With a population of about 1.6 million, Philadelphia is the largest city in the Commonwealth of Pennsylvania, the second largest on the US east coast, and sixth largest in the whole country. Yet Philadelphia’s investment appeal goes far beyond size, being one of the trendiest yet most affordable cities in the US.
“Philadelphia is all about the people who live here. Philadelphia is where creative, determined and collaborative people come to live, work, play and make their marks. Philadelphia’s diverse population of talented, innovative people strive to think differently—with passion and a spirit of invention,” Jim Kenney, mayor of the City of Philadelphia, tells Investment Monitor.
“Passion is, and always has been, the fuel that sparks possibility in Philadelphia. Here, you can make a difference in a city that’s small enough to make an impact, but big enough that your impact matters,” he adds.
Another selling point, according to the city’s department of commerce, is its location at the heart of the Northeast corridor. It is two-hours drive from New York City to the north and about the same from Washington DC to the south. The city has a diverse transportation infrastructure, including the Philadelphia International Airport, Amtrak’s Northeast Corridor rail service, major interstate highway access, and the Port of Philadelphia.
“Philadelphia’s seaport industry is strengthening with trade in and out. The city’s first direct shipping route between our port and Asia, with China and Taipei was recently established by Wai Han Lines. The Port of Philadelphia is the fastest growing container port in the US East Coast with $546m in container upgrades bringing family-sustaining jobs to the city,” a spokesperson for the department of commerce told Investment Monitor.
The demographics of the county of Philadelphia is one of the most diverse in the US, with a population made up of around 43.6% Black or African American, 44.4% white, 15.9% Hispanic and 8% Asian, according to the US Census Bureau.
“Entrepreneurs of diverse backgrounds and walks of life are at the essence of our thriving economy,” says Pierre-Olivier Lugez, senior director for international business and global strategy for the City of Philadelphia.
“Philadelphia is home to communities that have been expanding local markets and growing commercial districts for generations,” he adds.
A hub for cell and gene theraphies
One of the flourishing – but equally most established – sectors in Philadelphia is life sciences. The city is the birthplace of the first FDA-approved cell and gene therapies, and boasts health care and life sciences university hubs, explains Sam Woods Thomas, senior director of business development at the Philadelphia Department of Commerce.
“Philadelphia is home to innovative pioneers of cell and gene therapies that are influencing the landscape of global healthcare systems,” says Woods Thomas.
“The city is destined to continue bringing biomedical breakthroughs and medical marvels for the region. No one should be surprised when, in the next few years, more miraculous treatments and cures come out of our city,” he adds.
The Department of Commerce is striving to position Philadelphia as the global capital of cell and gene therapy, explains Dr Rebecca Grant, director of life sciences and biotechnology at the Department of Commerce.
”We are proud that the Philadelphia region is home to more than 2,000 medical technology companies, 15 major health systems and more than 50 of the most-cutting edge cell and gene therapy development companies.”
From 2018 to August 2022, $4.2bn was invested in cell and gene therapy companies in the Philadelphia region by venture capitalists, according to data from the city’s Department of Commerce.
In 2021, over $8bn of venture capital was attracted to the region, with a third of this going to life sciences start-ups and companies.
“Over the past decade, there have been many milestones achieved in healthcare research and life sciences leading to advanced cures and treatments in Philadelphia,” says Dr Grant.
“We have seen an increased number of life science lab start-up companies as well as increased number of established life science companies either due to growth or relocation,” she adds.
Philadelphia’s FDI landscape
Over the past decade, the city has seen a rise of e-commerce and alternative methods of reaching consumers, such as pop-ups, as well as an increasingly young and diverse population, explains a spokesperson for the Philadelphia Department of Commerce.
At the same time, the city has seen its restaurant and nightlife sector turn more dynamic, as reliance on hospitality, tourism, arts and culture increased.
As part of its strategy to boost investment, the City of Philadelphia recently introduced reductions in the net income portion of the business income and receipts tax (BIRT), and reduced wage taxes to their lowest levels in decades, says the spokesperson.
“The City of Philadelphia passed a budget for 2023 that includes reduced tax rates for BIRT, earnings tax, net profits tax, school income tax, and wage tax. This brings the BIRT to its lowest level since the late 1980s and the wage tax to the lowest in nearly 50 years,” explains the spokesperson.
Attracting multinational companies is also part of the city’s agenda, says Dawn Summerville, deputy director of the office of business development and workforce solutions for the City of Philadelphia.
“The City of Philadelphia works to attract and retain multinational companies in Philadelphia, while expanding the growth of local companies,” says Summerville.
“The goal is to equitably position Philadelphia as a diverse hub attracting international and domestic businesses across all sectors,” she adds.
GlobalData's FDI Projects Database records a total of 35 projects in Philadelphia in the three years to 2021: nine in 2019, 14 in 2020 and 12 in 2021. Out of these, 26 were new projects, while seven were expansion projects and the remaining two were co-location projects.
Business and professional services was the sector that generated the largest amount of projects, a total of seven over the period, followed by construction and real estate with five, and then biotechnology and financial with four projects each.
In 2021, Spark Therapeutics, the US-based developer of gene therapy treatments, which treat debilitating genetic diseases, and a subsidiary of F. Hoffmann-La Roche, a Switzerland-based multinational healthcare company, announced plans to invest $575m to open a new 46,452m2 (500,000-square-foot) innovation centre on Drexel University’s campus in Philadelphia.
The city is not resting on its laurels according to the city's commerce director, Anne Nadol, and is “constantly expanding tourism, trade, and connectivity by adding new routes to foster the movement of cargo, business and investment connections worldwide”.
“These investments are fostering thousands of high impact jobs in the region, creating opportunities to revitalize vast land parcels and producing billions of dollars of economic impact,” she adds.
Investments in other sectors separate from life sciences are also being fostered, explains Sophie Heng, the City of Philadelphia's director of business development, creative economy.
“The creative economy is one of the most dynamic areas of economic development. The sectors stimulate innovation and promote Philadelphia’s cultural diversity.”
“We are dedicated to identifying growth opportunities for the existing Philadelphia creative ecosystem by connecting entrepreneurs with resources, incentives, and grant opportunities,” concludes Heng.
So while Philadelphia has its established world-leading sectors, such as life sciences, which continue to attract investment, it is also focused on further expanding the broad range of business areas that are supported by foreign companies. As recent data show, no one sector dominates inward investment into the city and most investments since 2019 have been new ventures, underlining its continuing attractiveness as an investment destination.