becoming more commonly used by the Pennsylvania Department of Transport. Over the course of three years, the agency used PPPs to replace more than 550 small bridges across the state. In November, the agency announced it would seek a PPP to help restore the state’s bridges.

The benefit of PPPs for private companies is that the government shoulders much of the project risk, while the benefit for the government is that the private sector makes most of the initial outlay and is repaid with toll revenue or a similar mechanism over the course of several years. And in December, the Pennsylvania House Rules Committee voted unanimously for proposed changes to expand PPP legislation beyond roads, bridges, rail, transit and parking. House Bill 2065 would expand project scope to include rest areas, weigh stations and even electric charging stations.

Airports The growth in e-commerce and Philadelphia’s positioning as a logistics hub is not only dependent on roads, but also on air freight. As passenger

TRANSPORTATION CONSTRUCTION & LOGISTICS OVERVIEW

traffic has tailed off, cargo handling capabilities at Philadelphia International Airport (PHL) have only intensified. According to a November activity report, total domestic and international passenger traffic was down over 63% on the year, while total cargo handled was up 2% to 53,000 tons. For the year, cargo reached over half a million tons. It is no surprise then that as early as May, American Airlines began ramping up cargo-only flights to Europe from the United States.

From Philadelphia, it rolled out cargo-only services to Zurich, Switzerland, and to Rome. The airline was able to leverage the region’s cold storage expertise and on the return leg from Zurich was bringing essential pharmaceutical chemicals destined for San Juan, Puerto Rico. In September, the cargo-only flights were expanded further to include Amsterdam, Frankfurt, Milan and Dublin.

The airport also is investing in its future as a cargo handling hub. At the end of 2020, the airport ploughed ahead with a proposed expansion and development of West Coast Cargo handling with a public review of the draft environmental assessment. And in October, the airport established an Air Cargo Council to oversee its focus on cargo movement.

While Philadelphia is in the ideal position to be a cargo hub, it is not yet leveraging all of its strengths.

Of the $53 billion in air cargo activity that is generated within a 400-mile radius around PHL, the airport handles only about 9% every year, according to its chief revenue officer. Much of the efforts until now have been focused on securing a share of the East Coast cargo activity but during the pandemic, the airport turned its attention to Europe.

While cargo has become a huge focus for airports in the region, the downtime caused by fewer passengers is also allowing for critical improvements to infrastructure. In July, the FAA awarded $9.1 million to Northeast Philadelphia Airport to rehabilitate Runway 6-24. In September, Philadelphia International received an $18 million federal grant to reconstruct Taxiway K and rehabilitate Runway 17-35. PHL also received grants to install 13 electric Ground Support Equipment (eGSE) charging stations. Another development that should integrate the airport more into the city of Philadelphia is a $1 million grant for train improvements on the four stops Philadelphia International holds on SEPTA lines. And keeping the airport afloat amid a drop-off in passenger numbers is among the top concerns. In January, PHL CEO Chellie Cameron advocated for a further $17 billion in additional funding for the country’s airports.

Philadelphia International is also set to play a key

Scott Petri Executive Director Philadelphia Parking Authority

How did the pause in traffic stemming from the pandemic reveal challenges to your operations?

During the pandemic, speed cameras were implemented through state law and city ordinance. The lockdown delayed implementation but the cameras were active, just not issuing tickets. All summer long, people were driving at exceedingly high speeds on Roosevelt Blvd.

We saw unsafe conditions, and we also saw only a slight reduction in red light violations, which was disturbing from a safety point of view. Meter revenues are running around 58% of normal amounts. There isn’t the foot traffic or the restaurant traffic that there had been.

Commerce has been slow, although it’s improving.

Our garages have returned to profitability. The revenue recovery in all divisions has exceeded expectations.

What are your expectations for the impact of the Biden presidency on your business and sector?

We had an initiative to install more electric vehicle charging stations. We’re going to push that effort, knowing that environmental requirements are going to roll out, and as air quality is an important health goal.

We’re going to have to be very thoughtful regarding electric vehicle charging stations at the curb. The policy issues over curb stations are led by the Office of Transportation, Infrastructure, and Sustainability (OTIS), a division of the city. I can see us responding to the environmental air quality issues during the Biden administration and we’re budgeting for air quality measures.

We’re also working on a very robust project for curb management. The cost of congestion is significant at $60 million annually in lost tax revenue to the city. We have narrow city streets. We’re working to map and geofense all of the parking spaces and regulations. This will produce a lot of data to be shared. We will soon be using smartphones to select parking spots, payment options, and permissions. Within two to five years, you’ll be able to know from your smart device whether a spot is legal or not legal. www.capitalanalyticsassociates.com

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TRANSPORTATION & LOGISTICS OVERVIEW

role in the vaccine distribution efforts. Its cuttingedge cold storage technology and its proximity to New Jersey’s pharmaceutical hub gives the airport the edge over its competitors. Philadelphia-based PCI Pharma Services is also a key distribution hub for the vaccines, expected to send out 2-3 million doses. American Airlines has a 25,000-square-foot cargo storage facility at PHL, including 3,000 square feet of refrigerated storage for temperatures between 36 degrees and 43 degrees. There is also space for those shipments that must remain frozen between 14 degrees and minus-4 degrees, which the Moderna vaccine requires.

Johnson & Johnson has said its vaccine can be shipped at standard refrigerated temperatures.

PhilaPort In February 2021, the Port of Philadelphia (PhilaPort) was named the fastest-growing port on the East Coast, with a 7% increase in container volumes in 2020. This highlights the port’s strengths in handling perishable foods, demand for which surged during the pandemic.

The port saw a five-year high in forest product cargoes in 2020. In breakbulk, the port handled almost 1 million tons as well as 20,000 units of containerized forest products.

From January to August, the port saw a 5% increase in TEUs, despite volumes in U.S. trade and East Coast trade shrinking by 8%. In December, exports at the port were up 14.94% on the year and it ranked 34th among U.S. airports, seaports and border crossings. In January, both Pittsburgh and Philadelphia ports were named by Global Trade Magazine as ports that are making a difference in the supply chain. At PhilaPort, shippers can move products to 70% of the nation’s population within 72 hours, the magazine pointed out.

In 2020, skyrocketing air freight rates supported sea cargoes and many senders of perishable shipments that would generally be airlifted to airports such as Miami started looking for new options. Philadelphia’s cold storage capabilities meant it was ideally positioned to compete for perishable cargoes from Latin America, including Colombian flowers, Peruvian asparagus and Chilean grapes. During 2020, the long-awaited deepening of the Delaware River main channel was completed, allowing larger vessels entry into the port. PhilaPort will now have the same vessel capability as the Port of NY/NJ, giving it a further boost in positioning itself as the No. 1 East Coast port.

A $190 million public investment coupled with private funds of $65 million a few years ago have contributed to making the Packer Avenue Marine Terminal one of the most efficient in the country. And Holt Logistics is 104

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Philadelphia International Airport generates $16.8 billion in spending annually and supports more than 106,000 full-time jobs.

spending $32 million this year on improvements to the Gloucester Marine Terminal.

Technology According to a study by Penn Institute for Urban Research, Philadelphia’s mass transit ridership has declined in recent years in favor of ridesharing services such as Lyft. This has long-term implications on the viability of public transit going forward, according to the study. Not only this, but the percentage of Lyft rides that start or end in lower income neighborhoods in Philadelphia is greater than almost anywhere else in the United States, according to a report from the company. For many, depending on how ridesharing technology is used, it can be cheaper than owning a car and often more convenient than taking public transport. The Lyft report suggests that ridesharing has actually slowed car ownership trends in the

TRANSPORTATION & LOGISTICS OVERVIEW

PhilaPort is the fastest-growing port on the East Coast, with a 7% increase in container volumes in 2020 safety as a 2019 medical journal study found more riders were injured while riding e-scooters than while walking or biking.

city. And ridesharing can also work in conjunction with public transport. The Lyft report says 56% of riders have used the service to get to or from public transportation.

Another option for tech-savvy commuters is e-scooters and, although still not legal in Pennsylvania, their popularity has surged due to their relatively lowrisk profile during the pandemic. Data from rental companies Lime and Bird suggests people trust e-scooters more than any other mode of transport right now. There were more first-time riders during the pandemic and most rode more than once, with trip length increasing over time, the study said. For SEPTA, the concern with e-scooters is not the risk that they will take market share but, rather, the obstacles the scooters may create for buses, impacting timetables.

While the city has mulled using scooters as a potential source of tax revenue, concerns still surround their

Looking ahead Despite best efforts to pivot during the pandemic, challenges still remain for Philadelphia’s transport network. Even prior to the pandemic, SEPTA faced affordability issues among its riders. Due to the large proportion of its riders being from lower income households, the most affordable way to use the services tends to be using weekly or monthly passes, which is often not possible for these households. Now, this problem is exacerbated by a resistance to return to public transit and lower tax revenues, which will, in turn, provide less funding to the agency to meet operational needs.

Outside of public transit, the public sector has managed to plough on with road and bridge improvements during the COVID downtime, which is bound to position it well for the future. But lower budgets going forward are sure to create complications for transport infrastructure in the coming years.

While transportation will take some time to recover from COVID, Philadelphia’s logistics have thrived during the pandemic thanks to e-commerce. Airports and ports pivoted to focus on cargo rather than passengers and the hunt for industrial real estate has never been more intense. But there are still some challenges to consider on the other side of the pandemic, including streamlining and onshoring of supply chains. And as always, as the technology becomes more advanced, the risks become more intense. The Financial Times reported in December that cyberattackers had begun to target the COVID-19 vaccine distribution supply chain, either looking to disrupt the delivery process or to steal intellectual property. www.capitalanalyticsassociates.com

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Chester County: With an ideal location, a diversified economy and an enviable education and healthcare landscape, Chester County has positioned itself as an attractive destination to live, work and raise a family. Its resilience in the face of the COVID-19 pandemic and a government that understands the importance of protecting local businesses has only bolstered its reputation.

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Growing stronger: Chester County is ready-made to meet the challenges of the new normal With an abundance of wide-open spaces, a highlyrated education sector and a sought-after quality of life, Chester County is on the rise. A plum location and a diversified economy that helped the county stave off the worst of the COVID-19 pandemic have positioned Chester County as a nationally recognized destination to live, work and raise a family.

Its key virtue has been most evident during the pandemic in particular, giving the county a unique opportunity to face the new normal head-on. When the world began to place greater importance on living spaces, the county stood out as one deeply rooted in open space. About 142,000 acres, or 29% of its land area, is preserved. For many, this affords a desirable quality of life that is now crucial when selecting a place to live, which is why the county continues to experience one of the highest rates of net in-migration in the state.

With good access to award-winning top public and private schools, thriving urban centers and recreational events, the county also is attracting a younger population, which positions it well for future growth. Projections are for the county’s estimated 2019 population of 524,989 to grow by another 137,294 108

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residents to 662,283 by 2045, making Chester County among the fastest-growing counties in southeastern Pennsylvania.

Located within a short commute to both Philadelphia and Wilmington, the county offers road and rail proximity to New York and Washington, D.C. For this reason, a high proportion of residents work in professional occupations with a high median income of almost $100,000 – far above the U.S. median by approximately $31,000. But the county itself also provides solid employment opportunities, with an equal number of people commuting both into and out of Chester County.

Median home values in Chester County climbed to $375,000 in 2020, which exceeds the U.S. average of $217,500 as well as the state average of $180,200.

The county also remained resilient throughout the pandemic. Economically, Chester County has been rated within the highest Triple-A classification by the three main ratings agencies, Moody’s, Fitch and S&P Global, for the last 12 years. This was reaffirmed in December.

The accolade places it in the top 2% of counties in the United States and allows the county to access debt at lower interest rates due to its financial strengths. ( )

CHESTER COUNTY INTERVIEW

Targeting tech Environment is ripe for technology growth but training local talent is a necessity

Marian Moskowitz Commissioners’ Chair – Chester County

In which sectors would you like to see more growth in Chester County?

I would like to see more technology growth in Chester County; we’re ripe for it. We have very close relationships with our universities. West Chester, Immaculata and Lincoln University are in our backyard. We have other universities, community colleges and STEM schools throughout the county.

One struggle is getting local talent trained for technology jobs. We’re thrilled that Mphasis has chosen Chester County to reside in. They are taking 1,000 employees from Vanguard and instead of taking those jobs out of the county, they’ll be setting up a permanent residence here. Those are the kind of things that help us build the future right, while still keeping our agricultural community, which is really important to us.

Aside from COVID, what are the prevalent challenges you would like to see addressed?

We would like to help municipalities with their stormwater management plans. We have a great comprehensive plan called Landscapes3, which stipulates our goals for things such as our open space, stormwater management, where we want to see the County grow and prosper. It’s going to be a year of repairing, restructuring and resolve. We are looking forward to the day when residents can feel good again, go out and visit shops, visit restaurants and see the beauty that Chester County has to offer. Everyone has struggled during the pandemic. Two key areas that we need to focus more resources on is drug and alcohol abuse and the mental health sector. We have to work on drug and alcohol abuse because that has become even more rampant during this time, given the despair and depression that people are feeling.

What is your general outlook for Chester County?

First and foremost is the county budget. We’re focusing on zero-based budgeting for next year and outcome budgeting after that. We’re exploring those options because we do function differently. The end game for the Chester County government is that each department will function more efficiently.

Economic development is also key. We’ve been working nonstop on transportation needs in the county and its overall improvement. One way we have started this initiative is by seeking to get trains and more diverse public transportation to the county seat, as well as the outskirts of the county. We recently partnered with Urban Outfitters, PennDot, the Governor’s Office and the Transportation Management Association of Chester County (TMACC) to get jobs to Coatesville where transportation has been a struggle. www.capitalanalyticsassociates.com

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Brenda Allen President Lincoln University

What were some highlights or major takeaways for the university in 2020?

We’ve learned so much. The key takeaway for us is that we need to be nimble and flexible to make necessary adjustments. We also need to make sure we have priorities that guide those decisions. Those priorities for last year were ensuring we protected our staff and students. Another was maintaining continuity within our education. In June, when we reopened for the academic year, we made adjustments for the entire year.

What are the main differentiators that set LU apart from the competition?

As the first HBCU, we have a legacy of investing primarily in African American students, although we do have some racial diversity. We are a liberal arts institution, so we are small, and our goal is to offer our students the option to study any area that is of interest to them. For us, content is just a part of the education and we use this as a vehicle for honing the important skills required in the world of work. We focus on communication skills, problem solving, critical thinking and other skills that we build into our degree programs. The more I read about employer data, they are looking for those soft skills and do not tend to care what a potential employee’s major was.

What changes do you expect in the education sector from the Biden administration?

We’ve begun to see more interest in HBCUs and minority institutions over the last decade. I’m anticipating even more investment as this administration talks about social justice, including disparities. Much of the disparity we see along racial lines correlates to education, so it’s critical to make sure people of color have access to education. Many health disparities are based on the fact that people do not have access to knowledge on nutrition. We just received a $20 million gift from McKenzie Scott, which is a record, and we are seeing more and more of this recently.

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Chester County has a rich historical legacy, with a variety of offerings including the historic Hibernia Mansion.

( ) History Chester County was founded in 1682 by William Penn and played a vital role in many of the important battles of the revolutionary war, including the Battle of Brandywine, Battle of the Clouds and the Paoli Massacre. The first railroad was established through Chester County’s Great Valley, creating one of the first industrial corridors and commuter rail lines to urban jobs. The neighborhoods surrounding the Main Line remain among the most prestigious areas in the midAtlantic area thanks to this early development.

The county has strong connections to Quakers and is home to a number of historical Quaker buildings and meeting houses. Kennett Square was an integral cog in the Underground Railroad, with dozens of Underground Railroad stations within an eight-mile radius of the borough. The Kennett Underground Railroad Center (KURC) was formed in 1998 to protect this heritage and abolitionist culture. Chester County’s historical growth is also rooted in its long-held status as an agricultural powerhouse. Not only does the county have mushrooms, Christmas tree nurseries, forestry, viticulture, orchards and vegetables but it also has strengths in crops, dairy, swine, poultry and egg production. It is also one of the most densely populated equine areas in the country.

CHESTER CONSTRUCTION COUNTY OVERVIEW

Paul Redman President & CEO Longwood Gardens

What is Longwood’s role in the community?

Longwood’s role is as a community and cultural hub, a place for people to come, gather, be together, be inspired by nature and learn. We’re truly one of the finest horticultural display gardens in the world. The importance of Longwood and its indispensability was affirmed over this past year. When things were shut down, people couldn’t access places for families to gather. People couldn’t go to restaurants, museums, and so forth. Longwood has served as an outdoor space that is safe and beautiful. It has served as a community gathering place that is safe for families to connect.

Longwood serves as an anchor in the beautiful oasis that Chester County is.

Economy Chester County is home to 15,529 businesses that employ around 310,000 people, representing around 3.8% of Pennsylvania’s total jobs. Healthcare and social assistance provided around 15% of jobs in 2018, followed by retail at 11%, professional and technical services with 10% and finance and insurance at 8%. The majority of Chester County establishments are small and mediumsized enterprises (SMEs), with over 10,500 small businesses employing between two and nine people, while 16 businesses have 1,000 or more employees.

From 2000 to 2018, Chester County saw significant job growth of over 20%, outpacing the national average and the state average. As of 2019, investment management firm The Vanguard Group was the largest employer, followed by home shopping channel QVC, the County of Chester and Chester County Hospital.

Chester County’s GDP exceeded $45 million in 2019, which is more than double the $21 million recorded in 2001, according to St. Louis Federal Reserve data. As of 2018, the largest contributing industries to Chester County’s GDP were information, at 14%, professional, scientific and technical services, which provided 13%, real estate, contributing 12% and finance and insurance, with 10%. Manufacturing also provided 10% of GDP.

What is Longwood’s impact on the local economy?

Prior to the pandemic, we were on track in 2020 to have one of our most successful and highly attended years ever. We were on track to have 1.6 million visitors. We have a $67 million operating budget and we’re getting ready to embark upon a $250 million capital expansion.

Through our ongoing operations, our budget and with the indirect and ancillary impact that we’re having, we help to generate and support 2,600 jobs in the region, and we put $276 million back into the economy annually. That’s just our operations. The $250 million project alone is going to generate another 2,230 jobs, and it will put another $214 back into the community.

How is Longwood involved in education?

We were the first public garden in the world to deliver live, synchronous K-12 education programs. For eight years now, we’ve been doing the virtual learning that became so important when schools shut down. We were able to pivot and activate that entire platform on an entirely new level. That outreach is free. These programs are not only helping students achieve the science, technology, engineering, math and arts curriculum requirements they need, but are also serving as an introduction to careers working with plants. www.capitalanalyticsassociates.com

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CHESTER COUNTY OVERVIEW

Peter Urscheler Mayor – Borough of Phoenixville

Phoenixville as a community has weathered the pandemic storm. Although not fully out of it, we’re one of the few communities that has never had an interruption in meal service to our students, nor to our senior citizens. We started monitoring COVID in December 2019. Although we’re a borough and have a smaller governmental organization, we actually started monitoring this in conjunction with our hospital, superintendent and office of emergency management. In March, we implemented everything very quickly. We were blown away by the level of cooperation in our community from our nonprofit and business partners, and really just everyone in our community.

Despite the COVID-19 pandemic, Chester County government’s operating budget for 2021 dipped just slightly, with $513.2 million budgeted for expenditures in 2021 compared with almost $553 million in 2020.

The county has also seen an increase in its capital investment program to $91 million from $73 million in 2020, targeting open space preservation, community revitalization, development of parks and trails and investment in libraries.

COVID challenges The County is one of just six in the Commonwealth of Pennsylvania that has its own Health Department, which was crucial in its response to the pandemic and the public health support it brought to residents, businesses, education partners and all other community organizations. The Health Department also supported neighboring Delaware County in its response to COVID-19.

When COVID-19 hit Pennsylvania, the Chester County government was quick to implement its “Continuity of Operations” plan, ensuring essential services remained, while many county services continued remotely. The County-owned long-term care facility, youth center and prison enacted swift mitigation measures, taking guidance from the County’s health department officials. The County followed the state’s stay-at-home order and additional lock-down measures, and the Commissioners came together with the County’s economic development and business leaders to provide support to business owners and organizations that were immediately impacted by the lockdown.

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Chester County’s 2021 operating budget dipped just slightly from 2020, to $513 million from $553 million In April, the Chester County Commissioners announced the formation of a COVID-19 Business Task Force, whose aim was to support county businesses and the economy in the short, medium, and eventually long-term. One month later, the County launched “Restore Chester County,” a comprehensive online toolkit offering guidance to individuals and businesses throughout the COVID-19 reopening process. Several webinars were held on the platform, including employment and training opportunities, mortgage and rent relief updates and ways to navigate the reopening process. Phase one of the economic recovery plan focused on short-term strategies for 21 key industry sectors using feedback from industry leaders. Phase two encompassed a more long-term recovery and evaluating how businesses could rebound from the effects of the pandemic.

Throughout the rest of 2020, the County Commissioners made available a range of funding that

CHESTER CONSTRUCTION COUNTY OVERVIEW

benefited businesses, organizations and individuals across Chester County. As early as June, grants of up to $25,000 were awarded to 248 Chester County small businesses through the Main Street Preservation Grant Program, with a total of $5 million awarded. During the second funding round in February 2021, a further $10 million was awarded to 333 small businesses in grants ranging between $20,000 and $49,500. The Commissioners also provided $3.5 million in pandemic relief to nonprofits through the Restore Chester County Nonprofit Innovation & Resiliency Fund, and $15 million was provided to alleviate the burden of childcare during the pandemic. In September, $1.8 million was provided in CARES Act funding to prevent evictions and provide rental assistance, with payment made within 48 hours of documentation being submitted.

The $10 million Public School Grant Program, which went to all the public-school districts in Chester County, allowed the schools within the 12 districts to comply with COVID-19 public health measures. Ninety-eight businesses received zero-interest loans through the PA COVID-19 Working Capital Access Program (CWCA) with over $7 million allocated to small businesses in the county. Seedcopa also assisted six partner banks in processing 557 applications to the Paycheck Protection Program and Seedcopa also approved loan deferrals for all borrowers.

Throughout the pandemic, Chester County has continued to focus on community revitalization.

In September five Chester County urban centers received more than $2.3 million in grants from Chester County’s Community Revitalization Program (CRP) and a further $5.6 million was invested in October, primarily on three new affordable housing developments. Since 2002, the Chester County Commissioners have awarded more than $70 million in funding for urban center improvements and upgrades, which include Chester County’s 15 boroughs and the City of Coatesville. By leveraging these investments, including water and sewer system upgrades, stormwater management, roadway improvements and streetscaping, the urban centers are able to accommodate future growth and see a rise in home values.

The county is not only supporting the community monetarily but also through public policy measures.

In July, the county expanded virtual services for jobseekers and businesses. Given the disruption of the pandemic on the job market, the PA CareerLink Chester County Site opened for limited on-site services, including use of the Computer Resource ( )

Joel Frank Chairman & Managing Partner Lamb McErlane, PC Attorneys at Law

What lessons did you take away from 2020?

2020 was actually our best year ever despite all of the impediments and roadblocks. Understandably, there were certain departments that were down, such as personal injury and criminal. However, other departments, such as litigation and employment, were off the charts. We were fortunate to continue to grow and it was a very productive year overall. We were even able to successfully consummate a merger with a fiveattorney Newtown Square firm. We think that there will be an uptick in work in 2021 with the pent-up demand when clients and the business community get up and running at full speed again.

How do you continue to differentiate your firm in a crowded marketplace?

We clearly are a unique suburban practice with a diverse client base, ranging from mom and pop shops and startups to Fortune 100 companies. We’re the largest firm headquartered in Chester County, with 42 lawyers.

We can legitimately hold ourselves out as a full-service firm. The only primary practice areas that we do not delve into are intellectual property and immigration law. We’re also deeply integrated into the community, participating on numerous charitable, philanthropic, business and governmental boards across the county and in the region overall. Giving back to the community is an important part of being a lawyer, both financially and perhaps more importantly with one’s time.

What is your near-term outlook?

We remain highly optimistic and upbeat. Our pipeline is strong, especially in the litigation and M&A practices.

We try to be conservative in our projections because we’re still uncertain about what is going to ultimately happen with the virus and the vaccine. I’m happy to say that despite the mandated COVID-19 protocols, we were able to pay everyone their full salary on the normal schedule and even provide significant bonuses at the end of the year as well. www.capitalanalyticsassociates.com

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®

oundtable:

Goals and opportunities Chester County leaders provide their outlook for 2021, discussing their priorities and goals and where the opportunities lie.

Josh Maxwell Commissioner Chester County

What have been some recent initiatives to boost the Chester County community?

We’ve created an ethics policy and a diversity and inclusion board for our County government. We have over 2,000 employees, and we want to make sure we’re providing opportunities across all backgrounds. We’ve also been providing corporate relief grants. We’re up to $15 million in grants to businesses along with $15 million for childcare to ensure parents can get to work despite restricted daycare space. We’ve also been investing in affordable housing, creating six more affordable housing projects throughout the county. This includes $1.2 million for affordable housing in the center of the County.

What are your top priorities for the near term?

We’re always pushing to become a stronger, more efficient government and searching for ways to reinvent what we do. We’re also looking to further improve our already solid financial situation, specifically our budget process. We want to make sure we’re utilizing taxpayer dollars in the most efficient and effective ways possible.

One aspect of this is looking at the space we need for our county government in a transforming work environment. A lot of our buildings were built decades ago and many were designed thinking people would be spending 40 hours a week in the office. With the new work environment as a result of the pandemic, we need to reevaluate our space needs to ensure we’re most efficiently using taxpayer dollars. This is the year we’re going to open up the budget and start looking at every dollar, making sure it’s being invested wisely.

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Michelle Kichline Commissioner Chester County

What role will inter-institutional and business cooperation play in the post-pandemic landscape?

Chester County enjoys a long-standing tradition of collaboration, with a track record of public-private partnerships. We also have a robust nonprofit sector.

Moving forward, it will be more important than ever to establish cooperation mechanisms among the different stakeholders that push our economy and community forward. We are looking to partner with small local businesses, whose successes will attract other businesses to set up shop here. Our COVID-19 Business Task Force is called upon to play a major role in that effort. Parallel to our robust financial services and biopharma sectors, Chester County has been a launching pad for several information and technology companies, coupled with intellectual-property firms. In 2018, we officially launched a program called Venture Chesco, in which we partnered with Ben Franklin Technology Partners to fund venture startups and small businesses as long as they locate and grow in Chester County. In turn, this fosters the intellectual capital of young, small businesses, which are critical to us.

What are Chester County’s top priorities in 2021?

Our top priority, in collaboration with our health department, is to ensure the health and success of our residents. Protection from the virus is certainly critical, but so is the health of our businesses. We’re putting tremendous effort into “Restore Chester County” and our COVID-19 Business Task Force. We will continue to implement the same prudent fiscal management that we always have. We remain optimistic.

CHESTER COUNTY ROUNDTABLE

Susan Hamley

Executive Director Chester County Conference & Visitors Bureau

What have been the biggest takeaways for Chester County Conference & Visitors Bureau this past year?

I think one of the most significant takeaways is the old adage, “no man is an island.” I’ve always been an advocate for collaboration but this environment proved the absolute necessity of it. Our regional destination marketing organizations in Chester, Bucks, Delaware and Montgomery counties and Philadelphia, including the airport and the convention center, brainstormed recovery strategies together from the very start of the pandemic. As a side benefit, I think we also lifted each other up when we didn’t know exactly what we were facing. Together, we have greater impact and reach and a louder voice in the marketplace. Plus, we can be more efficient.

How are you working to help the tourism sector rebound from the pandemc?

We do know from research that leisure is going to drive tourism. We are 100% funded by a lodging room tax, so we’re pragmatic in how we spend those reduced dollars.

We’re conserving in 1Q21 to be prepared for a more robust recovery when visitors are listening more and ready to travel. In the last part of 2020, we were awarded a block grant from the Chester County Commissioners’ office. With that, we did a multipronged campaign.

One was hyper-local, supporting our restaurants and other small businesses. The second campaign was Magical Moments Await, centered on our biggest draw – Longwood Gardens – but inspiring future visitors with our full offering of Chester County gems they can experience here.

Brian O’Leary

Executive Director Chester County Planning Commission

What would you identify as the county’s primary challenges for 2021?

Fully recovering from the pandemic will be the county’s primary challenge in 2021, including getting people vaccinated. Urban centers will be a continuing focus for us, specifically assisting downtowns and distressed businesses. Many of our downtowns are vibrant restaurant destinations, such as West Chester, Phoenixville, Kennett Square and Malvern. In 2020, a number of those communities worked with PennDot to close streets and expand outdoor dining, which was critical during the pandemic. The county is continuing to provide grants to these small businesses. Having a strong workforce remains critical for the county’s overall economy. It will continue to be so as we have a great, highly educated workforce, but some businesses are having trouble getting the workers they need with the correct training. The county’s Workforce Investment Board helps with this training.

What are the Planning Commission’s 2021 priorities?

We will be taking more of an economic focus during this year. First, we will redo our analysis of the county economy and update it. We also want to identify redevelopment opportunities and provide guidance on how places can be redeveloped. On the housing front, which is critical for economic development, we want to have housing that is attractive and fits in, is affordably priced, in the right location, aging friendly, and adaptable. During the year, we’re going to be looking closely at missing middle housing to see how we can get more of those assets. www.capitalanalyticsassociates.com

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CHESTER COUNTY OVERVIEW

Gary Smith President & CEO – Chester County Economic Development Council

There is optimism in the market as people are starting to see an increasing proportion of the population getting vaccinated. We remain completely engaged in helping the most fragile parts of our economy, those businesses that have been very much negatively impacted by the pandemic. The base of the recovery efforts is built into the design of Restore Chester County and the 21 industry clusters, which include some exciting opportunities. The good news is that Chester County has some very strong economic indicators: it is the 10th-wealthiest county in the country; has the fastest-growing and highest median income in Pennsylvania, and we are a Triple A-rated county that has enjoyed good management over the years.

Though these factors have historically been economic pluses, we are also aware that there are pockets of need in any community that need to be addressed.

( ) Center and on-site educational assessments.

Chester County also launched the Simple Ask: Wear a Mask Campaign to support local businesses by providing signage, social media toolkits, branded masks and other PPE items. The County Commissioners launched a social media and marketing campaign as well as offering grants totaling $150,000 to eligible chambers of commerce, to allow them to support local businesses in the effort.

Infrastructure projects Over the last year or so, several major infrastructure projects, focused on road, rail and public transit have been completed in Chester County. At the end of 2019, SEPTA, Amtrak and state and local officials announced the completion of the Paoli Station Accessibility Improvements Project, a $48 million plan to improve operations. Station enhancements made by Amtrak included a new platform, new elevators and a pedestrian overpass. Shortly after, the county celebrated the completion by PennDOT of the final phase of the US202 improvement project, including rehabilitation of two bridges over Amtrak rail lines in West Whiteland and East Whiteland townships. And at the beginning of 2020, SEPTA inaugurated the newly modernized Exton Station on the Paoli/Thorndale Regional Line.

The funding was received from Transportation Bill 89 signed into law in 2013 by then-Gov. Tom Corbett and improvements included new high-level platforms, covered bicycle parking, extension of the parking lot, 116

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At the start of 2020, SEPTA innuagurated the modernized Exton Station installation of a stormwater management system and platform lighting and signage upgrades.

Significant improvements in Coatesville – Chester County’s only city – can be seen in the new train station initiative, with investment coming from Amtrak, a commitment to extend train service to the city by SEPTA, and $1 million in funding provided by the County Commissioners for a parking garage adjacent to the station. The US-422 between Chester and Montgomery counties is also undergoing several improvements, which include Schuylkill River crossings, rail crossings and improvements to facilitate multimodal transport.

PennDOT is also designing projects to reconstruct US-1, with construction bids expected to open in 2023 through 80% federal and 20% state funding. A series of improvements are in the design stage for the US-30 to upgrade the Coatesville-Downingtown bypass.

CHESTER COUNTY OVERVIEW

Chester County is extremely active in land preservation, and for this reason, it boasts 142,000 acres of permanently protected land — nearly 30% of the county’s land area. As entertainment facilities closed during the pandemic, and many viable activities that comply with social distancing focus around the outdoors, Chester County was, and remains, wellpositioned with its extensive network of parks, trails and green areas. The Chester Valley Trail is 14.7 miles in length with over 13.5 miles open for use within Chester County. The county is actively working on an extension that would see the trail run an extra seven miles to the west into Downingtown. Montgomery County is also constructing an extension of the trail to the east into Norristown to provide a connection to the Schuylkill River Trail. When the Schuylkill River trail is completed in Chester County, it will run parallel to the river for 10 miles from Phoenixville to Pottstown. Right now, 5.75 miles of trail are open in Chester County.

Key sectors Chester County has several key sectors that contribute to its economy. Namely, Life Sciences, Information Technology, Entrepreneurship & Management, Agri-

culture, Tourism & Entertainment, Banking & Finance, Manufacturing, Education and Healthcare.

The county is once again seeing growth in the Life Sciences sector, which includes biotechnology and pharmaceutical research, development, manufacturing and distribution firms, after employment declines in prior years. Chester County is home to 7,114 life sciences employees. The county’s location quotient of 3.16, coupled with the burgeoning Route 202 high tech corridor, means it is often at the top of the list for companies looking to locate lab space in the region. Some of the life science focused companies that currently call Chester County home include Life Sciences Pennsylvania, Teva Pharmaceutical Industries and West Pharmaceutical Services.

Named the Top Tech Hub in Pennsylvania, there are a high concentration of technology companies settled in Chester County. As a result, Information Technology has been a key economic driver. Total employment in the IT industry in Chester County is 13,629 as of 2018 and the location quotient is 1.77. This allows the county to compete nationally to attract technology companies.

Bentley Systems, QVC, and Infosys are a few of the technology-focused companies that have a significant

CHESTER COUNTY OVERVIEW

presence in the county. Software publishing is also experiencing massive growth, more than doubling its number of jobs to 2,303 from 2015 to 2018.

Entrepreneurial spirit is extremely high in Chester County and Management roles account for around 4% of jobs in the county, employing 9,134 people. The location quotient of 2.27 exceeds any other nearby Pennsylvania County as well as the Pennsylvania average of 1.3. The average annual wage provided by these professions is $178,554, well above the national and even the Chester County average.

With its rich history of farming and swathes of protected land, it is no surprise Agriculture is one of the top industries in the county. With temperate climates and rich, fertile soil, the county remains in second place of Pennsylvania’s 67 counties in terms of value of agricultural products sold. Over half of the mushrooms produced in the United States are grown in Chester County. Agriculture and food production is one of the biggest job creators, providing over 10,000 jobs in 2018.

While one of the major industries to suffer under the COVID-19 pandemic, as of 2018, Tourism & Entertainment was among the most buoyant economic sectors in Chester County. Philadelphia, as a convention and tourism and entertainment hub, leads the region in this sector with 77,000 jobs but Chester County has seen huge growth with 24,809 jobs as of 2018. Major attractions and historical sites include Longwood Gardens, the Brandywine Battlefield, the Paoli Battlefield, the Valley Forge National Historical Park and St. Peter’s Village. It is also host to the Devon Horse Show.

With many of the major Banking and Finance institutions having set up roots in Philadelphia as one of the country’s financial centers, the overspill has created over 23,000 jobs in Chester County. Some of

Chester County ranks second in Pennsylvania in value of agricultural products sold the prominent financial institutions with a presence in the county include Citadel Credit Union, TD Bank, PNC Bank, De Lage Landen Financial Services and US Investment Corp. The location quotient of 1.83 is high compared to the national average and it outpaces neighboring counties. Investment management firm Vanguard is Chester County’s largest employer, and is the home of the company’s world headquarters, in this segment with over 8,000 employees.

The original home of the nation’s iron industry, Chester County has retained much of its early Manufacturing expertise. Providing around 18,900 jobs pre-COVID, due to negative manufacturing trends countrywide pre-pandemic the sector has experienced some contraction.

Feeding into all this economic growth is Chester County’s top-ranked Education offering. The county is home to a range of prestigious educational institutions.

Its 12 public school districts contain 60 elementary schools, 19 middle schools and 17 high schools. Some

Doug Claffey Founder – Energage

For all of us, 2020 is a year we were happy to say goodbye to.

But 2021 is starting strong, and I see us back on a growth path. In terms of our focus, which is helping companies generate employee engagement, we’re going to continue to press on to achieve our purpose of making the world a better place to work together. Our silver lining is seeing the effects of what we do, whether it’s giving employees a voice, sharing data that helps leaders improve the employee experience, or recognizing people-first organizations through our annual and quarterly awards,

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CHESTER COUNTY OVERVIEW

Hubert Ho Chief Operating Officer – 8BioMed

As a venture company in biotech, we have to be agile and flexible. COVID triggered some uncertainties and difficulties, forcing us to slow down. But we took this opportunity to launch our 8HUB incubator to make use of our surplus resources and reserved space.

The decision was timely as we noticed that other venture companies were looking at adjusting their plans to become COVID-resilient, therefore creating demand, and we are in the position to meet their needs. Furthermore, this pandemic-triggered slowdown also presented us the opportunity to re-evaluate our plan as we switched gears. Thanks to our 8HUB incubator initiatives, we started to connect to a greater variety of companies in the area, allowing us the opportunity to identify valuable synergy potentials and collaboration partnerships despite the physical limitations. This demonstrates not only that a crisis could evolve into opportunities but also the dynamic environment and resourcefulness the region offers. of the public schools in the county are nationally recognized, award-winning schools, one of which is the Downtown STEM Academy. There are 95 private, early childhood education schools, 20 private high schools, 18 charter and online schools, three technical college high school campuses and six colleges and universities. Notable higher education institutions include Lincoln University, Cheyney University, West Chester University, Immaculata University and Penn State Great Valley. The sector employed 12,689 people pre-COVID. One of the most critical sectors in the last year, the healthcare industry is also the largest employer in Chester County with almost 29,000 employees, and there are many opportunities for the county to capitalize on its geographical proximity to the metropolitan area. National and industrial trends are also supporting growth in the sector.

Looking ahead Chester County’s economy is diversified among a number of key industries. As a result of the pandemic, the county’s economic growth was disrupted but it was largely insulated from large-scale damage by its strong economy and a local government that understands the importance of protecting local businesses.

Restore Chester County has provided a lifeline to the community in terms of grants, training and support during the pandemic. And the county’s VISTA 2025

economic development strategy includes both the public and private sectors in the long-term growth of Chester County so that it continues to be an attractive place to live for its residents.

Not only this, but emphasis is being placed on longterm economic strategies related to climate change and diversity and inclusion. In February 2021, the Chester County Planning Commission, in partnership with the Chester County Environmental and Energy Advisory Board, held a virtual public meeting on the county’s Climate Action Plan, and a draft plan has since been made available. The Chester County Commissioners and the Chester County Economic Development Council are also taking steps to focus on diversity, inclusion and equity within county government and the county’s business community.

While challenges remain, in particular as the pandemic continues, Chester County is a bright spot in the region, focusing on its economic diversity to ensure it remains a leading destination for individuals and companies.

Capital Analytics would like to thank Chester County for its contributions in compiling this chapter.

To learn more, visit its website at: www.chesco.org

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Banking & Finance: 2020 was an unprecedented year for banking, and Philadelphia’s financial institutions are set to emerge with stronger frameworks for a more proactive approach to business, while adapting the lessons learned from the pandemic. The disruption in the industry also drove home the benefits of fintech and technology adoption to weather any future storms.

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Branching out: Lenders and other financial firms have learned to adopt, adapt, pivot and change. The results speak volumes New York City long ago edged Philadelphia from its first-place standing as a U.S. financial center but Greater Philadelphia still has the edge over many other jurisdictions. The region has a large, educated population, favorable tax rates, prestigious educational institutions, a wide array of safe neighborhoods and proximity to other major financial hubs in the Northeast and Mid-Atlantic regions.

While the pandemic put up many challenges for the industry, including the daunting rollout of the Payment Protection Program (PPP) loans, it also sparked an unprecedented opportunity to adopt new technologies and forced a closer relationship between traditional institutions and the emerging fintech segment.

Landscape According to data from the Philadelphia Federal Reserve Bank, in the third quarter of 2020, small banks in the tri-state area of Pennsylvania, New Jersey and Delaware saw their assets increase almost 25% on the year, with a similar growth rate for loans.

Total deposits were up over 17% to $155.3 billion. In the Greater Philadelphia region, the 10 largest credit 122

| Invest: Philadelphia 2021 | BANKING & FINANCE

unions saw a 10% growth in total assets and a 15.6% increase in loans.

Although profitability fell among small tri-state banks, commercial and industrial lending growth of almost 140% drove performance. Crucially, the nonperforming loan ratio remained small and steady, while the U.S. economy is set to pick up by spring 2021, according to the chief economist at PNC Financial Services Group.

The attractiveness of Philadelphia as a banking hub can be seen by two of New York City’s biggest real estate firms doubling down on commitments to the city at the end of 2020. The Durst Organization will build a $2.2 billion, 3.5-million-square-foot mixeduse development at Penn’s Landing and Silverstein Properties acquired the $451.6 million BNY Mellon Bank Tower, as well as investing $56 million in the development of 3.0 University Place. “The Philadelphia advantage lies in being sandwiched between New York and D.C. It’s easy to get anywhere and it’s a large market,” Gene S. Godick CEO and founder of G-Squared Partners, LLC, told Invest:. “It does come with its caveats, such as its tax policy with a high wage tax, as well as an unusual business ( )

BANKING & FINANCE INTERVIEW

Positive outlook Investment in technology and across the board helps position lender for growth

Jeff Schweitzer President & CEO – Univest Financial Corporation What have been some major highlights for Univest, notwithstanding the pandemic?

We entered the year poised to start taking advantage of all the technology investments that we made. We were excited to start to leverage that as we continue to expand our footprint further west and north, gaining market share in the city and the surrounding suburbs.

While we are a commercial bank predominantly, we still have many consumer customers that we value. We invest in a great deal of technology on the consumer side and we are really starting to leverage that and become more efficient as an organization while improving our customer experience.

Which services have seen the most demand?

Eliminating the pandemic, we were seeing good opportunities across all lines of business. I would say that the commercial bank was probably growing the fastest. We’ve invested a lot in wealth management through a partnership with Black Diamond on their app. This helped to get digital capabilities to our wealth management customers. We’ve really been making investments all across the board in all lines of business. I would say that mortgage banking has also been doing extremely well, given lower interest rates and customers starting to want to leave the city and buy homes in the suburbs. This year, the fastest-growing has been mortgage banking but our commercial banking capabilities have been keeping up with the pandemic and the downturn of the economy.

What is your outlook for Univest and the commercial banking industry in the next 12-18 months?

I think our outlook at Univest is really positive. We’re in good markets in southeastern and central Pennsylvania with a diversified business model that should position us well for the future. With respect to commercial

banking, we have strong pipelines and a strong team to serve our customers and prospects. I think from a lending perspective everyone is trying to figure out the future economic recovery so credit is important. You want to make sure the companies that you are lending to are surviving but I’m pretty optimistic for the business development side of things. The whole industry has put up a lot of money toward loan losses. Everyone knows loan losses are going to be coming.

Overall, the banking industry is very well capitalized.

The government stimulus has masked a lot of the problems that are probably out there. Obviously hospitality is going to suffer in some respects. Overall, I’m optimistic of where we are headed with the big wild card being how long it’s going to take for a vaccine to be effective. www.capitalanalyticsassociates.com

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( ) tax structure that needs to be dealt with. Its school district struggles as well. The Philadelphia suburbs, however, are great places to raise a family.

We do not have extreme weather. It tends to be on the lower end of costs of living compared to New York and there are a lot of great colleges and universities in the area. Philadelphia needs to figure out how to retain that talent, which has been a discussion for the last 30 years. We probably could use more venture funds and other things that enable investing in early stage companies.”

With the advent of fintech and online banking, banking institutions also are looking at their branch strategies. An example is Univest Financial. The bank said in October that it would close 20% of its retail branches through the consolidation of 15 branches in Bucks and Montgomery County. At the same time, it announced plans to open 13 branches in strategic markets, including Philadelphia. The decision was based on deposit data, the bank said.

According to Philadelphia Business Journal research, the Top 5 banks in Philadelphia (June 30, 2020) according to deposits in the market were TD Bank ($186.78 billion), Capital One ($169.17 billion),

The rollout of PPP loans forced many traditional bank branches to explore closer relationships with emerging fintech companies.

BANKING CONSTRUCTION & FINANCE OVERVIEW

Rodger Levenson Chairman, President & CEO WSFS Bank

Wells Fargo Bank ($44.31 billion), PNC Bank ($34.18 billion) and Bank of America ($26.42 billion).

A number of banks are also headquartered in the city, including AmeriServ Financial, Bank of Pennsylvania, Fidelity Trust and Second Bank of the United States.

Philadelphia-based PNC Financial Services is set to acquire the U.S. assets of Spanish bank BBVA, which will make it the largest regional bank in terms of assets under management in the United States. PNC also stands as an example of the success banks had in 2020, as they participated in the Payment Protection Program loans, which saw regional and community banks benefit at the expense of the bigger players.

PNC reported a year-over-year increase in net profit in the fourth quarter of 2020 to $1.46 billion. Deposits increased sequentially by 3% to $359.4 billion with strong growth in both the commercial and consumer segments.

And there could be another banking body to add to the ranks soon. A study commissioned by the city of Philadelphia released its findings in October, recommending the creation of a public bank that would allow for direct loans from the city government to small businesses. A feasibility study was carried out

by HR&A Advisors to evaluate how the city could open banking mobility to those traditionally overlooked by the system. The study estimated a lending gap of at

What have the last 12 months been like for WSFS in the Philadelphia region?

In March of 2019, we closed the acquisition of Beneficial Bank, which was a huge milestone for us. It marked our significant entry into the Philadelphia border region.

This was followed by a well-done, award-winning marketing campaign that introduced the WSFS brand to the community in a thought-provoking way, sharing our nickname, which was really consistent with the way that Philadelphians view banks and where it is very hard to differentiate yourself. We married all that with Beneficial and what they brought to the community.

We waited until six months after the close to do the systems and branding conversion because we thought it was important to allow ourselves some time to get customers, associates and the community acclimated to our name and become familiar with us.

How involved is the bank in federal aid initiatives such as the PPP? When the dust settles from this program, we will have processed just about 5,000 loans and just a little bit under a billion dollars. At the end of the day, that’s almost a billion dollars that we put into the regional economy.

What role will the bank, and the sector in general, play in reactivating the economy?

I think the banking community is really doing everything possible to support our customers and get them through this really difficult stage to bridge them into what hopefully will be the opening up and recovery in the second half of the year. As things move forward and we open up our ability to continue to support those customers with additional lending requests, among others, we are going to do everything we can to support them and the community. We moved $3 million into the WSFS Foundation, which supports nonprofits in the region, and we did that because so many of those nonprofits are struggling right now. I think that is the beauty of the community banking model. www.capitalanalyticsassociates.com

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BANKING CONSTRUCTION & FINANCE OVERVIEW

least $840 million for small businesses that were either rejected for a loan or were discouraged from applying.

The potential city bank could use $255 million in municipal deposits to provide small-business loans at an interest rate of 1.42-1.46%.

COVID-19 As the eighth-largest U.S. metro economy, Philadelphia hosts five Fortune 1000 companies and generates a gross metropolitan product of $490 billion. More than 2,000 ultra-wealthy individuals live in Philadelphia and the impacts of COVID-19 have caused more and more people to evaluate how their assets are managed and handed down. The largest wealth manager in Philadelphia is Delaware Management Business Trust, with $2 trillion in assets under management (AUM), followed by Brandywine Global, which has $67 billion in AUM. Aberdeen, Logan Circle Partners and AJO

We probably could use more venture funds and other things that enable investing in early-stage companies.

Gene Godick, CEO & Founder G-Squared Partners, LLC

round out the Top 5 with a collective $123 billion in AUM. And there are more and more wealth managers arriving in Philadelphia amid the expanding demand.

UBS’ Wealth Management team recently hired two new advisers for its Philadelphia operations to manage around $1.7 billion in client assets.

COVID has not only changed the demand for wealth management but it has also ramped up appetite for M&A activity. As of Dec. 21, 2020, there were 106 bank merger or acquisition announcements, four of which were in Pennsylvania and New Jersey, compared with 15 in 2019. But as 2020 closed out and 2021 began, PNC Financial acknowledged a flurry of new consolidation activity, leading to speculation that there will be a “turbocharged” deal pipeline as the pandemic slows.

PNC identified community banks and those with $1 billion or less in assets as the most likely candidates willing to sell.

Jeane Vidoni President & CEO Penn Community Bank

What role does Penn Community Bank play in the Philadelphia and Bucks County community?

In the five years since the unification of two longstanding mutual banks to create Penn Community Bank, we’ve truly become a powerhouse in the financial services space – we are the largest independent mutual bank in eastern Pennsylvania and have over $2.5 billion in assets. As a mutual bank, we have no outside investors and we are not publicly traded, which gives us the opportunity for longer-term decisionmaking and to be an integral part of the communities we serve. Combine that with the ability we have to recruit talent and this has allowed us to grow and compete with the largest financial institutions in the area. As a community-first bank we believe in being a catalyst for growth in the markets we serve. Beyond meeting consumer and business banking, lending, and investment needs, we donate 5% of our net income to community organizations and nonprofits that benefit our customers and neighborhoods.

How do you see the Bucks County region emerging from the pandemic?

As the chair of the Philadelphia Federal Reserve’s Community Depository Institutions Advisory Council (CDIAC) I have access to some of the most up-todate details and economic projections in the nation.

We know that in our market, we deal with a lot of small businesses, non-chain restaurants and a robust tourism industry. It is very important for us to help guide those segments to the other side of this with a targeted response – both private and public. Some of that might be grants, lending products, community response efforts and leveraging the best ideas from a wide group of leaders. While I think in the long term there is cause for optimism, we’re looking at a seriously transformative moment for the economy in the short term. Regardless of our response, our No. 1 goal needs to be always keeping people at the center of what we are doing. www.capitalanalyticsassociates.com

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In 2020, PNC Financial announced it would go ahead with the closure of 160 branches over the course of the year, with at least one of those located in Philadelphia.

The bank justified its decision by clarifying that 77% of consumers used nonteller channels for the majority of their transactions in the final quarter of the year, while 66% of total deposits were made through ATM and mobile channels. Bancorp also announced the closure of two of its branches in the region.

Philadelphia banks worked diligently throughout the pandemic to help clients capitalize on PPP loans and refinancing opportunities.

The pandemic has also presented many new challenges and question marks over the future of bank branches. With banks being urged to curtail branch access to hold the spread of COVID-19 at bay, many are questioning whether they need to offer branch access at all. As the need to limit face to face interaction becomes more urgent, there has been a surge in online banking, telephone banking and even drive-through branches.

Diversity and inclusion Branch closures, while they make more business sense for banking chains, can have a knock-on effect on financial literacy rates and can often impact lowerincome populations more than middle- and upperincome demographics. The pandemic has exposed several challenges to universal financial literacy, according to Forbes magazine. A U.S. Financial Literacy and Education Commission study published in December showed that just a third of adults were able to answer at least four out of five questions on fundamental financial matters, such as mortgages, interest rates and inflation. Over 20% of Americans reported they did not know who they could turn to with a question about finance. In Pennsylvania, there is no requirement for high schools to offer courses in financial literacy and there is no standardized testing on the matter.

In Philadelphia, a 2019 investigation by the Philadelphia Business Journal found that only 5% of the city’s bank or credit union branches were located in lowincome minority neighborhoods. The underbanked population of Philadelphia at that time was the highest of any major U.S. city at 35% and the race gap exists, the study found. Only 3.9% of white residents were

BANKING CONSTRUCTION & FINANCE OVERVIEW

unbanked, compared with 19% of people of color.

Citizens Bank has the highest number of branches in low-income neighborhoods, followed by Wells Fargo and TD Bank. According to FDIC, the unbanked population has dropped to 5%, although around 25% of Americans are estimated to use alternative institutions rather than banks for loans and savings accounts. The HR&A Advisors study says that, even with low interest rates, a public bank could create money for the city due to its ability to attract and incentivize private investment.

Investopedia says that, much like all of the nation’s older institutions, banks have a role to play in a racist past. But now, Black-owned banks have emerged to provide greater financial access to those minority communities. A Minority Deposit Institution (MDI) is an institution that is 51% minority owned or one whose board has a majority of the minority population.

In Pennsylvania, there are three such institutions: OneUnited Bank, United Bank of Philadelphia and Hill District Federal Credit Union.

FDIC says the unbanked population has dropped to 5% but 25% of Americans use alternative institutions PPP Loans As COVID-19 threatened to decimate the U.S. economy, the federal government’s rollout of the PPP loan program through the Small Business Administration (SBA) was warmly welcomed by the small businesses it was intended to help. But for Philadelphia’s banking system, the rollout required rapid introspection to evaluate the technology, platforms and staff availability to handle the inevitable deluge of applications. On April 3, the $669 billion program was rolled out, with guidance provided to lenders from federal officials on the eve of the program going live. On April 5, Philadelphia’s largest bank by assets, Wells Fargo, announced it had exhausted its $10 billion lending capacity, and ( )

Susanne Svizeny Greater Philadelphia Regional President OceanFirst Bank, N.A.

Which service lines have seen the most demand in the Philadelphia area in the last year?

With the bustling Philadelphia real estate market over the past few years, we’ve been successful in growing our commercial real estate relationships, while also building relationships with commercial and industrial business owners. Philadelphia is a diverse community full of businesses that are ideal to partner with OceanFirst for their banking services. We’ve really experienced great success and momentum in new business since Philadelphia companies appreciate that our team at OceanFirst both understands the market and has strong connectivity to the business community.

We also worked throughout the pandemic to support businesses with the Paycheck Protection Program, providing access to this important resource quickly for both customers and potential customers.

What do you see for the banking sector in the Philadelphia region in the next few years?

Credit and risk management are very important to the banking sector and with the current crisis, we need to ensure we support our customers while also managing credit risk. OceanFirst Bank continues to lend as well as support our customers with PPP and debt relief.

OceanFirst Bank has prepared for short- and longerterm economic outcomes with a solid financial position.

To what extent is banking consolidation healthy for the banking sector?

Competition and choices are always beneficial for the customer. However, investment in technology will become essential for banks to compete effectively, and those organizations that are not doing this will have to consider other alternatives. OceanFirst has complimented our organic growth with the acquisition of other strong banks allowing us to continue to grow our organization, while also investing in our service and product offerings in line with customer’s evolving banking expectations. www.capitalanalyticsassociates.com

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Fintech is here Fintech isn’t the future; it’s the present and has helped Bryn Mawr sucessfully navigate many of the pandemic’s challenges

Frank Leto President & CEO – Bryn Mawr Bank Corp. think it was “the way it was” even before the pandemic crisis. The demise of the traditional retail network was obvious. We just went through six months of proving that you don’t need an open branch to continue to do business. Drive-throughs are more than sufficient for those who don’t understand the technology, with appointments for very technical services.

How do you see the interaction between banks and fintech companies developing?

It’s pretty much here; this is the future; we are living it, and fintech is a critical part of what we do. We are in the throes of the single-largest technology project this bank has ever undertaken. Quite honestly, we were lucky to start the process last year because it served us very well going into the SBA Paycheck Protection Program (PPP) process early on. Technology allowed us to be a real leader in that area.

Fintech is now part of our everyday life, part of our regular examinations by regulators, by our auditors, everybody understands that this is it. It certainly has changed the dynamics of banking. There are people in banking who still think that everything will go back to the way it was prior to the pandemic, but I don’t 130

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What is the main tech project that BMT is working on?

It’s a fintech project in the bank space called “nCino,” which was a commercial lending platform when they started. It allowed for a better customer experience, and it created a great deal of efficiency on the banking side.

We looked at it five years ago, when it first came out, and it was so new. I don’t think the bank had embraced the use of technology the way it does today and there was a bit of reluctance to believe that anything could be better than a spreadsheet and a calculator. We went to a more traditional solution at that time.

Now, nCino has large banks on it. I believe Bank of America and Citibank are using some nCino technology. We decided when we were looking at it to create efficiencies to move to a more remote and much more efficient environment that it was the appropriate platform. We also decided to be the pilot bank for nCino to launch online and mobile deposit account openings, so you don’t need to come into the bank to sign a card, show ID, and those typically in-person requirements.

That’s what really allowed us to excel during the PPP program in two ways: first, because we were one of a few local banks that accepted PPP loans from nonBMT clients, and every one of these loans required a deposit account to be able to deposit the money, and second, we built a PPP loan application in nCino that allowed the origination of over 1,800 loans in a small window, and we did that with nCino.

BANKING & FINANCE OVERVIEW

( ) the first $349 billion was exhausted within 13 days as business owners scrambled to secure aid.

The second $320 billion round began on April 27. TD Bank became the largest PPP lender in Philadelphia with 12,789 PPP loans. Focus was then switched to the forgiveness side of the program.

“Working with the SBA, we were able to get a lot of loans out the door in a very short period. As an example, we usually process about 30 loans a month but we did 300 in about six weeks,” said Charles Crawford Chairman & CEO of Hyperion Bank, in an interview with Invest:. “What we are finding now is that it was a little easier to give out the money than it is to go through the process of forgiveness. We’ll work through it with our customers. We are having that dialogue with many of our small-business clients.”

After a further federal stimulus agreement was made in Congress in December, banks were in a much better position to deal with the PPP process. But two Philadelphia-based banks — Bryn Mawr Trust Co. and Sharon Bank — told the Philadelphia Business Journal that they would not participate in the program, while others were unsure whether they would take part until further clarification had been released. The new round of loans would be much more targeted to smaller businesses, with eligibility restricted to those with 300 employees or less and payouts restricted to $2 million.

One of the biggest concerns is that, like the first PPP round, many regional banks may choose to cater to only their own customers, and even Wells Fargo has placed this restriction on its applicants. The SBA has said that applications from community financial institutions will be exclusively accepted for at least

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Due to the rapid digital transformation stemming from the challenges of the pandemic, there are many questions surrounding the future of brick and mortar banking branches.

BANKING CONSTRUCTION & FINANCE OVERVIEW

Rory Ritrievi President & CEO Mid Penn Bank

What will be the function of physical bank space going forward?

Mid Penn Bank is reimagining all of its delivery channels, including its physical space, to better serve all of our customer’s rapidly evolving needs. We believe that many of our customers still want to visit and interact with experienced bankers for their account opening and transactional needs. We also want to be present, visible and with convenient access in the communities in which we operate. That likely will mean a “hub and spoke” concept of establishing a main physical hub within each community that is in a very convenient location and where any and every customer can come and do whatever they need to do and with the assistance of specialists. Surrounding that hub in various parts of the same market would be limited service facilities that would allow access to transactional service and of course, to cash. In each of those facilities, we will deliver the very best of technology to make each visit purposeful and efficient for the customers.

the first two days, with a goal of targeting businesses owned by people of color, veterans, women and those in underserved geographies.

Data from the first round of stimulus showed that 11 of Philadelphia’s smaller higher education institutions received $23.7 million in funding, which was crucial to avoid layoffs and furloughs. All in, about 50% of Philadelphia’s small businesses were awarded funds, with $1.5 billion going to 16,000 businesses. But many argue that there were fundamental flaws in the system. Controversy surrounded the fact that around $110 million in aid went to the legal industry, which is capable of working remotely. A report also showed that the aid was not targeted enough to the industries that were really suffering, such as restaurants and hospitality. Black and Latino business owners also reported that just 10% had received the amounts ( )

How did demand for the bank’s services shift over the past year?

We had an incredible level of demand for our services in 2020. As the pandemic raged on, we were able to deliver $1.2 billion of new commercial, consumer and residential loans, not including the $630 million of Paycheck Protection Loans we originated. To do that, we made a total of 6,000 new loans in 2020. That is an average of 16 new loans a day for every day of the year!

Our deposit production was equally as impressive. Even with our retail lobbies being closed for the majority of the year, we opened more accounts than ever before and grew our deposit base by almost 30%. Lastly, we had a great year in trust and wealth management growth with relationship development on the bank side and in our newly formed MPB Financial, which is a nonbank subsidiary that focuses on specialized trusts, wealth management and insurance for high-net-worth and ultra-high-net-worth individuals. www.capitalanalyticsassociates.com

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oundtable:

Fintech and digital impact There is little doubt that technology played a significant role in helping people through the pandemic. Banking and financial leaders discuss the impact from fintech and digital trends.

Michael Carbone Regional President, Metro PA/NJ TD Bank

How are customers adapting to the digital developments in banking?

We’ve learned that customers are adaptable. An increasing number of customers have been using digital banking, either through their mobile phone, computer or any other smart device. However, there is still a base of customers who want more of a person-to-person experience. In the beginning of the pandemic, our drive-throughs were extremely crowded since people were stopping by just to cash a check or make a deposit.

Customers have since adjusted to using more digital means. We’ve also focused on offering customized solutions and services to our customers as their needs change.

How did the TD Ready Commitment positively impact local communities in 2020?

The intent of the TD Ready Commitment is to make a positive impact in the communities we serve. Of course, there are a number of areas in which we could help across the country. For us, it is about making a meaningful commitment in financial security, having a vibrant planet, connected communities and better health. We want people to be positively impacted not only toda, but to also provide the infrastructure for relevant organizations to experience long-term growth, especially in the development of children and financial literacy. We have a tremendous crisis in this country around financial literacy and it’s important to continue to make people comfortable about how to manage their money. We are hopeful that the TD Ready Commitment will have a positive, durable impact.

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Angela Moultrie

Executive Vice President & Region President, Penn/ Central NJ Santander Bank

What are some of Santander’s programs to promote financial literacy?

The issue of financial literacy can really span a number of different areas. We try to meet the customer — or whomever we are offering the service to – where they are. It can be as little as the basics of banking – how do I balance my checkbook and save for my future? – or it can be as much as how one utilizes or takes advantage of credit. We also seek to educate and provide financial advice on home ownership, retirement, long-term savings, and short-term savings. It’s essential to meet the client where they are. We’re also looking for opportunities to help small businesses.

What trends have you observed during the past year?

Foremost is digital transformation and providing accessibility. During the pandemic, people have not been out and about in a normal way, so offering digital and online banking services has been important and where we have seen our largest area of growth. People needed the service, and we were ready and equipped to help. I think we have done a fine job serving our customers’ needs. We’re also seeing that consumers and businesses have needed help with receiving sound financial advice and establishing long-term and emergency, savings plans. These have been important areas of focus for our customers. As part of our commitment to offering competitive products and services, we are launching Santander Private Client. The program aims to provide our clients exceptional treatment and personalized service that supports their everyday needs, long-term goals and lifetime aspirations.

BANKING & FINANCE ROUNDTABLE

Bryan McCullough Philadelphia Market Director Banking Chase

Do you see the relationship between fintech and banks deepening with the pandemic?

We’re always striving to provide clients with convenience because we want clients to bank the way they want to bank. That is key. A lot of our enhanced ATMs really can take care of about 70% or so of the transactions that people come inside a branch for. That’s there. But there is also a percentage of clients who love to put their eyes on people. They like that feel, that experience. That’s what we’re trying to do; a merging, not a separation, of technology on one side and a personal touch on the other.

During this pandemic, there are understandably some clients who want to take care of their banking from home. The breadth of what we are offering right now on our chase.com platform and our Chase app is expansive, from direct deposits, depositing checks, to setting up bill payments and doing transfers. Literally, you can bank from your phone. Of course that’s helpful and convenient anytime, but even more so now.

What banking trends are you keeping an eye on?

For us, it’s not so much about trends but more continuing to focus on financial literacy. What can we do to empower our customers when you realize that most Americans don’t have $400 saved up for a rainy day? What can we do to change that? We can talk to them about automatic savings and other little tricks of the trade. Our Credit Journey platform is amazing for helping to educate clients on credit, on what they can do. So, it’s really more about what we can do to take care of our clients over the long term versus current trends.

Tom Harper

Executive Vice President & Head of Technology Banking Wells Fargo Commercial Banking

How have your technology clients performed throughout the pandemic?

Our business is focused primarily on software and fintech. We also cover hardware, internet/e-commerce and clean tech. On the whole, the entire tech ecosystem performed very well. Our two main industries, software and fintech, have done very well as of late. Although the ecosystem took a pause early in the second quarter as our venture capital counterparts and our customers tried to figure out how they were going to work their way through COVID-19, it has rebounded very quickly. Our clients in the travel and leisure industry were negatively impacted during the pandemic, but a lot of sectors experienced phenomenal growth. Because we provide support to their operations via our systems and offerings, we experienced the same lift. The VCs were there to support their portfolio companies and the portfolio companies hunkered down early, to preserve cash flow.

What characteristics should tech companies look for in a bank?

Tech companies should find a bank that can be a resource and grow with them. It’s important to work with someone who understands their business and challenges, especially in a pandemic environment where their challenges are changing almost daily. This space is changing every day, and there are a lot of disruptors out there. You want bankers who are on top of that and can provide a consultative relationship. The other piece that is important is that you want to be banking with an entity that’s scalable. Yes, many banks have good products but as you grow, you want a bank that can grow with you. www.capitalanalyticsassociates.com

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BANKING & FINANCE OVERVIEW

( ) they had requested. There was also controversy over the fact that bank directors and shareholders holding up to 30% stakes in the bank could apply for PPP funding at that very same bank.

Data from July showed that the most dominant banks in the Philadelphia region – including Wells Fargo and Bank of America – did not allocate the proportionate amount of PPP loans to their market share. TD Bank allocated the most loans by far at 14.4% of the total, while Citizens Bank was second with 8.9% and PNC third with 7.2%. Twenty lenders approved at least 1,000 loans, 16 of which were local banks.

As of Jan. 13, the SBA had forgiven 1.1 million PPP loans amounting to $100 billion. About 80% of loans under $50,000 that sought forgiveness had received it and the December stimulus came with a drastic simplification of the forgiveness process. Now, banks are calling for more targeted PPP allocations as the third round rolls out. After the Philadelphia Department of Public Health ordered indoor dining, gyms, museums, libraries, youth centers, community centers and school sports to shut down and announced limits on gatherings, bankers called for “common sense stimulus reforms” that help those industries most affected by restrictions.

Regulations The Federal Reserve Bank of Philadelphia is responsible for financial institution supervision across the Third Federal Reserve District. Fintech globally made great strides in 2020 due to the COVID-19 tailwinds forcing remote banking access, but with this progress also came regulations that struggled to keep up.

Fintech and its regulation have been at the center

Until the 1850s, Philadelphia was long considered the financial capital of the nation.

BANKING CONSTRUCTION & FINANCE OVERVIEW

Chris Martin Chairman & CEO Provident Bank

How did Provident Bank finish 2020?

It was an interesting year, one of the most difficult for the banking industry in recent times. With so many heartstrings being pulled at the same time, including the pandemic and its political backdrop, social unrest, to name a few, it was a challenging environment. When we started 2020, we had all the aspirations for great things to come. In early March, at the beginning of the COVID-19 spread, we announced a merger and a week earlier we had launched our new online and mobile banking solutions to provide enhanced digital banking capabilities. Despite the challenges, we were able to complete the merger and finalize our system integration on schedule in November.

of the discussion among Philadelphia Federal Bank regulators for many years. According to the Conference of State Bank Supervisors (CSBS), “regulation should enable market competition and innovation but operate consistent with strong consumer protections.” While traditional models for products such as mortgages or money transfers can be applied to fintech, there are some gaps that still need to be addressed. The sheer number of nonbanks alone created the need for regulatory efficiency, the CSBS says. And while digitalization can improve access to credit and can provide more transparent credit decisions, there is also the risk that digitalization could create more marginalization among the haves and the have nots within the banking sector.

And often when the regulation lags, the competition suffers. In the United States, payment processing

What is your take on the Payment Protection Program (PPP) loans rollout?

Our company has been around since 1839 and from the beginning, we’ve been conservative in the way we approach things. To help meet the overwhelming response, we collaborated with our marketing team on an in-house solution, where we developed an online portal for our clients to apply. The day after the launch, we had over $450 million in applications. We’re looking at the next batch of PPP loans coming in as the SBA is not equipped to process this kind of volume in forgiveness proceedings.

How did COVID-19 modify your technology and fintech strategy?

Technology is definitely an integral part of this business.

Forty-four percent of our bank’s expense this year will be on technology. Going forward, it boils down to refining our digital strategy and understanding the right balance between our digital channels and our branch environment. We are partnering with fintech solutions to add to our client service offerings. Banks our size traditionally rely on legacy, off-the-shelf systems. We are planning to get unbolted from them. That is where we anticipate fintech solutions will help. www.capitalanalyticsassociates.com

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12 Philadelphia fintech players made Technical.ly’s list of companies worth keeping an eye on startups have been forced to circumvent regulation by partnering with federally insured traditional banks, which then demand fees for the services. Fintech companies are now seeking a national banking charter that would allow them to accept federal insured consumer deposits without the involvement of banks.

Hard lobbying by banks and fears over industry heavyweights Amazon and Facebook monopolizing online payments have been blamed for the country’s slow adoption of this crucial fintech regulation.

Competitive advantage But despite regulatory hurdles, fintech is moving faster and faster to revolutionize the world of banking and payments. The use of big data and AI also allows traditional banks to move faster and lower their costs of credit assessment and monitoring, potentially generating savings that are then passed on to

Founded in 1790, Philadelphia is home to the oldest stock exchange in the United States.

BANKING & FINANCE OVERVIEW

customers. Costs are also reduced by paper-free billing and statements and the lower need for hardware and infrastructure beyond a customer’s smartphone.

Hyperion’s Crawford said the two sides, traditional banks and fintech, are increasingly integrated. “The pandemic is only accelerating it further, and the SBA program is a good example. Because they are not banks on their own, some fintechs, like Kabbage, worked with banks to be able to process a greater volume in a faster way. For us, it has really enhanced our model.”

In Philadelphia, 12 fintech players made Technical. ly’s list of companies worth keeping an eye on. Radnorbased eMoney Advisor provides data analytics for wealth management, while CardConnect is a payment processing company that recently listed on the Nasdaq. Moven is a spending tracker and BizEquity offers businesses online valuations. Other companies to watch are Chaikin Analytics, Perpay, AlphaPoint, WorthFM, WealthHub, Safeguard Scientifics, Ben Franklin Technology Partners and Wharton FinTech.

PowerPay, an app that enables contractors to offer financing plans to customers, also found its business boosted by the COVID-19 pandemic as home improvements hit the roof. And everyone is embracing the new world: a recent survey by DealCloud Dealmaker Pulse showed that just 2% of respondents said they felt technology was hindering their firm during COVID. Mortgages One major economic indicator and an important barometer for the banking and financial sector is the state of the housing industry and, more specifically, mortgages. At the beginning of the pandemic and over the summer, legislators enacted a freeze on ( )

Steve Meyer Executive Vice President & Head of Global Wealth Management Services – SEI With SEI celebrating over 50 years in business, we’ve been through business cycles, market euphoria and financial meltdowns, but 2020 was unparalleled. The way we responded to the pandemic is definitely our No. 1 success story. The fact that we were able to go fully remote on March 17 in terms of our global workforce and didn’t miss a beat is a testament to our commitment to our business and the dedication of our workforce. We’ve always been a vibrant and agile company with a strong culture. What the past year proved to me — more than anything else — is that we have a resilient, adaptable, persistent and deeply committed workforce.

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Market voices: Priorities and goals

Chris Bickel

Senior Vice President & Main Line Market Leader Centric Bank

Building on our 2020 growth, Centric Bank is well-positioned in the Philadelphia market to continue strengthening our small business customers and provide capital to a new wave of entrepreneurs. We responded to every PPP loan customer with personal, focused attention. That’s our We Revolve Around You promise, and it continues into 2021 and beyond. Our plans include expanding our footprint further into New Jersey, another ideal marketplace with a robust small business presence.

Philadelphia and other major metro areas are facing the fallout from the pandemic, which was most acute in urban centers. We need to try and get the population re-engaged. Citizens is very active in helping minority businesses grow and thrive. We provide capital, resources and volunteers to help grow those businesses to help generate jobs so we can support a diverse economy that spurs growth. As a bank, our job is to connect people and ensure the economic environment is beneficial for everyone and civic engagement is a huge part of this.

Jordan Space

President, Eastern PA Region S&T Bank

President, Mid-Atlantic Region & Head National Industry Verticals, Citizens

We would like to return from crisis management to a growth situation.

We had payment deferral programs and Payment Protection Program (PPP) loans in 2020, which took attention from our core business. In the short term, we want to continue to give our clients the attention and services they need and get ahead of the next round of PPP loans. One of the things the industry is keeping an eye on is margin compression so revenue channels can be increased and expanded.

Tompkins had record earnings in 2019 and our return on equity continues to be in the top quartile of community banks in the country. We plan to sustain this level of performance and expand our services by taking a holistic approach in 2021. We recognize the need to continue to diversify our cross-sale efforts through our banking, insurance and wealth management businesses. Our credit quality was solid prior to the pandemic and we feel we can continue to support our customers while also being mindful of taking appropriate credit risks. As always, we are committed to staying engaged with our customers, and we truly believe we’re all in this together. As we come out the other side of this pandemic, Tompkins VIST Bank’s success will be built upon our abilities to assist in our customers’ success.

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Jim Whitton

Senior Vice President/ Regional Market Leader Greater Philadelphia Area Tompkins VIST Bank

BANKING CONSTRUCTION & FINANCE OVERVIEW

Bernie Shields Regional President, Philadelphia & South Jersey M&T Bank

The first building and loan association was founded in Philadelphia.

( ) foreclosures and evictions, which stopped those whose incomes were affected by the pandemic from becoming homeless. But there was criticism that the measure kicked the can down the road as delinquencies and arrears gathered in the background. In June, the US CMBS delinquency rate registered its largest month-over-month increase in at least 16 years. Loan delinquencies were up to 3.59% in June from 1.46% a month earlier, with new delinquencies of $10.8 billion.

Fitch Ratings at the time expected delinquency rates to increase, peaking at between 8.25% and 8.75% by the end of September. In Philadelphia, up to $2.7 billion in commercial mortgages were being monitored for potential default as of June, up 74% from March.

But on the other side of the coin, new home sales were booming in Philadelphia. New Yorkers began leaving the city in droves, mainly to the mid-Atlantic region but those who still sought the big city lifestyle also moved to Philadelphia. According to RENTCafe, new arrivals in the city during 2020 had a median age of 28.

Although new inventory coming online outpaced inmigration, both rental and sales activity held up well, although rents fell by around 0.6%. One explanation is that the region recovered around 56% of the jobs lost in March, and another is that 31% of people expect to return to the office at least part-time when the pandemic is over. And while rents decreased slightly, the median sale price of homes in Philadelphia was as high as $249,900 in June and median days on the market was down 15.9% on the year to 37.

What challenges has the current situation brought to the real estate banking sector?

M&T is heavily concentrated in commercial real estate.

Relative to our peers, we have a greater proportion of our loan book focused in commercial real estate, largely concentrated within our footprint, which is the mid-Atlantic region to the Northeast – from Virginia up the coast to New York City and Boston.

We have every kind of asset in the class, including hotels and retail where there is significant stress.

Other segments, like industrial and residential, are super strong. For-sale real estate is off the charts and multifamily rentals continue to be good. In all of these asset classes, the majority of our clients can survive challenging economic circumstances. In our view, the situation will probably create some opportunities for our clients as time moves forward. We expect to be there to support them.

What steps has the bank taken to bolster its strategy through technology and fintech?

We have a great focus on it, and part of that is our branch footprint. Every year, we look at our delivery and execution to see if we have the right properties or outlets for what our clients want and need. The reinvestment at this point is aimed more at electronic delivery and execution, although we remain committed to our branch network and to being user friendly for our communities.

We believe integrating fintech in what we are doing is a way to do that. There’s something like 4,500 banks left in the country, and that number is likely to continue to shrink. There are around 7,000 fintech companies. But just being in fintech does not guarantee survival. M&T Bank has an advantage in its history of delivering quality products and serving our communities in a regulated industry. While there will be fewer banks in the future, those that are well-run and layer in the appropriate levels of financial technology are the ones that are going to survive and thrive. www.capitalanalyticsassociates.com

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Bob Falese Senior Managing Director – Berkadia

Rent collection for every landlord has been at the top of the list, regardless of the asset class. The fiscal stimulus has helped quite a bit, certainly on the apartment side. Today, rent collection has held up to more than 85% of projected rent, which is amazing. There is a high degree of uncertainty as to what next year will look like when the federal stimulus abates and if the pandemic persists. Restrictions at this point next year are a concern. However, there is so much capital in the marketplace looking to absorb yield, which means people are constantly looking for new opportunities. Transactions are absolutely getting done, albeit looking at a slight discount.

Freedom Mortgage, which generated $8 billion in originations in May, $11 billion in June and around $12.5 billion in July, said it will hire 1,000 new full-time employees in Philadelphia alone to deal with growing demand. Across all of 2019, the company’s originations were just $50 billion. Record low interest rates in 2020 had buyers flocking to take advantage of repricings, with 70-80% of volumes for the company coming from refinancing.

Insurance The insurance market is also growing, adapting and being disrupted alongside banking. Property and casualty insurance was given a complete overhaul as claim trends changed dramatically. Globally, property and casualty insurance represent $1.6 trillion in premiums, which is around one-third of the total insurance industry. Based on risk management, the insurance sector was irrevocably changed by a pandemic nobody saw coming. Now, pandemicrelated disruptions are written into insurance policies and businesses have had to tread murky waters over whether or not they can make claims over lockdownrelated losses.

Still, growth and consolidation continue across Philadelphia’s insurance sector. Insurance brokerage and risk management firm Risk Strategies acquired Securitas Insurance Partners in September to add expertise in acquisition risk and insurance. And in January, Philadelphia Insurance Companies acquired World Wide Specialty Programs (WWSP), a $100 million staffing insurance business. Philadelphia’s insurance firms, like many others around the world, are increasingly seeing the need to diversify into 142

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Globally, property and casualty insurance represent 1.6 trillion in premiums areas outside their traditional expertise so they can be prepared for the next unprecedented global event.

Looking ahead As Philadelphia’s banking industry emerges from the COVID-19 pandemic, there is no doubt that change is here. PPP loans and forgiveness claims will continue to dominate the sector for at least 2021 and there can be no going back from the disruption caused by fintech.

The focus for banking institutions should be to keep up with the latest technologies and ensure they can provide their customers the security that goes alongside a digital footprint. The sector is also set to evaluate its physical footprint as more financial operations can be carried out digitally and so consolidation is likely to remain a talking point. With a new administration also comes the risk of new regulation and rule changes.

2020 was unprecedented for banking but Philadelphia’s institutions are sure to emerge with stronger frameworks, taking a proactive approach to adapt to the lessons learned in the last year.

Healthcare & Life Sciences: The healthcare industry has a long history in Philadelphia but it has never been as prominent as now. Life sciences are on the rise, with educational institutions and medical research positioning the region as an integral hub. The pandemic, however, has strained the sector, highlighting deficiencies and pointing to the need for changes.

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Battle-tested: The pandemic turned the healthcare system upside down. It could emerge stronger as a result Ever since Philadelphia became home to Pennsylvania Hospital, the first hospital in the British North Colonies, the healthcare industry in Greater Philadelphia has been a major contributor to the region’s identity and growth. In recent years, a fast-establishing life sciences and “eds and meds” hub is buttressing that identity and instilling renewed vigor in the region.

With several healthcare giants headquartered here, healthcare is by far the single, largest employer in the city. GlaxoSmithKline, AstraZeneca, Wyeth, Merck, GE Healthcare, Johnson & Johnson and Siemens Medical Solutions are just some of the large pharmaceutical companies with operations in the region, and the metropolitan area is also home to the first school of pharmacy in the country.

Pre-COVID landscape Philadelphia is the sixth-largest city in the United States with an estimated population of almost 1.6 million in 2019. The 20-34 demographic is the city’s largest and continues to grow. Just over 40% of the population in the city is Black, 34% is white, around 15% is Hispanic and 7.5% is Asian. In 2019, prior to the COVID-19 pandemic, an estimated 14,187 Philadelphia 146

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residents died, with the leading causes of mortality being heart disease, cancer and drug overdoses. Black residents had a higher age-adjusted mortality than the Philadelphia average, at 968 per 100,000 of the population compared with the citywide average of 818.2. Asian females have the highest life expectancy at 88.2, while Black males have the lowest at 68.7.

From 2010 to 2019, rates of hypertension and diabetes in adults remained relatively stable, while adult obesity rates dropped slightly in Pennsylvania.

The Black population had higher cases of hypertension and diabetes than any other ethnic group, while the Black and Hispanic populations combined had the highest obesity rate. And chronic conditions in Philadelphia were relatively well treated. Between 2020 and 2019 asthma hospitalization among children under 18 dropped dramatically from 94.6 per 10,000 to just 41.1. Prevalence of obesity in children also slightly declined in the last decade. Both cancer incidence and cancer mortality have been steadily dropping since 2010.

The availability of primary healthcare providers in Philadelphia has improved in recent years although a government report identifies several ( )

HEALTHCARE & LIFE SCIENCES INTERVIEW

Propeling care Innovation, strategic partnerships and keeping a finger on the pulse of community needs will propel the healthcare system

Gregory Deavens President & CEO – Independence Health Group In what areas did the pandemic shine a light and how has independence Health responded?

The pandemic brought to light the issue of health inequities and broader inequities. We have begun to mine our data to validate and identify inequities that we see in the delivery of healthcare. We’ve had a focus on that as we moved through 2020 and now into 2021. We’re working with a number of organizations to address some of those. Late last year, we launched a partnership with The Philadelphia Tribune called Our Community. Our Health. that is laser-focused on the high levels of diabetes, obesity and heart disease in the African-American community. This whole effort is intended to provide information and education around those particular disease states but also to provide access to nutritional resources that will help people change their diets. For our senior population, we recently partnered with an organization called Signify Health that is looking to break down some of the traditional barriers to accessing clinical and social care and improving health outcomes for seniors.

What innovation strategies has Independence deployed to optimize the member’s experience?

One of the concerns that we know our members and customers had at the outset of the pandemic was obtaining access to testing and treatment resources, as well as the associated cost burden. One of the first things we did was make sure that our members would not face out-of-pocket costs for testing or treatment. We also recognized, based on Centers for Disease Control (CDC) recommendations relative to limiting the spread, that there would be a need for individuals to access their providers through telemedicine. We waived the normal cost-sharing associated with telemedicine services, either through your primary care physician or through a vendor that we use for remote access.

What is your outlook for healthcare moving forward?

I think you’re going to continue to see significant innovation in terms of how healthcare is delivered, not only in this community but nationally. Going forward, we believe there will be a national trend in care migrating from inpatient settings to outpatient community settings, ultimately into the home. I also think you’re going to start to see more advancements in terms of remote monitoring capabilities. We’re excited about the innovation that we think is going to continue.

We are extremely fortunate to be in an area with such tremendous and prominent health systems but also individual practitioners who I think are on the leading edge of some of the innovation that’s taking place in healthcare today. www.capitalanalyticsassociates.com

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Carol Irvine CEO Abramson Senior Care

How are you meeting the growing and changing demands for senior care?

There are two functions to that. Before, I used to look at an individual and think about how they fit into one of our systems. Now, it’s a mixture of funding streams and preferences. Their preference and their needs define what’s right for them. We ask, can we match their preference and fulfillment of their needs by a funding stream? Then I look at how they fit into an individual service, whether it’s one of Abramson Senior Care services or another out in the community. Instead of being so committed to filling a slot in a silo, we really look at it differently.

What policy adjustments or other changes are you keeping a close eye on?

No. 1, the state is going to face challenges after the pandemic and there isn’t enough money. Is there going to be even more of a push for a reimbursement change of moving people from a nursing home environment to home and community-based services? Will there be a push from the managed care companies regarding how to support those individuals more and more creatively with innovation? The future of senior care is integration. Most certainly in our case, it is managed by a care management function that matches technology and service provision and recognizes the entire individual. It’s playing a role to wrap services in a care plan that really supports them. If you do that effectively, you will yield a reduction in hospitalizations and a delay in any kind of institutionalizations. We’ve seen it in our experience and we have the data to prove it. It’s really what role managed Medicaid will play in the community and how it will be appropriately funded. All of our government and private pay is really going to be influenced by this. We’re going to see a challenge and a pressure on Medicare: will we see reductions in Medicare or even flat funding? Any time there’s economic pressure, there’s also a real opportunity to innovate.

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Philadelphia was the home of the first established hospital in the United States.

( ) areas in the northeast, southwest and parts of South Philadelphia that have lower access to primary care. One in five adults reported no access to a primary care physician. Hospitalization for ambulatory caresensitive conditions such as asthma and diabetes has been steadily reducing, which speaks to the strength of the region’s primary and preventive care facilities.

However, as of 2016, the rate began to climb again, reaching 1,556.5 per 100,000 of the population in 2018.

The COVID effect Despite the region’s healthcare strengths, the COVID-19 pandemic sent shockwaves through the system, just like everywhere in the world. During the first wave, COVID-19 cases surged initially to over 3,000 cases per week, hitting long-term care facilities particularly hard. Cases tailed off with the shelter in place orders, reaching just over 500 cases per week as of the end of September. But the second wave brought case numbers back up, climbing to over 7,000 per week in December before tapering off again as the new year began. By race, Black residents were hit the hardest, accounting

HEALTHCARE & LIFE SCIENCES OVERVIEW

for 54.5% of cases. This can be somewhat explained by the larger Black population but the numbers remain disproportional. Despite accounting for just 8.9% of COVID cases, the Hispanic population saw one of the highest mortality rates at 127 per 100,000 people.

The healthcare workforce in Philadelphia also was not immune to the effects of COVID-19. Many of the region’s non-essential healthcare workers, especially those in non-urgent care facilities, were laid off or furloughed during the pandemic. Due to the large population of healthcare workers, high unemployment among the sector would be detrimental to the region as a whole. The education and health services industry accounted for 17.2% of total initial unemployment claims in the spring. Hospital systems are also in cash preservation mode, having eliminated elective surgeries for at least part of the year. The University of Pennsylvania Health System projected a loss of $450 million from March to June 2020.

Notable 2020 expansions Despite the grim numbers, some players in the

healthcare system were able to continue along a growth path. During the onset of the pandemic, hospital systems understandably put big-budget expansion and M&A activity on hold, which inevitably will have an affect on the pipeline for at least the next year. But toward the end of 2020 and early 2021, activity came back to life. As early as June 2020, Jefferson Health’s CEO announced plans to build a multimillion-dollar ambulatory care center in Center City due to a steady increase in outpatient surgery and ambulatory care demand. The center is slated to be the most innovative, providing all services, with the exception of acute intensive care.

At that point, Jefferson was already moving ahead with plans to build a $300-350 million biomedical research building at 9th and Locust. And in December, the final phase of the Jefferson Cherry Hill $250 million campus transformation was completed. Initiated five years previously, the center has 90 private in-patient rooms, a 14-bed critical care unit and a 16-bed intermediate care unit. The system’s campus in Washington Township is expected to complete its own ( ) www.capitalanalyticsassociates.com

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Market voices: Health insurance

Bill Green

CEO Homestead Smart Health Plans

We were excited about sales for 2020 and in March-April, we had to focus our attention fully on pivoting toward making our operations as efficient as possible. We focused on the implementation of several new technologies, providing much more auto-adjudication. As sales slowed, we could take a breath to figure out how to automate many more processes, eliminate manual and paper-based processes. We had great success doing that in 2020. The beauty of it is that as the business comes in throughout 2021-22, we are so much more efficient in every single aspect of what we do. We’re looking forward to getting back out there. We enjoy meeting our customers, groups and brokers in person, going to conferences and speaking about what we do. We’re going to try to double down on that and spend a whole lot more time on the road to make up for the inability to do that.

One of the silver linings in terms of lessons learned is the adoption of virtual care and telemedicine. For us, simplicity, affordability and access to our members have always been some of the most critical values we can deliver.

The rapid adoption and the transformation that several providers were willing to take with us to be able to support their patients was remarkable. We are excited about what we are seeing now in terms of the enthusiasm among consumers and patients who have tried virtual or telemedicine in some capacity, enjoyed it and we expect will continue to use those types of services.We’re starting to tip the scale, unlocking opportunities for consumers to trust seeing their physician and prevent themselves from making that extra trip.

Dan Tropeano CEO UnitedHealthcare of Pennsylvania & Delaware

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Remy Richman Vice President, Strategic Programs Aetna

A big way to help companies mitigate insurance costs for their employees is to leverage technology like virtual means of care and services. We traditionally have tried to drive people to the virtual world for the first point of care in these smaller groups. That could be something as simple as going on the internet to find the closest doctor instead of picking up the phone and calling a service center. We have all heard about telehealth and virtual visits and trying to drive people toward that technology. We’re now trying to drive people to leverage technology in home care through monitoring them virtually. We’re still in the beginning of some of that but the advancements are coming quickly and we’re really starting to implement some of that at-home monitoring more aggressively.

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CONSTRUCTION HEALTHCARE OVERVIEW

( ) $222 million expansion this summer – a sevenstory, 240,000-square-foot, 90-room patient pavilion.

In January 2021, the Children’s Hospital of Philadelphia received a $2.5 million donation, which it earmarked for the emergency department in its new inpatient hospital in King of Prussia. The new hospital, expected to be operational this year, features 52 inpatient beds, a 20-bay emergency department, a four-room operating suite, transitional care facilities for chronic complex breathing patients and specializations in orthopaedics, plastic surgery and ENT, among others.

The local and state governments also recognize the value of the healthcare industry for the region’s ecosystem. In January, seven Philadelphia hospitals and health systems received $5.5 million in state funding through the Pennsylvania Redevelopment Assistance Capital Program. The discretionary fund is intended to promote economic activity. Fox Chase Cancer Center received $1.5 million for an intensive care unit upgrade, Doylestown Hospital received $1 million for a women’s diagnostics center and Moss Rehab was awarded $1 million to renovate its brain injury center.

Gov. Tom Wolf also announced he would allocate over $4.8 million in Direct Care Worker Training Grants amid the increased demand for essential health services. A partnership of the District 1199C Training & Upgrading Fund, SEIU HealthCare PA Education & Training Fund, and the Pennsylvania Health Care Association (PHCA) was awarded $2 million, $1.2 million was given to Center for Independent Living of Central PA, $1.2 million was awarded to Central Susquehanna Intermediate Unit and Penn Asian Senior Services received $407,000. The funds will be used for a variety of purposes centered around training of frontline and triage workers.

Employment Pre-COVID, Philadelphia’s healthcare workforce was one of the highest concentrated in the country at 12.7%, outpacing even New York City at 11.9%. The healthcare industry in Greater Philadelphia provided around 365,670 jobs. The Hospital and Healthsystem Association of Pennsylvania estimates that the region’s hospital systems alone account for $17.9 billion in direct economic impact. The healthcare workforce in Philadelphia has been growing, having added an average of 9,000 jobs per year since 1990. The majority of healthcare workers are employed as Home Health and Personal Care Aides and are paid an average salary of $25,510. Health Technologists and Technicians

Thomas Garvin President & CEO Waverly Heights, Ltd

How has demand for retirement communities shifted over the course of the pandemic?

Demand is going to continue to be extremely strong.

Every one of our independent living units is either reserved or occupied. Seniors will look at these communities, also referred to as lifeplan communities, as a residence of choice. They will be looked at in many respects as a safe space. It’s too early to take a victory lap, but we’re getting close to the finish line on COVID-19. With all our residents vaccinated and a significant portion of our employees vaccinated, we hope that when we are on the tail end of this pandemic, we can look back and say we were able to protect these 370 residents from harm and promote a quality lifestyle. There’s no better lifestyle for seniors than to be at a place like this where you’re having your healthcare needs met, your social needs met, and where you can be engaged and involved in living like you always have been, contributing the talents that you certainly still have to the organization as a whole. Add to this all the various amenities, programs, activities and amazing dining, and you will find a lifestyle to be desired.

What steps did you take to cater to the mental health of your enclosed residents during the pandemic?

Their mental health and psychological well-being were sizable issues that we wanted to address from the beginning. The most important element initially was to implement something we called Reassurance Calls. Our marketing team spearheaded this initiative, converting their responsibilities along with our Life Enrichment Coordinator to make reassurance calls every single day.

There was a touch point on every resident who lives here at Waverly Heights by someone making a reassurance call. Sometimes it was just a casual conversation; other times it was for them to be able to vent about how they were feeling or just talk about the emotions that they were going through. That was critical to helping people’s mental well-being stay strong. www.capitalanalyticsassociates.com

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CONSTRUCTION HEALTHCARE OVERVIEW

Dennis Pfleiger President St.Luke’s Quakertown – Upper Bucks Campuses

While the future of traditional office space remains an unknown, medical focused space has stayed in high demand.

make up 6,870 jobs and are paid an average of $60,285.

The third-largest category is Nurse Practitioners, who make an average of $109,450.

But the pandemic upended employment in the healthcare sector. Sudden high unemployment rates in an otherwise growing sector are sure to be problematic when normality resumes. Lack of demand in certain areas, including elective surgeries, has piled the pressure on frontline medical staff such as emergency doctors and nurses. Not only this, but a huge pipeline has built up as elective surgeries have been canceled or pushed back, setting the stage for the perfect storm for higher than ever medical staffing demands.

And it wasn’t just the rank and file who felt the sting of the pandemic’s blow. By December, CEO turnover in Philadelphia’s healthcare industry had soared.

Independence Blue Cross, Temple University Health System, Inspira Health and Crozer Health all had new CEOs. In an unexpected turn of events, even doctors were forced to quit their practices, or the city, in light of the stress caused by the pandemic. As the crisis deepened, thousands of medical practices closed. As of July, 8% of doctors reported closing their offices in the preceding months, equal to around 16,000 practices. Another 4% said they planned to shutter within the next year.

How does St. Luke’s set itself apart from the competition in the region?

St. Luke’s University Health Network consists of 12 hospitals across two states and 350 outpatient centers. Our primary differentiator across our entire network is that we can go into any market and bring that community a high-quality, low-cost provider of healthcare with great access, including telehealth visits. Fully rounded out healthcare is critical. When you enter our facilities, you know you are getting the best in healthcare. We are proud to see that several of our campuses are on the IBM Watson Health 100 Top Hospital list every year. We are excited to provide that commitment to quality. Without the latter and great patient service, you really cannot differentiate yourself from everybody else.

What are St. Luke’s plans for growth?

We are still within our first phase of growth. When we opened in December 2019, we built a 40-bed hospital, with 10 beds for critical care and 30 medical surgical beds. We rapidly realized we were not going to be able to keep up with the demand on this campus once we opened. In August 2020, we received all of our official letters from the state and opened an additional 20 beds on the second floor for our inpatient growth. We have additional land available on this property so we have room to grow on this campus to meet the future needs of the community. We have plans for our Quakertown campus to move further into behavioral health and expand services there.

What are your fastest-growing areas of service?

We have seen dramatic growth across every area, which is fantastic. What has really resonated with people in our community is that we are here to be a part of it. We support a wide array of causes within the community, we help by being an integral part of it and we want people to think of St. Luke’s whenever they think about healthcare. www.capitalanalyticsassociates.com

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Donald Mueller CEO St. Christopher’s Hospital for Children

What were the main milestones of 2020 and how did you navigate the challenges of COVID? I had the opportunity to interview for the job of CEO right as the COVID-19 pandemic began. Trying to assimilate has been different in a COVID-19 world but we are blessed to have Drexel and Tower Health to help resurrect us from bankruptcy. The year has been challenging in many respects and COVID has certainly been a big issue.

The social unrest and injustice issues have also been top of mind in Philadelphia. I think this also underscores the resilience of a place like St. Christopher’s where we’re not only emerging from bankruptcy, but we’re also trying to reinforce community resources. We’re active in the conversations around social inequity as well as the COVID testing efforts.

What are your projections and goals for the hospital?

We are affected in a different way by COVID. We had to stop some of our elective surgeries when the numbers were high but we have now resumed those. We’ve seen a decrease in the number of illnesses children usually present during the winter. For example, in January, we saw only three RSV cases when normally the hospital would be full of children with respiratory illness. We’re learning that masking and social distancing really works to prevent the spread of viruses. Additionally, many children are not participating in sports, so our orthopedic consultations are down. Children’s hospitals of the future may look different but we need to ensure we are here to take care of the essential services. We’re looking at developing a sustainable model without the same volumes we are used to seeing.

St. Christopher’s is the 11th-largest funded Children’s Hospitals Graduate Medical Education (CHGME) program in the country so we play a huge role in educating the healthcare community focusing on the pediatric population. Going through an experience like COVID-19 made us focus on providing a safe learning experience while also keeping our patients safe.

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Philadelphia’s has one of the largest and fastest growing life science industries in the world.

The pressure from the pandemic also caused some nurses to demand better working conditions at the risk of striking. Over 2,500 nurses represented by the Pennsylvania Association of Staff Nurses and Allied Professionals (PASNAP) threatened to strike in November, while 1,400 employees at Crozer Health negotiated new labor contracts with the health system in December.

Despite the turmoil, growth is on the horizon. Going forward, the Greater Philadelphia Economy League says a rebooted health system will be needed in Philadelphia after its flaws were exposed by COVID-19.

Job creation will be driven by adoption of new technologies such as telemedicine, increased demand for personalized care treatment, increased funding for public health programs and a rethink of employerprovided health benefits, it says. One of the companies

HEALTHCARE & LIFE SCIENCES OVERVIEW

Dan Bradley President, Select Medical Outpatient Division – Novacare There is a palatable need for physical therapy services. Our Recovery and Reconditioning program will continue to grow as more people test positive for COVID, deal with lingering effects and try to return to a sense of normalcy. Technology will continue to be in play and we’ll continue our focus on the opioid crisis. Unfortunately, it did not go away with COVID-19. That was an important mission of ours going into 2020: finding ways to impact and reduce its ripple effects. Physical therapy definitely has a place to help reduce chronic pain which can lead to opioid dependencies. We need to promote the benefits of physical therapy over opioids.

positioned to provide more than 40,000 jobs is Carbon Health, the self-styled Starbucks of healthcare, which plans to open 1,500 clinics in more than 50 regions, including Philadelphia, by 2025.

Policy updates Health policy across the United States in 2020 has been largely shaped by the COVID-19 pandemic. As more and more people shied away from accessing the emergency room, the need for telehealth and telemedicine became greater and with that, policy had to evolve. The use of technology in healthcare has almost been seen as a taboo in the past but the pandemic made everyone more aware of its usefulness. Seeing this, Jefferson Health partnered with venture capital fund General Catalyst to launch

a digital health company to transform medicine in Philadelphia. Buoyed by the pandemic, the company aims to organize care online.

Rapid policy decisions were also required for the vaccine rollout, with the city prioritizing seniors over 75, essential workers and those with high-risk health conditions such as diabetes, chronic kidney disease, cancer and organ transplant recipients.

Throughout 2020 there was never a sharper focus on existing healthcare policy as more people began to question if the current system really fit the needs of the population. Health insurance was one of the key areas that were examined. According to a paper published in the New England Journal of Medicine, the trend in the United States of employer-provided healthcare cover fell apart during the pandemic when record numbers ( )

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HEALTHCARE & LIFE SCIENCES INTERVIEW

Strong together Pandemic highlights the strength of expanding the collaboration circle rather than making it smaller

Stephen Klasko President – Thomas Jefferson University CEO – Jefferson Health How is Jefferson Health working to the benefit of public health?

We do so in two ways. First, we started the Philadelphia Collaborative for Health Equity, working with nonprofit Esperanza and the Latinx community, the AfricanAmerican community, and the Southeast Asian community. Our mission is to truly improve lives for all of the communities we serve. Second, we went allin with healthcare at any address, shifting the locus of healthcare to the home. We started the first and largest all-specialty, all-Jefferson telehealth program in 2013, investing $35 million. The initiative truly paid off during this pandemic, when we moved from 50 telehealth calls a day to 3,500 a day. We’re expanding the idea of “connected care” through a partnership with General Catalyst out of Silicon Valley. We’re embedding engineers from Silicon Valley into our ecosystem and vice versa. We’re looking deeply into how Jefferson starts at home and the hospital becomes the ultimate place you look to for care, not the first.

How can the healthcare industry improve its status as a major growth driver in Philadelphia?

We need to start to take advantage of the entire region. Other regions such as Boston and the Research Triangle in North Carolina and the San Francisco Bay Area are much better at expanding their circle instead of making the circle smaller. We saw it during the pandemic: Together, we are stronger.

During the pandemic outbreak, we got together every week with the University of Pennsylvania, Temple University, Children’s Hospital of Philadelphia and Main Line Health. This amount of interaction has not happened since at least 2013, and we need to continue to work together for innovation and to advocate for the underserved.

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How will Philadelphia’s healthcare landscape change post-COVID-19?

The lessons learned from the outbreak open the door to being better prepared for the next one. I believe we should think about a pandemic in 2030 and imagine what would make that 2030 pandemic a blip instead of a crisis. It will take a new appreciation of the tools of connected care. It will take digital inclusion, so that every small business could operate even in a lockdown, and every family could provide virtual education. And we will need much greater coordination between the federal government, the states, the cities and private industry. The pandemic made clear that we need much tighter public-private partnerships, including creative partnerships across industry sectors.

HEALTHCARE & LIFE SCIENCES OVERVIEW

Perspectives – Innovation in care Jennifer Davis Senior Vice President and Executive Director – American Heart Association A couple of years ago, we launched our STEM Go Red initiative to engage high-school girls to take a seat around the table as we solve problems related to cardiovascular disease. As a science-based organization, we have a stake in more women and more girls going into STEM careers.

Samuel Menaged Founder & President – The Renfrew Center Prior to the pandemic we were offering some telehealth programming, but with the onset of COVID-19, we shifted all Day Treatment and Intensive Outpatient Programming at all 17 non-residential sites to a virtual platform. Since the pandemic began, the number of telehealth visits for all disorders has increased by 4,000%, and one-third of those were related to mental health.

Philadelphia has its own state-based insurance marketplace, known as Pennie.com.

( ) began filing for unemployment. It is estimated that around half of Philadelphians have employer cover.

There were significant concerns that current policy paves the way for prohibitive testing and treatment costs, which would in turn discourage people from seeking treatment and prolong the pandemic. The CARES Act provided a Band-Aid solution by requiring all private plans to cover COVID testing and vaccines and many insurers waived cost-sharing payments.

Still, the authors say further policies are needed as the crisis continues.

Health insurance Philadelphia’s health insurance market has been becoming more comprehensive over the years and the rate of uninsured has plummeted since 2010, from 14.9% to 7.4% in 2018. Medicaid enrollment was up to 649,301 in 2019 from 496,086 in 2009, with a noticeable pick-up in 2014 after the rollout of the Affordable Care Act (ACA). As of 2021, Pennsylvania has its own ACA exchange, known as Pennie, as well as a new reinsurance program. Enrollment for plans is a month longer than normal and insurers reported an average year on year rate decrease of 3.3%. In 2020, year on year enrollment decreased to 333,000 and as of December 2020, with only one month left to buy 2021 plans, around 320,000 had enrolled. In the individual

Burton Piper CEO – Roxborough Memorial Hospital We’ve seen an enhancement of protocols over the past year. We’ve been using data to determine policy and improve processes. Additionally, we have a flash meeting every morning at 9 a.m. In this meeting, all leadership are briefed on things that are happening that day. That communication tool is very helpful. It makes leadership aware of operational matters.

Kapila Ratnam General Partner – NewSpring The first computer ever, ENIAC, was built at the University of Pennsylvania’s engineering department. We have so much technology talent in this area and there’s a lot happening both in healthcare technology and healthcare delivery in the pharmaceutical biotech industry; there’s a lot happening here in gene therapy too, particularly with innovation coming out of our academic institutions.

Edgar Vesga President & CEO – Philadelphia International Medicine Before the next emergency strikes, we need to prepare our healthcare systems to sustain any challenges we may face, including but not limited to integrating innovative technologies and solutions. In the future, we could have a physician from Philadelphia perform remote surgeries in other countries to ensure all patients across the globe have access to care even during times of great uncertainty.

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HEALTHCARE & LIFE SCIENCES OVERVIEW

Pre-pandemic, the healthcare industry in Greater Philadelphia provided around 365,670 jobs.

market, significant rate decreases were seen in 2021, with Capital Advantage Assurance cover dropping 14.3%, Geisinger Quality Options cover down 13.6% and the Geisinger Health Plan dipping 11.3%.

At the outset of 2021, with a new federal administration in the White House, one of the first policy issues in the crosshairs is sure to be the ACA. With President Joe Biden taking office, legislation related to ACA enacted in the last four years is expected to be drastically rolled back. Biden is expected to reinstate market funding for the ACA, bolster the healthcare. gov website, expand the annual enrollment period and reinforce consumer protections. The Biden administration is also expected to roll back short-term health plans, which were launched by the previous administration. Association health plans, which have been able to exclude or penalize policyholders on the basis of gender, age and certain other factors, are also expected to come under scrutiny.

The expansion of Medicaid is expected to regain momentum after four years of obstacles. When it was expanded in 2015, Medicaid in Pennsylvania bridged the poverty gap of those with incomes below 100% of the poverty level, which covered an estimated 281,290 people. Past CMS guidance allows states to tie Medicaid eligibility to work requirements and cap funding, and this is something the Biden government 158

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is expected to address. In Pennsylvania, Gov. Wolf vetoed the passing of the controversial work requirement bill in 2018. The president can tweak the Medicaid managed care rule for 2020, which relaxed network adequacy, beneficiary protections and quality oversight.

Public health Public health often falls by the wayside for many administrations but the pandemic sharpened the focus on behavioral and mental health issues as Philadelphians were forced to stay indoors. According to the Philadelphia government’s 2020 Health of the City report, diagnosed depressive orders in adults is worsening, as is suicide ideation and suicide attempts in teens. Frequent mental stress among adults is unchanged but low-income populations were found to have worse outcomes. The Chinese Immigrant Family Wellness Program, Tabadul and The Intercultural Wellness Program are three Philadelphia groups reaching out to those with mental health issues in the immigrant community to partially address this disparity.

There was no change in opioid-related deaths, at 53.5 per 100,000 of the population, with worse outcomes witnessed among non-Hispanic white males. This rate has been steadily climbing since 2010 when it was just

HEALTHCARE & LIFE SCIENCES OVERVIEW

18.6. Overdose ER visits have fallen off slightly after a peak in 2018 at 6,446, although in 2019 the number was still high at 5,457. In January, Philadelphia health officials warned that fentanyl was being mixed with many more drug types based on testing of people who died of drug overdose. In the first nine months of 2020, fentanyl-related deaths among methamphetamine users were up 350%.

While social and economic determinants can go a long way to shaping health outcomes within communities, there are still many inequalities present within healthcare, and this has been underlined by the pandemic. While the elderly in long-term care facilities represent just 1% of the population, they represent over 50% of Pennsylvania’s COVID deaths. African Americans and the Latino population are also more likely to contract the virus and die from it than white counterparts. Even testing showed disparity, according to the Black Doctors COVID-19 Consortium. Testing sites were primarily set up in white, affluent areas, with reduced availability in the poorer, Black communities.

Efforts to make testing more inclusive have been implemented, including a mobile testing unit rolled out by the Philadelphia Department of Public Health.

Michael Young President and CEO Temple University Health System (TUHS)

Pre-COVID-19, what were your fastest-growing areas in terms of healthcare?

The fastest-growing area was the emergency department because of the Hahnemann closure. The next biggest growth was within our high-end pulmonary hypertension program, which started around three years ago and is now the second-largest in the country.

In Philadelphia, we have one of the largest and best heart failure and pulmonary hypertension programs, and for the third year in a row, we are the largest lung transplant program in the country. In those very highend services, we have seen tremendous growth.

What opportunities are emerging from the COVID-19 crisis?

I think the biggest theme is telehealth. Prior to COVID-19, for every 100 scheduled office visits, 22 people failed to show up. With telehealth, this number falls to three. A lot of our patients are transportation challenged. When public transport services slowed down, that had a significant impact. Our conversations with physicians in China also reinforced the value of sharing information.

In just the two weeks between when New York hit its critical point and cases began really increasing here, we had already learned from the experiences of those on the ground in Wuhan. Another thing we have learned is the value of clinical trials. We had a number of clinical trials, including the remdesivir study, meaning we could adjust treatment in real time based on the sharing of data. I think COVID-19 has taught us that working in teams adds great value to medicine.

What is your outlook for the hospital?

I think we will be one of the few hospitals in the United States to have a good financial year. Our focus is getting back to the processes that were running on March 19, of efficient quality care, capital replacement, infrastructure investment and program growth. Our priorities will be merging the old and new teams to maintain our momentum in our performance rankings.

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In the first nine months of 2020, fentanyl-related deaths among methamphetamine users in Philadelphia was up 350% One perhaps surprising development is that telehealth and health technology have made healthcare more inclusive for millions, according to Healthline. The fact that patients do not need to attend in-person appointments has appealed to the demographics that can be more stigmatized, including women, Black and brown communities and the LGBTQIA+ community. But on the flip side, telemedicine is only accessible to those with access to smartphones and computers and is only recommended for those with good health literacy.

Still, services such as FOLX, which specializes in queer and trans health, have emerged to bridge the gap between healthcare professionals and more marginalized communities.

Although telehealth is expected to continue and eventually become a staple of modern healthcare, the challenges are real, especially for older generations and those with limited means to take full advantage.

“There’s a generational gap in adapting to virtual visits and telemedicine; it’s been more of a struggle for baby boomers and I can attest to that since I’m one of them,” said James Woodward, president and CEO of Trinity Health Mid Atlantic, in an interview with Invest:. “The other challenge we are facing as a mission-based institution with a special concern for the disadvantaged and most vulnerable is that a large portion of our patients do not have easy access to technology. In many of our service areas we are not seeing high utilization of telemedicine. Due to the barriers to access the technology required for telemedicine, the trend toward technological medicine has the potential to be inequitable in our patients’ communities. In other service areas, the

HEALTHCARE & LIFE SCIENCES OVERVIEW

Alex Vaccaro President – Rothman Orthopaedic Institute

We have learned through big data what works and what doesn’t work when it comes to value-based healthcare. We have three goals: decrease variation, decrease cost and decrease waste. We do that through our registries and data acquisitions, research we do and the papers we publish. We collect multiple outcomes in orthopaedic care and we have used this to create treatment pathways, which we have then used to expand into new markets. Our platform is based on the pillars of research, teaching, innovation and clinical excellence and we want to bring that to Florida. Our activities in our key markets have allowed us to extend our care to new markets.

population may not experience barriers to technology due to higher median incomes and education levels.

In these areas, utilization of telemedicine has been extremely high and growing.”

BioTech and life sciences Among the region’s strongest factors is its eds and meds bulwark. Philadelphia has more than 100 colleges and universities, offices of 80% of all national pharmaceutical and biotech companies and more than 2,000 medical technology companies. But the city set itself apart in life sciences and biotech with the construction of University City, a multi-use megaproject spanning millions of square feet that serves as an incubator for research. University City has generated billions of dollars in growth through its discoveries and innovations in biotech, robotics and medicine and in 2019, a record number of patents were issued to companies in the mini city. In the same year, R&D investment reached $1.85 billion, with almost half of the $1.43 billion awarded by Pennsylvania NIH going to University City occupants.

CBRE ranked Philadelphia the seventh top and fifthfastest-growing life science cluster in the country thanks to University City.

In 2020, Philadelphia saw $1.47 billion in venture capital deals and life sciences provided additional support to the real estate industry. Over $530 million was invested in Philadelphia drug developers and medical device companies during the year. Notably, Immunocore raised $130 million in March, Immvax raised $112 million in July, Larimer Therapeutics raised $80 million in May, SwanBio raised $52 million in April and Palvella Therapeutics raised ( )

The telemedicine industry saw extreme growth throughout 2020 and is expected to continue to capitalize on this growth in 2021.

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®

oundtable:

Life sciences The life sciences segment has been on the frontlines of the fight against COVID-19. Sector leaders discuss the challenges and opportunities of the past while also looking ahead.

John Crowley

Chairman & CEO Amicus Therapeutics

How did direct and indirect challenges presented by the pandemic reveal opportunities?

It was just about a year ago when we in the science community had first sequenced the DNA for the COVID-19 virus. To have gone from that to approved vaccines and now vaccinating millions of people in less than a year start to finish, in a process that usually takes seven to 10 years – the industry reinvented the entire model for drug development. Fast science can be good science. The other element was time. It was a race against time as much as it was a race against nature. When I think about what we do with rare diseases, that’s the mindset we bring to every program. We need great science and the ability to get it to everyone who needs it in the world, as quickly as humanly possible. You look at the regulators: the FDA completely changed its model in response to COVID. Whether it’s changed regulatory paradigms to address inequality, a changed mindset, how we direct resources, a lot of new biostatistics tools as well; all of that is the next generation of drug development.

What is an example of your work’s impact?

We had one approved precision medicine for a rare disease known as Fabry Disease. It was vitally important throughout COVID in 2020 that we were able to ensure the supply of that medicine and integrity of the supply chain, and to make sure around the world, in the now three dozen countries where the medicine is approved, that patients in need had access to that medicine. I’m proud that we’ve been able to do that. We were able to get this medicine to 1,400 people with this rare disease.

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John Grady

Senior Vice President, Northeast Region Executive Wexford Science & Technology

What were some of the takeaways from 2020 that can be applied going forward?

The big innovation for us, like a lot of people, was adapting to a remote environment. Real estate in particular is a heavily in-person business and when we’re working on a lease transaction or a construction project, there is enormous value in that connection.

As a company, we were not adopting technology on a large scale so in March we had to find a way to create a balance where we could stay in front of clients and also drive complicated transactions through to completion.

Going forward, I think we will continue to use some of this because these virtual platforms certainly have some value. All our projects will have a mix of in-person and virtual components going forward.

What design changes are now going into your spaces?

There are some COVID-specific features that are front of mind, a lot of which revolve around remote access and touchless entry and is software-driven. We are ensuring we have that technology. We build purpose-built lab buildings with really robust infrastructure. They have high floor-load capacities, high ceilings and significant air change frequency at seven times an hour. We are using the highest filtration that is more consistent with a hospital than an office environment. This is why it’s so difficult to convert an office building into a lab building.

At 1 uCity, we decided to make some additional upgrades to our building systems, including incorporating 100% outside air. Going forward, we will always be looking at the most functional, healthy buildings we can bring to the market.

HEALTHCARE & LIFE SCIENCES ROUNDTABLE

Eric Green

President & CEO West Pharmaceutical Services, Inc.

What shifts in demand have resulted from the pandemic?

The core business has continued to do quite well. The demand that has been put on us to respond to the vaccines and various therapeutics required to combat COVID has been significant. We increased our capital investments in our sites and we’ve added close to 1,000 team members over the last 12 months, both full-time and temporary jobs. Several of our 25 manufacturing plants, located around the world, have been operating 24/7. Concerning our core business, we expect demand for injectable medicines will continue to rise due to an aging population and increasing chronic disease rates.

How important is purpose in creating high-quality products?

We are incredibly proud to play such a vital role in making a difference to the millions of patients around the world. Our team produces about 40 billion components a year at our facilities. When you ask our team members in our manufacturing operations how we ensure the highest level of quality that is needed for the products we provide, they always say, “Every one of these components has a patient’s name on it.”

Purpose is pronounced and known in the hallways of West Pharmaceutical. Purpose is enabling our ability to support patient health and fuel a brighter future with product innovations. For seven out of 10 injectable medicines that are used on any given day, we’re a part of that. With that comes a tremendous amount of responsibility but also significant pride.

Eric Karas

Vice President and General Manager, North America Commercial Emergent BioSolutions

How are you involved in fighting the COVID-19 pandemic?

Our organization has four distinct business units, including devices, vaccines, therapeutics and contract development and manufacturing (CDMO). The latter has the ability to partner with pharmaceutical or biotech companies with services to support all stages of drug development through commercialization across a network of nine facilities. Over the last year Emergent has been working around the clock to fulfil our role in combating the COVID-19 pandemic by utilizing our expertise in the public health threat space. We’ve provided our (CDMO) services to advance COVID-19 vaccine and therapeutic candidates. We’re working together with CDMO collaborators for large-scale drug substance manufacturing for COVID-19 vaccines. We are also researching and developing two of our own therapeutics to tackle the pandemic.

What is your outlook for the near term?

With all the COVID-19-related developments, I believe there’s going to be a greater emphasis on vaccines and proactive therapeutics that perhaps can help fight viruses through natural, biological means or manmade. Emergent is in a unique position to be a leader in that space in terms of public health threats, not only through developing our own in-house therapeutics but also through our contract development manufacturing organization, as well as collaborations with other pharma and biotech innovators. There is also a broad and robust internal pipeline of products we have across various therapeutic areas, which is progressing steadily. www.capitalanalyticsassociates.com

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HEALTHCARE & LIFE SCIENCES INTERVIEW

Wellness focus Burnout among healthcare workers is a national conversation

Ken Levitan Interim President & CEO – Einstein Healthcare Network

How has the hospital system as a whole been addressing physician burnout?

This is a conversation happening at hospitals throughout the country. Burnout is not just limited to physicians. The length of the pandemic response and the overwhelming stress took a toll on all those involved. We have been thinking a lot about the repercussions from the stress that the pandemic has placed on all of our physicians, nurses and other frontline staff. Because of our low reimbursement from government payers, we know we need to manage costs, but that can’t be at the expense of the wellbeing of the Einstein care team. As an industry, we’ve been focusing on wellness and trying to provide as many outlets as possible for our staff. We set up quiet areas for staff to be able to go and decompress. We will always need to consider this issue and ensure we are striking the right balance.

How important has telehealth become within the health sector, given its rapid rise during the pandemic?

We were a relative early adopter and already had a nascent telehealth program in place before the pandemic, in areas like our obstetrics program.

When the pandemic hit, we had to rapidly set up two platforms to be able to reach our patients. We went from doing about 50 telehealth visits per week to around 5,000. We created a task force within two weeks and with a team of 10 people, we had the platforms set up.

We also set up a new website to allow scheduling and produced the relevant marketing materials to advertise those services. We think going forward that 15-25% of our visits will be virtual visits.

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What are the main goals and priorities for the network in the next year?

Our first focus is the merger with Jefferson Health and carrying out the right steps to make it the most efficient process possible. The second focus is stability.

During a merger there can be a certain amount of uncertainty. We want to be able to communicate our dedication to our employees and the community.

The third focus is diversity, equity and inclusion. The events of the summer really brought into focus our need to be more mindful and direct in our actions.

This organization was founded to care for those who were unable to receive care elsewhere and we have always been focused on caring for as many people as we could reach. We’re taking an inward look to evaluate how we can be more focused on these issues.

HEALTHCARE & LIFE SCIENCES OVERVIEW

There are 22 nursing schools and seven medical schools located within Philadelphia.

( ) $45 million in May. Life sciences has generated pharma as an industry has not done a good job of job growth, and approvals and onshoring were sped communicating the opportunity for employment up dramatically thanks to the sector. But the region in all different types of disciplines and all different is running out of space for specialist labs, with spaces functional areas.”

Molineaux points out that in University City leasing for a neither a Ph.D. or an MD is premium. required to work in pharma. There University City is also getting are technical and trade jobs; legal, involved with the community, regulatory, public relations; and having launched a new workforce many jobs that only require a high development program with the school diploma or a certificate. proceeds from a $250,000 feder“Those are opportunities for al grant. The Building an Underreemployment of people who are standing of Lab Basics course is displaced from other industries,” designed to train underemployed Molineaux told Invest:. “We are and unemployed adults to prerunning a program called Tell Me pare them for a career in biotech.

About Your Job. It’s a 30-minute Christopher Molineaux, presprogram that airs every other week ident and CEO of Life Sciences Christopher Molineaux where life sciences employees of Pennsylvania, believes that President & CEO, Life Sciences Pennsylvania all different levels, and in many more people need to be aware of the opportunities the sector provides. “What is often different disciplines, appear on a live program online overlooked about the life sciences industry is that and talk about what they do for a living. The idea with there are so many different types of jobs. Historically, this particular program is to get in front of students

Historically, pharma as an industry has not done a good job of communicating the opportunity for employment...

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who may or may not be in a scientific curriculum and students from underrepresented populations. We want them to see that there are people who look just like they do and have similar backgrounds as they experienced, who are successfully employed in the life sciences.

Health research One of the factors that make Philadelphia such a healthcare hub is its sterling educational institutions.

Since 2009, “eds and meds” jobs have accounted for 30,800 of the 55,100 jobs added in the city, according to the University of Pennsylvania’s Healthcare and Higher Education report. According to the National Science Foundation’s Higher Education Research and Development Survey, combined research spending at Drexel, Temple, Jefferson and Penn totaled $1.79 billion in 2016, up from $1.34 billion in 2015. And Jefferson is set to raise the bar with its new Master of Public Health, a course with a syllabus that is in line with the 10 Essential Public Health Services framework established by the CDC. It is no surprise that several cutting-edge studies have come out of Philadelphia’s educational and research institutions. In response to the COVID-19 pandemic, Penn founded the Center for Research on Coronavirus and Other Emerging Pathogens and is carrying out several active coronavirus trials, including on masks, blood donation and T-cell response to vaccination. Temple’s research centers around antispike SARS-Cov-2 monclonal antibodies, as well as other studies that look at repurposing existing medication to treat the virus.

And the private sector is not holding back.

The first medical school in the United States was established in Philadelphia, and the region has since become a mecca for medical students.

HEALTHCARE & LIFE SCIENCES OVERVIEW

Philadelphia-based oncology leader Imvax published in early 2021 Phase 1b clinical trial results for a study of patients with newly diagnosed glioblastoma in Clinical Cancer Research. Work done in Philadelphia is also at the forefront of the technology being used to fight COVID-19. Most notably, two of the most promising COVID-19 vaccines, developed by Moderna and Pfizer, rely on mRNA technology, which was developed by Penn professors in 2005. The Centers for Disease Control and Prevention says mRNA technology may one day lead to single vaccines that treat multiple diseases.

Looking ahead Despite the health sector’s large contribution to Philadelphia’s gross metropolitan product, the COVID-19 pandemic exposed some issues related to public health and disparities that will be hard to ignore going forward. The Greater Philadelphia Economy League says the aftermath could be a chance for the city to pivot in another direction, embracing telemedicine, personalized care, public health programming and addressing health insurance gaps.

The city is already taking steps toward democratizing healthcare access and costs as it seeks to end surprise medical billing that is commonplace when hospitals outsource testing to out of network labs without the knowledge of the policyholder. But there is more to be done, especially given the large proportion of people who lost jobs or became sick due to the pandemic.

And while states should continue to focus on these issues, the complexity of the system demands federal intervention too, says the New England Medical Journal.

Frank Ingari CEO – Tandigm Health

If we ever doubted it, the last year has shown us that human health is not just about bacteria and viruses. It is about the whole person. It has been long known that of two people with strongly similar morphology — disease state, age and weight and so on — the one under tremendous financial stress is way more likely to go to the hospital than the one who is not under financial stress.

COVID has had the impact of spotlighting the social differences in terms of Social Determinants of Health (SDOH) — poverty, multigenerational lack of education, race. The system has wound up highlighting disparities in equity in healthcare.

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Education: The pandemic is proving to be the education system’s ultimate test.

Universities, colleges, vocational centers and elementary and high schools alike reeled from pandemic’s effects, but as the dust settled, there emerged the opportunity to take action and address the sector’s deficiencies.

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Long-term blueprint: Delivering on the promise of a quality education, secure jobs and prosperous careers From universities to K-12, educational systems across the country had never seen anything like it: a global pandemic forcing students, faculty and staff to shelter in place. But students still needed to learn and these institutions still needed to teach, to deliver lessons, to educate.

The disruption in the sector has been unlike few others but seemingly overnight, educators pivoted and adapted for the safety of faculty, staff and students alike. Suddenly, even the most prestigious schools were delivering their courses online, with many making the transition in record time, and the impossible quickly became possible.

At the same time, the pivot to remote learning put a spotlight on enrollment, a key revenue source for many institutions, but also on inequities in the system as schools discovered that many students did not have the technology required for distance learning.

The result has been a transformation of the educational system. Through alliances and synergies between its stakeholders, Philadelphia’s education system is set to come out the other end strengthened and more determined than ever to deliver on the promise of the next generation for quality education, secure jobs 170

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and prosperous careers. “For a place like Arcadia and across all of higher education, there is an opportunity for us to reset and reimagine how we do our work,” Ajay Nair, president of Arcadia University, told Invest:.

“Our mission to serve our stakeholders in the liberal arts environment is something we should stay true to, but how we go about delivering to those stakeholders needs to change. I’m optimistic in part because this is something that is required, but also because of the increase in partnership. We will see more innovation because we will be working side by side with some unlikely partners who see the world in different ways.”

Landscape Besides having to deal with securing the health and safety of faculty, staff and students and navigating a fastpaced online learning migration while maintaining a value proposition in the digital world to keep students enticed and engaged, Greater Philadelphia’s higher education institutions also had to deal with the impact of decreased enrollments. The National Student Clearinghouse Research Center’s Fall 2020 estimates found nationwide enrollment declined 2.5% compared to fall 2019, most notably in ( )

EDUCATION INTERVIEW

Challenges Among the top challenges for education is the gap between what future jobs will require and the number of people available to fill them

Christopher Fiorentino President – West Chester University What is the biggest challenge for higher education?

This is a world where the areas in which jobs are growing are areas that require some kind of higher education credential. It’s critically important for the well-being of citizens and economic growth that higher education is able to effectively prepare students for the opportunities out there. There are great opportunities for people who have the preparation but the gap between the jobs that are on the horizon that require a college degree or other post-high school certificate and the number of people available to fill those jobs who don’t have the necessary credentials is a big problem.

That’s going to be one of the biggest challenges that higher education faces in the coming decade.

What makes West Chester University a great university?

We have a couple things in our favor. The town of West Chester is an incredible place and a college town, and we have a beautiful campus. When you have a beautiful campus, in a beautiful town, in a place like Chester County, it’s easy for us to attract good talent.

We have incredible faculty. We’re more of a teachingfocused institution in comparison to the large universities that are focused more on research, so at West Chester University we have excellent, passionate professors. For virtually every program that can receive an external accreditation, we have achieved that validation of excellence. We have very good retention and graduation rates but we’re still always looking at how we can do better.

How has the pandemic affected the university’s use of technology?

At the undergraduate level, we were a traditional face-to-face university. We had a few online classes but we didn’t have any undergraduate programs that you could take start to finish online. However,

the pandemic has prompted our faculty to embrace technology even more. Although they’re not interested in teaching strictly online, we expect more and more of our faculty to implement new technology tools, such as videos and group chats, even when they’re face-toface.

We outfitted all 200-plus of our classrooms with technology that allows for students to join class from remote locations, and the professor can see the students on a screen. We didn’t use this that much in the past year because most of the faculty weren’t actually on campus but going forward, that technology is there and we have that opportunity. We’re going to see a richness of technological tools being utilized by faculty. www.capitalanalyticsassociates.com

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Opportunity Pandemic challenges highlight need to rapidly adjust to a changing environment

Aaron Walton President – Cheyney University of Pennsylvania A lot of it has to do with the communities in which some of our students reside. In more of the socioeconomically disadvantaged communities, which many of our students are part of, their environments are challenging from a social perspective, as well as from an educational perspective. We’ve been able to create a nurturing environment in the school because of our relatively smaller size. There is a trust of administration and faculty that you can’t find in some of the larger institutions.

What lessons did you learn from 2020?

We’ve learned that challenges can be turned into opportunities and equally as important, you have to make lemonade out of lemons. With the unprecedented time in which we live, we’ve had to adjust rapidly to a changing environment, and we were successful in navigating the challenging landscape of COVID-19.

Our enrollment ended up being 624 students for the fall semester, which was slightly above our 2019 enrollment. Prior to the pandemic, our projections for 2020 were for a 5 to 20% increase in enrollment. We are looking forward to recapturing many of the students who had paid deposits but decided to take a gap year.

To what do you attribute the school’s enrollment increase?

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What does the near term look like for Cheyney University and higher education in general?

When we look at the dynamics of what is happening in the national arena as well as the regional and local levels in parallel to our school environments, they all have intersections where they impact each other. The greater focus, particularly in the next 12 months as we try to come out of the pandemic and we look at the economic issues that we face in this country, needs to be on economic and racial disparities, specifically tackling the challenges faced by underrepresented groups and under-resourced communities. We’ve got a sizable economic disparity in this country. It affects everybody.

The model of delivering education in the way we have for the last 50 years is changing dramatically with various emerging modalities. We’re never going to go back to where we used to be. I don’t think we should try to go back. We now need to assess what modalities are out there that will impact a wide range of students.

There are a lot of skill gaps that have been highlighted during the pandemic in some areas and we need to upscale a lot of the population. This was one of the major takeaways from the Philadelphia Regional Recharge and Recovery Task Force, which I served along with 160 other business, civic and educational leaders in the Philadelphia area.

EDUCATION OVERVIEW

( ) the public two-year sector. This segment accounts for seven out of 10 postsecondary students.

Eleven states, including Pennsylvania, posted undergraduate losses that outstripped the national average, coming in at 9.2%.

The Pennsylvania State System of Higher Education (PASSHE) is exploring the avenue of combining the operations of some of its 14 public four-year universities to breathe air into its institution’s financial lungs and alleviate the impact of falling enrollment.

Moreover, COVID-19 has shed some light on how the wealth gap among higher education institutions places well-funded schools such as the University of Pennsylvania in a more comfortable position to weather the storm compared to school’s like La Salle University, which was in the middle of a five-year turnaround involving salary, benefits, services and utilities reductions to the tune of $7 million when the pandemic hit. Academia has had to resort to outsidethe-box thinking, including applying for CARES Act financial aid, seeking strategic partnerships with the business community and with other institutions, renewing accreditation certificates and bolstering online education platforms.

Moreover, in the context of social unrest rooted in cases of police brutality that spread across the country in the summer of 2020, Philadelphia’s higher education sector is answering the call for equity and inclusion. In August 2020, a group of PASSHE students provided recommendations to foster equity amid academic institutions, focusing on five fronts: regular analysis of bias complaints to pinpoint repeat offenders; supporting more organizations affiliated with students of color; hiring more faculty and staff

In Philadelphia, colleges and universities refunded over $240 million to students because of COVID-19 of color, including mental health counselors; teaching anti-racism on campus and within communities; and expanding diversity efforts.

In January 2021, PASSHE Head Daniel Greenstein reaffirmed his commitment to combating racism on campus, recognizing he had yet to analyze how the system had developed a long-standing bias that generated inequity. Temple University is among those leading the charge with a $1 million initiative announced in September 2020 to help combat racism in society. Reinvesting in Temple’s Department of Africology and African American Studies, prioritizing recruitment and retention of faculty and staff of color, investing in anti-racism training and deploying a bridge program for North Philadelphia youth are among the primary initiatives.

In the early stages of the pandemic, Philadelphia’s higher education institutions focused their efforts on cost-cutting to alleviate the impact of COVID-

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Philadelphia is a premier location for higher education, contributing to the region’s large and highly skilled talent pool.

fueled uncertainty and empty campuses. In Philadelphia alone, colleges and universities ended up refunding more than $240 million to students as a reimbursement for room and board costs. Added to that, schools had to invest considerable resources to bolster their online learning capacity, not only for all courses and programs but also to ensure each and every student had the necessary tools for seamless remote learning. Temple, Drexel and the University of Pennsylvania faced student lawsuits relating to tuition refunds given the contrast between on-site and online education.

Notwithstanding the difficulties, the region’s universities and colleges are eyeing the spring 2021 semester, with strict adherence to CDC-recommended protocols, coupled with a mixture of in-person, online and hybrid classes adapted to each institution’s curriculum.

Philadelphia School District leaders have reported that since closing mid-March, local revenue dipped by $60 million while a $38 million shortfall looms for 2021.

Remote learning, staff and supply costs are expected to amount to $1 billion by 2025. Moreover, Philadelphia’s higher education institutions reported 15,570 full174

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Remote learning, staff and supply costs in Philadelphia are expected to total $1 billion by 2025 time international students in 2019, amounting to a total $990 million in revenue. With the combination of the Trump administration’s immigration policies and COVID-19, that precious resource was at risk and institutions relying heavily on student immigration faced difficulties to compensate that hit on their balance sheet.

In terms of program demand, in 2019, out of the 50 top-paying undergraduate degree programs in Greater Philadelphia, nursing enrolled 6,252 students, while

CONSTRUCTION EDUCATION OVERVIEW

Margo DelliCarpini Chancellor Penn State Abington

the second-most in-demand program, computer and information sciences, totaled 520 students.

Aggregating totals for computer science and computer engineering programs, computer-related students in Philadelphia totaled 872. These numbers come as no surprise considering the Education and Health Services is Philadelphia’s top employer with 659,800 professionals out of a total 2.8 million nonfarm workers. Moreover, Philadelphia ranked sixth among the U.S. Life Sciences Ecosystems as per JLL’s 2020 ranking.

The challenges and successes, of course, were not limited to higher education. Schools in the K-12 and early childhood education spheres also needed to pivot. Many remained closed at the start of 2021 amid safety concerns. Even among these schools, the move toward online became a necessity as the pandemic unfolded. “In response to COVID-19, our team at The Malvern School developed virtual education modules. These modules enable us to deliver learning experiences digitally, better support and stay connected with families who made a conscious choice or need to temporarily keep their child at home,” Kristen Waterfield, founder and CEO of ( )

How does Penn State Abington contribute to economic development of the local community?

About a third of our students come from Philadelphia.

It’s one of our main pathways into Abington. We’re contributing to the economy in a number of ways, through education and creating a talent pipeline. One of the things that I’m very committed to is enhancing and deepening our partnerships with our community and economic partners in ways that are mutually beneficial, that address employment needs in the region, that close the skills gap, and that really connect our faculty and students to our economic partners in the Greater Philadelphia area. We want to build the capacity in our own communities to address our own needs.

I’m very committed to high quality classroom-tocareer and co-curricular opportunities for students so that what happens in the classroom is complementary to high-quality experiences outside of the classroom, that really enhance learning and make those connections.

How are you supporting and addressing diversity and inclusion on your campus?

That’s one of my primary areas of focus. One of Penn State Abington’s strategic goals is to create an inclusive and welcoming environment for all. I’m working on a landscape analysis of what is happening on campus to support our students, faculty and staff. How are we collectively as a campus being accountable and responsible for these initiatives? We have the Office of Diversity, Equity and Inclusion for students. We’ve got staff and faculty support. I’m really looking into integrating that and aligning that. We have an obligation in higher education to be leaders. Penn State Abington has the most diverse student body of any campus at Pennsylvania State University. We have an opportunity to be leaders in what an inclusive, equitable and mutually respectful campus environment looks like. Part of that, and part of my commitment, is that we also critically look at our practices and policies and be able to say, let’s change this because it’s putting up a barrier. www.capitalanalyticsassociates.com

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Student focus Outreach, online events and opportunities prove pivotal in bolstering enrollment

Chris Domes President – Neumann University students to interact with current students and faculty.

How is the university working to reduce educational costs for its students?

We really looked at the resources that were being provided by the CARES Act to higher education. Each institution has the ability to decide where to distribute those resources, subject to some requirements. Every eligible student received some financial support and the most needy received a little more. We did that over the course of several months as students dealt with the pandemic. We fully refunded any student who left the residence halls on a prorated basis. If anyone had prepurchased meal plans, that money was also refunded.

We lowered summer tuition and did not raise tuition for the 2020-21 academic year to do what we could to help support our students.

What is Neumann University’s strategy to increase enrollment?

We have an exceptional ability to be incredibly student focused. I have never been part of an environment where the faculty and staff are so attentive to student needs. We did a calling campaign in the middle of the pandemic in April to check in on all our students. We reached out to 100% of our undergraduates and over half responded to those efforts. We were able to recruit dozens of volunteers from the faculty to do that. We also asked our students and faculty about their learning preferences. We did not impose any rules, but rather gave our students and staff choices. This speaks to the culture of the institution. Our admissions team also adapted very quickly to the pandemic, creating dozens of online events and opportunities for prospective 176

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In the age of virtual learning, how are you building programs to unite students and promote diversity and inclusion?

We are a very diverse campus, and we have a set of values that speak directly to this. At the top of our value structure is care and compassion for other people. Our diversity council is focusing on key areas to help our campus advance inclusion and equity in appropriate ways. Our president’s advisory council is made up of minority alumni who are helping to guide us in key areas, including job placement, career development and mentorship. Historically, students of color fall behind in job opportunities, even with the same qualifications. We also have diversity-certified courses, which we have had in place for a few years, prior to last summer’s racial tensions. For instance, we have a course on African American Leader in Business, focused on those who have impacted the business community.

EDUCATION OVERVIEW

( ) The Malvern School, told Invest:. “Right now, these virtual efforts are primarily centered around the pandemic, but they create new opportunities for the future, too. For example, we have a lot of international families who have extended family come to visit. They keep their child home to have that experience with their grandparents for weeks or months at a time. Virtual programs would allow them to jump into a classroom and continue to be a part of the learning experience.”

Higher education Philadelphia is home to 15 universities that in aggregate provide education to 126,216 students. The University of Pennsylvania is the oldest, having been founded in 1740. Even prior to the pandemic, student debt in the United States had become a lasting burden that is hindering people’s ability to purchase a home or finance their own children’s higher education aspirations. In 2020, student loan debt averaged $37,500 and as per Investopedia, 54% of the American student population resorts to debt to finance their education. Collectively, student debt totals $1.6 trillion, according to the Federal Reserve Bank of New York. “The student debt crisis was getting a lot of

attention even before the pandemic, and it was having an effect on students’ decision-making,” said Deborah Diamond, president of Campus Philly, in an interview with Invest:. “State-affiliated schools were becoming much more popular because of affordability, while private and nonprofit schools with high tuition fees were taking a hit. Schools that were struggling prior to the pandemic will probably see conditions because of events this year. The wage premium for a college degree is still extremely high, meaning that investing in a college education yields a strong return in what graduates earn with a degree.”

With COVID-19 and the advent of generalized online education, higher education institutions need to sharpen their edge more than ever in the digital landscape, showcasing an attractive return on investment for their students. Online learning is acting as the great equalizer as it leans heavily toward the added value of the content of education when the “college experience” factor has been removed. That is with the added caveat of finding ways of keeping students engaged in an interactive digital learning platform and training faculty and staff to use the median properly.

EDUCATION OVERVIEW

Philadelphia has the fourth-largest media market in the nation, supported by many IT and tech programs at local colleges and universities.

For graduates in the COVID-19 era, the job market remains uncertain in the pandemic’s wake. On one hand, new job opportunities are emerging that were not necessarily in demand pre-COVID, on the other hand, remote working has complicated the onboarding process and the development of a corporate culture.

It is not all bleak for recent graduates, however, as remote work has also unlocked opportunities for jobs at companies that do not necessarily have a footprint in the local market. Drexel University met this moment by transferring its iconic co-op program to the remote landscape. Compared to the 98% of students who were hired after finishing the original program, 87% of students in the remote co-op found jobs.

Philadelphia is also looking to provide the tools to either re-skill or upskill the talent that was impacted by the pandemic and either lost their employment or have just graduated and are actively looking for a job.

Professional services corporation Accenture joined the Chamber of Commerce for Greater Philadelphia, Philadelphia Works and Graduate! Philadelphia to launch the Philadelphia Skills Forward Initiative in December 2020. The primary aim of the initiative is to help workers affected by the pandemic to attain new skills as the bedrock toward resilient careers.

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Through entrepreneurship, health tech and IT, the initiative looks to train more than 5,000 people in an 18-month period.

Just as technology was instrumental in the online learning transition to address the pandemic, its myriad applications are paving the way toward the future of education, which academia needs to capitalize on. One such example is Modern Mouth, a 3D education platform founded in 2020 focused on providing anatomical and scientific 3D models that educators can integrate into their courses. The platform could be extended toward chiropractic, nursing, dental assisting and dental hygiene education purposes.

The technological revolution also demands an equally ambitious curricular update. Artificial intelligence, data analytics, machine learning, automation and cybersecurity are but a few of the avenues higher education is called upon to program for the future of work. St. Joseph’s University, for example, is taking higher education sports to another level with the launch of an esports class and club.

The nascent esports industry is well on its way to becoming a global behemoth as it is expected to surpass $1.5 billion in value by 2023. A $50 million, next-generation esports Fusion Arena is scheduled

EDUCATION OVERVIEW

to be inaugurated in Philadelphia before the end of 2021, courtesy of Comcast Spectacor and The Cordish Companies.

Workforce preparation In December 2020, Philadelphia Works reported that as a result of COVID-19 and the ensuing economic crisis, more than 233,000 newly unemployed Philadelphians had filed initial claims for unemployment compensation with the state of Pennsylvania. The figure represents 30% of the city’s labor force. To address this issue, the Pennsylvania Department of Labor and Industry has deployed a strategy that encompasses High Priority Occupations (HPO). The latter are job categories that are in demand among employers, with evolving skill needs and familysustaining wages. The organization also offers career services including five different employment sections to further fuel that effort: job openings; free career preparatory workshops; coaching for youth and young adults to land their first job; career coaches and career pathways.

The explosion of e-commerce during the pandemic also has fostered strong demand for logistics talent

and Philadelphia Works is taking notice. In November 2020, it announced another initiative directed at indemand logistics jobs, in partnership with Prologis and Jobs for the Future. Prologis’ online warehousing and distribution program offers self-paced, 30- to 45-minute courses that can be taken on any device and is accessible for adults of all ages and most education levels. The target for this initiative is to train 800 unemployed workers so they can join the ranks of the transportation, distribution and logistics sectors.

At the state level, Pennsylvania launched PAsmart, a digital platform that connects people to employers, upskill and re-skill initiatives, training and apprenticeship opportunities, education offerings and the possibility for people to retrace their career path. The state’s proportion of people with a bachelor’s degree or better education levels is 31%. In contrast, PAsmart estimates that by 2026, there will be close to 600,000 job openings in Pennsylvania, 9% of which will be STEM-related. Knowing this, PAsmart reflects Pennsylvania’s urgent ambition to increase the number of active Pennsylvanians with a certificate or degree to 60% by 2025. ( )

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Business schools Business schools are adapting curriculums and bridging gaps in edcuation. Educational leaders discuss their role and outlooks for the segment.

Joseph DiAngelo Dean St. Joseph’s University – Haub School of Business

How important is the increased emphasis on STEM curriculum to higher education in Philadelphia?

Philadelphia has 88 colleges within 25 miles. It is the largest concentration in the US. Boston has more students because of the capacity of some of its universities but it only concentrates 75 institutions in the same space. STEM is becoming increasingly relevant in higher education here. Our data analytics program is already STEM-certified. We are also launching a master’s in professional accountancy, which will also be STEMcertified. It is meant to help international students when they come over because they can stay an extra year or two if they have a degree from a STEM program.

What educational gaps are you working to address?

We are working on programs in neurodiversity together with the Kennedy Center Autism Project. We have a Center for Autism here. Many major companies, such as Lincoln Financial, JP Morgan, SAP and AmerisourceBergen, to name a few, are hiring employees who are on the autism spectrum. We are training managers on how to work with such employees. .

What direction will higher education take going forward?

It’s not going to happen right away but it will change dramatically. For faculty members, for example, it’s important to present their research at academic conferences so people hear about it. For universities, that can be a budgetary strain. Shifting those conferences to a virtual format can ease the inherent financial burden of such presentations.

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EDUCATION ROUNDTABLE

Paul Jensen

Provost Drexel University

The Drexel Solutions Institute connects organizations and the university. How does this benefit students and faculty?

We are building the infrastructure to better engage with students and faculty in this partnership with industry.

We just launched our first cohort of Provost’s Solutions Fellows. These are faculty from across the university in all different disciplines who have an interest in working with industry either through research and/or teaching.

One of the critical responsibilities of the fellows is to act as ambassadors in connecting other Drexel faculty with external partners. In the next year, we’ll be focused on increasing projects through the Solutions Institute and integrating them with our education and research programs.

What is your outlook for the education sector in Philadelphia?

I think the outlook is strong because Philadelphia is still known as an eds and meds city. One of the benefits of being in higher education is that we have the ability to pivot to remote delivery when necessary, and this is not the case with other industries. We’ve been fortunate in that we have been able to continue, albeit in a different format. This is a crisis that is accelerating the pace of change in many ways. It is driving innovation in ways that were inevitable but that are unfolding even more rapidly.

As a university, we have the near-term priority of navigating through this pandemic. This is a historic time for our nation in terms of social justice and addressing challenges of institutional racism and our focus on that will continue.

MarySheila McDonald Dean La Salle University School of Business

How is the School of Business addressing gaps in the traditional higher education system?

We are continuously working with industry through our advisory boards and corporate partners to gain feedback and insights as to their changing needs. We then can communicate this to our students and adapt and even change the curriculum when necessary so that we meet the needs of both our students and the professions they hope to join upon graduation. Our new, required sophomore year professionalism and career development course was placed into the curriculum just as students are preparing to interview for internships.

Sometimes, I see young people are a little lost and many of our freshmen will come in as “undecided business” in terms of which discipline they want to study. It is helpful to expose students to opportunities that will help them find their direction.

How has the past year reshaped your goals?

Our faculty and staff have used this time of disruption as an opportunity to discuss with our students the need to be agile business learners, as well as to focus on the sectors where the pandemic has spurred tremendous growth. Our Center for Entrepreneurship has been a leader in this discussion and reframing of an economic outlook. An example is that students in the center which works with a local vodka brand helped with the strategy to temporarily repurpose equipment and alcohol stocks to create a hand sanitizer that was distributed to the local healthcare community. I think for entrepreneurs who can effectively use analytics, there are opportunities to reimagine business and relationships. www.capitalanalyticsassociates.com

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Charles Cairns.

Annenberg Dean, College of Medicine Senior Vice President Medical Affairs Drexel University

How would you characterize the new campus the college has opened in West Reading?

It’s such an exciting opportunity for us. This campus is truly going to be both groundbreaking and evolutionary.

Reading Hospital is such a well-established hospital, the largest hospital between Pittsburgh and Philadelphia, and it has really grown rapidly to fill the needs of that population. It is complementary to our other campuses in Philadelphia and around the country. We will have an opportunity to not only integrate into a world-class hospital, and Reading Hospital has been named one of the Top 50 teaching hospitals in the United States, but also to interact with the population of Reading and surrounding counties. The facility itself is world-class.

How did your healthcare tracker app evolve?

Prior to the pandemic, we had been working on how to better reach out to communities to engage people who haven’t been traditionally involved in clinical trials, so we had to figure out a way to have a connection to those communities, how to obtain information accurately and effectively and also, how to provide feedback of value to those communities in order to enhance enrollment into clinical trials, as well expanding the diversity of populations in clinical trials. We had started a conversation with our partner organization, My Own Med, on how to better incorporate under-represented communities into clinical trials of respiratory virus infections in late January of 2020 when it became obvious that the pandemic was taking off. We worked to create an information system that would use the lessons learned in the clinical trials app and start to apply that first to situational awareness of the pandemic, and better understanding of the impact of the virus, symptom tracking and prioritizing those for testing. It has allowed us to get a comprehensive situational view of what’s happening on campus, how it is spreading, who’s infected, where they are and how we can intervene. It also gives us a portal to facilitate testing and to provide for trusted healthcare information about COVID. 182

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Philadelphia has the second-largest university population in the United States.

( ) On the Philadelphia corporate side, there are a couple of initiatives to propel the city toward the top-tier of technology. In a joint effort between the Philadelphia STEM Equity Collective and global healthcare heavyweight GlaxoSmithKline (GSK), $10 million will be contributed over the next 10 years to higher education programs to help students fulfil their STEM career ambitions.

The nonprofit front is also seeing significant activity toward innovation and disruption. Thanks to a $250,000 federal grant, Philadelphia’s University City Science Center will be expanding its “Building an Understanding of Lab Basics (BULB)” program. Its first iteration gathered 10 participants with a GED or high school diploma to train them for careers in the biotech industry at no cost.

Emphasis on trades A joint report between the Associated General Contractors of America (AGC) and Autodesk published in August 2019 found that 80% of contractors across the United States find it difficult to find the talent to fill their craft positions, which make up the lion’s share of the industry’s workforce.

CONSTRUCTION EDUCATION OVERVIEW

John Swartley Associate Vice Provost for Research Managing Director Penn Center for Innovation University of Pennsylvania

In Philadelphia, the General Building Contractors Association (GBCA) is taking the lead to solve the problem. Since as early as 2015, the GBCA has worked full steam ahead to bring a bevy of partners to the table to assist in that effort — local schools, youth groups, hands-on training, classroom training, work-ready skills training and boots-on-the-ground recruitment. There are also programs in place that are designed for a long-standing and successful career in the construction trade. These programs include the ACE Mentor Program of Greater Philadelphia; the Mercy Career & Technical High School’s seven career and technical education (CTE) programs; and YouthBuild Philadelphia Charter School’s building trades track. The group Women in Non-Traditional Careers (WINC) also is helping ensure that women have an opportunity in the male-dominated trades.

The organization found that fewer than 10 percent of women go into these nontraditional employment paths and make a career out of them.

Remote learning As higher education institutions pivoted to remote learning, the process unveiled that close to 14,700 ( )

Why is PCI important for the community?

PCI was formally launched in mid-2014, but it was at least five years in the planning. Prior to PCI, we were a more traditional center for technology transfer that focused mostly on patenting and licensing, as well as supporting a growing number of Penn startups.

Those are all critically important core activities that help protect and advance Penn technologies toward partnerships and business deals with the private sector. But we also realized that continuing to focus solely on patenting and licensing was not going to be enough because the translational needs of our population of innovators at Penn are far more diverse, and we needed to be able to facilitate access to a broader range of commercial support activities such as more development partnerships and R&D alliances.

We knew that to do that the university needed to be a better facilitator of the interaction between the faculty and the private sector and we channeled that objective through the formation and launch of PCI. We recognize that the university is a powerful player within our ecosystem and we take that role very seriously. If we can become better at attracting partners that want to co-develop projects and business opportunities that will in turn result in downstream investments in further research and innovations, as well as businesses and employees that situate themselves in greater Philadelphia, that becomes a truly virtuous cycle.

What is your outlook for PCI and the life sciences sector in Philadelphia?

We will continue to maintain our commitment to making these productive connections between our stakeholders on both sides of our partnerships for both established sectors and newcomers alike. One of our key priorities is making sure that my team and I remain as flexible as possible in continuing to support our existing programs, but to also be able to pivot quickly and nurture new ideas and business opportunities as they arise. www.capitalanalyticsassociates.com

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oundtable:

Community colleges Community colleges play a fundamental role in communities. Here, leaders discusses the importance of local talent, the role of diversity and inclusion and navigating revenue challenges.

Victoria Bastecki-Perez President Montgomery County Community College

How important is it to keep talent in the local area?

The need to keep talent within the Montco Family has never been more apparent. When we look at our own workforce and the needs in terms of our continued recruitment, hiring, and retaining top-notch talent, we do so while aiming to be the best in class in higher education. Keeping it local is very important.

Investing in MCCC is not only an investment in our students, but it also is an investment in the future and the viability and social mobility of individuals within the county, region, and Commonwealth. Ninety-eight percent of our graduates continue to live and work in the region, generating an additional $232.5 million in state and local taxes throughout their careers, according to a 2018 economic impact study. Through student spending, payroll, and day-to-day operations, MCCC supports over 9,100 jobs in the region, and MCCC provides an 11% return on investment for state and local taxpayers.

We’ve always had strong relationships with our K-12 partners and especially with high schools in the area with our dual enrollment program. We service between 1,5001,700 high-school students through these programs.

Through the pandemic, we were seeing that some of our partner high schools were finding it challenging to offer certain advanced placement courses. As they were transferring to remote learning, we were able to help them by offering our online courses to high school students at a special rate. If these students are interested in accessing even more courses, they can continue on their pathway to earn a certificate or an associate’s degree for employment and/or transfer.

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L. Joy Gates Black

President Delaware County Community College

What role are diversity and inclusion playing in the school’s development?

Even prior to my arrival, Delaware County Community College has had, for many years, an Institutional Diversity Committee focused on creating greater awareness of the rich diversity that exists within the institution.

In November 2019, we hired the college’s first chief diversity, equity and inclusion officer, and she hit the ground running. That has been a game changer in many ways at the college. It really complemented the work that was already taking place.

Fast forward to 2020 and the coronavirus pandemic, add to that the civil unrest that gripped our communities, and our nation reached a tipping point.

That civil unrest was the culmination of what I and so many people of color have experienced for so long, the cruel reality of the disparity in equity and social justice in this country. After the tragic killing of George Floyd, the college commissioned a white paper on the creation of a Center for Equity and Social Justice.

It is housed under our Office of Diversity, Equity and Inclusion. It was the missing piece to the puzzle in terms of providing the tools to our students to be effective in their communities. We created the Center for Equity and Social Justice with an external focus, engaging the broader community and having difficult but necessary conversations. We launched a series of free, community-centered discussions that we call “Dialogues for Diversity” and held our first, virtual dialogue in July 2020 on community policing, with several speakers, including a police officer, a police chief and an attorney.

EDUCATION ROUNDTABLE

Donald Guy Generals President Community College of Philadelphia

How will the school navigate the lost revenues from the pandemic?

Community colleges have been hardest hit by enrollment declines during the pandemic. Enrollment was down about 14% in the fall semester, and our spring enrollment is down about 18%. The CARES Act did not cover the revenues we lost from tuition, so we continue to come up with creative ways to navigate lost revenues.

We were fortunate to see an increase in out-of-county enrollment, which really helped to mitigate our revenue losses. We’re putting extra resources into marketing and recruiting and we’re taking a conservative approach to costs.

We’re also fortunate that the Higher Education Emergency Relief Fund II (HEERF II) authorized by the Coronavirus Responses and Relief Supplemental Appropriations Act of 2021 (CRRSAA) includes allocations for our kinds of organizations. Regardless of the outcome, we will not increase tuition costs.

I think virtual learning is one of the best things to come out of this scenario. We will never return to a scenario where we are only providing face-to-face learning. Teachers are now pushing boundaries and those who previously did not think they were able to teach certain courses online are finding they are able to do so.

There is historical data showing that community colleges have an inverse relationship with the economy, so we will be needed when people begin to seek skills development. I think in a year from now our enrollment will be booming and we need to prepare ourselves for that.

Stephanie Shanblatt

President Bucks County Community College

How is the college committed to making education more accessible to different demographics?

Many of the grants we have are for workforce development purposes. The county has been highly supportive of our workforce program and we recently received another grant for it. Almost all students who go through our metalworks and industrial maintenance programs do so tuition-free thanks to these grants. There are other grants for which we’re working with the Bucks County Career Link and our Workforce Development Board. We have a grant to help in-school youth and a second one for outof-school youth — individuals 16 to 24 years old who are neither engaged in education nor employed. We assist them in getting a GED if needed, training and help get them on a path to a career. We also have a grant with the National Science Foundation to help students transition from our workforce program to our engineering program.

What is your outlook for Bucks Community College and the education sector?

The college is in a really good place. We are financially solid. We are not in danger of going under. We believe higher education in general to be in a good place. For several schools, it has been more challenging than it has been for us, mainly for residential schools. We do think that as we begin to enter the recovery, both two-and four-year schools and workforce training will all play a significant role in what this new economy looks like.

Technology is called to play a more significant role in education. Jobs will be different too. How we all respond to that is not only a challenge but also exciting. Our overall outlook is bright. www.capitalanalyticsassociates.com

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Marilyn Wells Chancellor Penn State – Brandywine

In what ways you are supporting and addressing equal opportunity on your campus?

It is important to underscore that Penn State Brandywine is the most diverse of all the Penn State campuses, with over 40% U.S. students of color. About 70% of our students receive federal financial aid or scholarships, and we have a significant presence of first-generation students. Over the years the campus has had a variety of committees related to things like diversity and veterans. This year, we elevated those and established Chancellor’s Commissions on Equity

by Design. We have five of those. We are addressing accessibility and disabilities, empowering women, veteran and military students, gender identities and sexual orientation, and racial and ethnic justice. We’ve elevated those from committees to Chancellor’s Commissions with very specific charges, looking to base their work off of data, tapping into national and Penn State resources.

Another significant change is that in the past, those committees were largely composed of faculty. This year, every one of those committees is populated by faculty, staff and students from all areas of the campus.

What is in Penn State - Brandywine’s pipeline for this year?

In 2021, we will launch our new Penn State Brandywine Strategic Plan with three grand goals – grow our student population; foster diversity, equity, and inclusion; and increase our visibility. I’m equally excited about Penn State Brandywine’s expanding influence in job creation and economic growth. Our plans are ambitious. We’re looking forward to the ribbon-cutting, hopefully this summer, of our new community makerspace in Downtown Lansdowne.

Also in our pipeline is a new social entrepreneurship lab on our modern campus, partnerships to support Brown and Black business ownership, innovation and entrepreneurship experiences for youth and adults, and many other “future of work” initiatives.

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( ) students lacked a computer and more than 21,500 did not have an internet connection on hand, laying bare a profound digital divide. Philadelphia is preparing a two-fold strategy to address it. On one hand, the city is partnering with Verizon for a complete revamp of its public computer centers. The partnership will inject $50,000 into the Philadelphia Fund for Leadership, Innovation and Entrepreneurship, which in turn will provide funds and guidance to minority entrepreneurs and innovators in Philadelphia. As a result of COVID-19, the local government put in place a program through which any family with a public school student that does not have internet access can get it for free through June 2022.

In January 2021, the city also launched a Request for Proposal (RFP) to be able to count the number of households without internet connectivity or showcasing unstable, low-bandwidth capacity. The idea behind the RFP is to provide the city with the capacity to gauge its progress in closing the digital gap. Paired to the PHLConnectED initiative, Philadelphia is demonstrating its commitment over the long-term, and not just as COVID-19 subsides, to solving the digital diving.

Another critical aspect to do so is infrastructure.

In May 2020, Philadelphia’s Digital Literacy Alliance (DLA) confirmed it would be granting $90,000 to three organizations — Community Learning Center; ExCITe Center at Drexel University and SEAMAAC — to create “digital navigator” positions to assist people in a variety of ways,ranging from free internet service to providing digital literacy training.

K-12 While Philadelphia school leaders have expressed their confidence that schools will open at a reduced capacity for the 2021 school year, unknowns and concerns remain as the school district tried to reopen twice – once in September then again in November – throughout 2020 for 30,000 students to return to school, from kindergarten to third grade. A reopening plan was being drafted in 2021 while the inequalities in higher education also became evident among K-12 institutions.

What is more, remote learning at the K-12 level raised the concern of enhanced cyberbullying in online classrooms. Tech-company L1ght identified that during the pandemic, there has been a 70% increase in hate speech and a 40% increase in online toxicity between students in online platforms.

Added to the challenge of going remote, the Philadelphia School Partnership released a report in January 2021 that analyzed the last three years

EDUCATION OVERVIEW

of enrollment, student achievement and growth in Philadelphia’s schools that cater to the education of close to 140,000 children, ranging from kindergarten to eighth grade in public schools and city charters. It found that six out of 10 of these kids still attend lowperforming schools. The report could act as a prelude for necessary systemic change to provide the skilled workforce of the future.

Looking ahead Philadelphia has all hands on deck to ensure its education system meets the demand of the future in terms of preparing the next generation of talent trained to cater to the needs of disruptive, technological and top-tier companies. The city is in catch-up mode and so is its educational system as it continued to reel from the pandemic in early 2021. The lessons learned through this experience will prove critical to laying the foundation of Philadelphia’s higher education system of tomorrow.

Ronald Matthews, president of Eastern University, believes the region is well-positioned to deliver on its promise. “Large urban areas are magnets for young adults,” he told Invest:. “Philadelphia is distinctive because it represents the best of a large city and a smaller town. Philadelphia has more institutions of higher learning than any other city in the world. There are 99 colleges and universities in this city alone.

Diverse neighborhoods within a large urban metropolis provide amazing educational opportunities and unmatched resources including libraries, museums, performing arts, renowned hospitals and medical services, cutting-edge pharmaceutical industries, and a wide variety of employment opportunities.”

Philadelphia is consistently ranked as one of the best cities in the United States for STEM education.

EDUCATION INTERVIEW

Program analysis Market research, continuous analysis help shape curriculum updates

Mike Mittelman President – Salus University are over 55 years old. That creates a requirement and an opportunity for an educational institution like ours.

We already have the approval from our board, we have hired a consultant to move forward and we are planning on launching it in the fall of 2021.

What sets the university apart from others that offer similar programs across the country?

If you compare optometry, as an example, these are standardized programs, for the most part, because students have to go before the national board and take national exams, so they come out pretty much with the same skill set. What’s the differentiator? The value we bring to the entire educational process. We expose all of our students to clinical experiences much earlier in their training than other programs. We have also developed the nation’s only three-year optometry program not requiring an MD or Ph.D. and are about to launch a three-year doctor of audiology program.

What updates are being made to your curriculum to remain competitive?

We are constantly looking at what programs fit best with us. That’s how we decided on the physician assistant studies program 10 years ago as well as occupational therapy, speech-language pathology and blindness and low vision studies. Our main theme is rehabilitation.

That’s how we like to think of the programs we provide.

We recently conducted a market analysis, looking at what the next program should be. Based on our research, we’ve decided on orthotics and prosthetics.

What we’ve found is that there’s only 13 schools in the country that do this. I was surprised at that. The other thing that surprised me is that it is a profession for craftsmen that basically evolved into a master’s level profession. Around 75% of providers in the segment 188

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How did the university handle the COVID-19 pandemic to keep classes going?

There are challenges, but I need to thank my rock star faculty again, because they made the pivot from a faceto-face didactic style to online courses over a weekend.

It was remarkable. We actually pivoted our school before Gov. Wolf told us to. My faculty took about three days and worked through it. We were lucky because we’ve been investing in new technology for several years and now that investment is paying off. We had a head start in this regard as we have been offering online programs for over two decades. We had some challenges on the student side because many students, although we think of them as a digital generation, had difficulty making the switch to online learning. We’ve worked through much of this but it took some time.