The coronavirus has been ravaging the US for about six months, and new data has been released supporting the locally held notion that it is driving more people from New York to Philadelphia.
New data from location service provider Unacast shows that around 7,500 people from New York’s five boroughs moved to Philadelphia from the beginning of this year through the first week of September – about twice as many Philadelphians who went in the opposite timeframe.
According to Unacast’s MS, Philly’s MSA is the third most likely destination for those who have increased their stakes and left metropolitan New York behind Miami and Los Angeles this year. But since Los Angeles sent a similar number of migrants back to New York, Philly’s MSA has gained the most net residents of all but South Florida.
Rather than being a direct response to the coronavirus pandemic, locals believe this is an acceleration of a multi-year trend.
“I can’t say I’ve seen an increase in the last six months, but in the past two years we’ve seen an increase in renters from New York, New Jersey and Washington, DC,” said the Badger Group president and CEO Paul Badger said. “I can imagine that this is due to the relatively low cost of living and the resurgence of our inner city.”
As of 2015, Philadelphia has gained more new residents from New York than it has lost each year. This is based on research by the Center City District that increased from a net positive of around 150 in 2015 to 1,790 in 2018, the most recent year U.S. census data is available.
“I would never want to overestimate the impact of fewer than 2,000 people, but when you see a positive trend like this, it’s definitely worth keeping an eye out for,” said Paul Levy, CEO of Center City District.
When the first stories of a potential mass exodus from New York City caused by a pandemic surfaced in April or so, much of that movement could have been due to short-term escape attempts due to the city’s rising caseloads and death toll. Data from the housing list suggest that such a movement was temporary as it did not correspond with an increase in searches for new housing.
“When we look back on April, we wondered if someone would move this year because everyone is stuck in place,” Igor Popov, chief economist of the housing list, told Bisnow. “We saw a big freeze in search queries back then. But from probably the end of April and definitely into May and June, physical activity has recovered strongly. I think that summer was where most of the action took place. “
A coronavirus molecule
Unacast uses its numbers to determine anonymized individual devices in order to determine from where and over what period of time they connect to the Internet. When a device has stayed in a new location for a certain amount of time, Unacast logs this as a migration. This means that it does not take into account what type of accommodation it is moving to.
“It remains to be seen whether this is a consistent migration pattern as the real estate industry is keen to see how many of these moving companies have just been living with their families,” said Thomas Walle, CEO of Unacast. “We see that of the people who left New York, about 10% went to Florida, and the assumption is that many of those people have second homes or vacation homes there. Now the question arises whether they will live there permanently or will come back. “
As early as April, some were optimistic that summer would return to normal. Now that Labor Day is over and the number of cases in New York is lower than many other regions in the country, migration is more a response to the economic impact of the pandemic than to its health effects.
“I would still say it’s a little early to say it. It always takes a while for these things to play out, ”said Michael White, professor of sociology at Brown University, reiterating his“ wait and see ”comments in April. “It’s true that it’s not the short-term disruption people were hoping for in March or April.”
Prior to the 2020 disruptions, Philadelphia’s growing influx from New York correlated strongly with Philly’s job growth, which stagnated in the first half of the decade after the Great Recession but began to rise again about five years ago. Despite the good stock market performance this year, the US economy still experienced a major crash, which was most noticeable in the labor market. If Philly’s pattern of recovery repeats itself from the past downturn, it may lose a key factor in attracting new residents.
“We have shed a large number of jobs and are now slowly recovering,” Levy said, citing the city’s estimates of 76,000 jobs lost in February and March. “There’s no reason the migration can’t continue halfway, but I think the big leap will be when the recovery starts in earnest.”
As the likelihood of people moving to a location looking for work increases, the loss of jobs or income could be a major impetus for city dwellers fleeing to cheaper areas while staying within reach of their hometown. The four New Jersey boroughs closest to the city all had more net migration than Philadelphia, according to Unacast. Philadelphia proper has lost net residents to Counties Bucks, Montgomery, and Delaware to the west and Counties Camden and Burlington to the east – more than the population it has gained from New York.
Center City, Philadelphia, as of early 2017
Sacramento has become a popular destination for workers with jobs in the San Francisco Bay Area who can no longer afford to live, much like Richmond, Virginia, for Washington, DC. Philly is many times bigger than both, but only 20 years old, miles farther from New York than Sacramento from San Francisco. When finding Philadelphia apartments on the Apartment List, New York is five times more likely than its closest competition in Washington, DC
Although both cities are losing tenants to their suburbs, the multi-family landlords of Philly and New York are behaving very differently. Philadelphia rents have remained relatively stable, although franchises are becoming more common in the market while Manhattan rents have fallen. (Philadelphia stays far cheaper by the square foot.)
Part of the cause could be the huge gap in the number of new units going online, but Philadelphia has also seen an overall surge in apartment searches on the apartment list. It is the largest city in the country, which is positive for this category.
“Philly is obviously more than just a peripheral city, but it shares key features with Sacramento and Richmond,” said Popov. “[It’s] 100 miles from much larger job centers and with a fair proportion of people wanting to stay near those job markets looking for value – some kind of hedge their bets. “
With working from home almost certainly true for a larger proportion of the workplaces, even if the coronavirus is a thing of the past, the concept of being close to work is likely to change. Maybe more than two hours of walking into New York wouldn’t be so daunting if you only had to do it once or twice a week.
“The disruptive impact of COVID-19 has likely caused many individuals and organizations to re-evaluate proximity as so many people started working remotely,” White said. “And that change likely influenced the decisions people made about being close to employees, customers, or other organizations …
“Philadelphia’s advantage is that the cost of renting and housing space is lower than in Manhattan. Once individuals have considered the proximity, they still have instant remote access to work, but can physically get to DC, New York, or other locations on the East Coast in a relatively short amount of time. “
For those who have lost a job and can’t find a new one at the same wage, or for those whose wages have been cut, Philadelphia is an option – and not just because the median rent is still lower than suburbs like Jersey City. The urban live-work-play structure, which has been touted as a magnet for young professionals for years, has not completely lost its attractiveness in the pandemic.
An illustration of the Durst Organization’s proposal to develop two parcels at Penn’s Landing on the Delaware River in Philadelphia.
Although both Philadelphia and New York have reopened for al fresco dining at reduced capacity with no immediate spike in coronavirus cases, pedestrian traffic in Philadelphia recovered significantly more than in New in the spring, according to both companies York Unacast and Center City District.
“People also look for different cities because they still are [value] urban culture and there are job opportunities, ”said Walle. “We saw Philadelphia and Boston recover faster than New York or DC.”
Pedestrian traffic in Manhattan is still 80 to 90% lower than it was at this time last year, based on census data, according to Unacast.
Philadelphia has a slight lead over New York when it comes to indoor dining. On September 8th, the dining rooms of the restaurants reopened to 25% capacity, but New York City does not allow indoor dining until September 30th. This does not fully explain the almost normal traffic gap Levy returned to in Philadelphia. Unacast did not have pedestrian traffic data for Philadelphia at the time of publication.
With unprecedented circumstances forcing unpredictable demographic patterns, Walle, White, and Levy agree that it is too early to say for sure whether Philadelphia will stick to the profits it is making on New York. (Walle suggested Christmas would be a better trend-monitoring milestone.) But the commercial real estate industry may be moving faster.
“I’ve seen an influx of out-of-state developers investing in Philadelphia,” Badger said.
The Badger Group had teamed up with Hoffman & Associates of DC to come up with a proposal to develop Penn’s Landing, which was ultimately lost to the Durst Organization of New York.
“It’s been a common trend over the past few years,” Badger said. “But especially in the last six months, new projects have been proposed by Out-of-Towers.”
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