By Gary Smith, President & CEO, Chester County Economic Development Council
& Michael Grigalonis, COO & EVP, Chester County Economic Development Council
Gary Smith
Chester County is projected to be the fastest growing county in southeastern Pennsylvania, with growth of more than 25% anticipated by 2050. With a 2020 population of just over half a million people, the county is expected to draw 146,000 new residents over the next 30 years in a diverse business community with continued job growth. To assess the impact on Chesco and its neighboring counties, a second year of expanded data collection was recently completed by the Chester County Planning Commission with assistance from theChester County Economic Development Council. What we learned is well worth sharing with our regional business community, as we work together to create a more successful and equitable economy.
Agriculture
Chester County has dramatically transformed over the years with the diversification of multiple business sectors, including the life sciences corridor along Route 202 and the expansion of big-name financial service providers like Vanguard. One might assume this growth led to an agricultural decline, but that’s not what the data is telling us.
Despite the ongoing challenges of affordable housing, the Chester County Economy Report shows us that the concentration of ag employees is much higher than anticipated based on location quotient, an economic indicator that shows industry-specific employment rates by region. Chester County’s location quotient for agriculture is 2.34, followed by 1.95 in Berks County and 1.43 in Lancaster County in 2020. The mushroom sector and compatible industries are a key driver, despite the known labor and raw materials challenges. Together this new data shows that agriculture, in all its forms, continues to serve a crucial role.
Manufacturing
Michael Grigalonis
The decline of manufacturing is a problem that extends across the Commonwealth and the nation, but the latest reports tell a more positive story. Based on location quotient, Berks County continues to lead the way locally, followed by Lancaster County, Bucks and Montgomery counties. Here in Chester County, we’re seeing a marked increase in the concentration of manufacturing jobs, and two of the largest Chesco projects under development are in manufacturing. In Coatesville: A 120,000-square-foot expansion by Cleveland Cliffs to increase steel production capabilities. In West Sadsbury: The purchase and renovation by International Paper of a 415,700-square-foot facility.
Real Estate
Office space vacancy rates are stable here in Chester County at 10%, aligning closely with Bucks and Montgomery counties. That’s not where any of us would like to be, and we see future improvement as Class A office and industrial space rebounds from the pandemic economy. Retail vacancy, however, is trending higher in Chester County compared to our neighbors. This is a trend we’re paying close attention to, as retail continues to see dramatic changes in brick-and-mortar foot traffic during COVID-19.
Minority & Women Entrepreneurship
The number of new business starts across the nation has been widely reported, with record highs for two years in a row. Here in Chester County, we’re seeing that many of those new businesses are minority- and women-owned. This is no doubt a reflection of our increasingly diverse population. We and many of our partners are undertaking new efforts to serve this bright spot of the pandemic economy, making sure new business and first-time entrepreneurs get the resources they need to succeed.
Economic Outlook & Red Flags
The big picture here in Chesco is that our economy is in pretty good shape, with the data appearing stable or on the positive side. For example, unemployment is at 3%, which is slightly lower than before the pandemic. But there are red flags to address:
Labor Force: In 2020, Chester County had 235,948 people working in commercial establishments. That’s a decrease of 16,751 since 2019, a decline that we don’t want to continue.
Healthcare & Retail Employment: Chester County’s unemployment rate is low, but we’re seeing lower employment in the healthcare and hospitality industries when compared to neighboring counties, and even national norms.
Lending: Our data shows companies are growing, and lending activity is extremely busy when it comes to buying buildings and equipment. But access to capital continues to be a major challenge for minority- and women-owned businesses across the nation, with higher rates of denial and higher interest rates for the borrower. As an organization, one of the Chester County Economic Development Council’s top priorities is to make sure we are supporting these growing communities, including designing and building loan funds that better serve the needs of minority- and women-owned businesses.
As we all know, data is king – but only if it’s put to good use. At the onset of the pandemic, the Chester County Planning Commission saw the critical need for measurement and began the annual Economy Report leveraging data from 2019 and then 2020. As we speak, the cumulative data from 2021 is being analyzed even as 2022 data is being gathered.
Now we are using what we’ve learned to inform new business support services, including development of loan programs that prioritize lending for minority-, veteran- and women-owned businesses. We were also able to attain state funding to revive our AgConnect program, supporting the needs of Chester County’s agricultural industry. And the nomination period recently closed for the debut of our New Business Champions program, offering technical assistance and up to $3,000 in free professional services to new businesses. With so much more work to do, we know this journey is just beginning.
Gary Smith is the President and CEO of the Chester County Economic Development Council (CCEDC), and Michael Grigalonis is the Chief Operating Officer. CCEDC is a private, non-governmental entity that supports businesses in four key areas: financing solutions, location services, workforce development and innovation culture. The Chester County Economy Report can be found at www.chescoplanning.org
