Reading Eagle: COVID-19 continued to dominate Berks businesses in 2021

·13 min read

Dec. 26—Some familiar faces were part of the Reading Eagle's Top 10 business stories for 2021.

Over the years, events surrounding Penn National Gaming, Fairgrounds Square Mall, warehouses, Tower Health and gas prices have made appearances on the annual review lists. However, for the second year in a row, the unwanted star of the show is the coronavirus pandemic.

COVID has made such a deep impact on the business world that it has touched all 10 items on the list in some way. Unfortunately, signs indicate a return appearance on the 2022 list.

Here are the Top 10 business stories:

1. Lingering effects of COVID

The roller coaster ride of the coronavirus pandemic is rapidly approaching its second anniversary. The effects on Berks County businesses were certainly felt in 2021, as it seemed when a solution, such as vaccine development, was met with other problems.

And the other problems were numerous: supply shortages, worker shortages, inflation.

As businesses and consumers have found out, the fortune of Berks is firmly attached to the outside world.

Glenn Ebersole, in his October column for the Reading Eagle's Business Weekly wrote: "The boom in demand has overwhelmed the supply chain since the pandemic, began in 2020. Transportation has struggled to keep up as rising demand collided with COVID-19 shutdowns, labor shortages and historic weather occurrences, causing a lack of shipping containers and supplies, alongside major price hikes. Scott Price, President of UPS, recently said, 'The logistics industry does not see 2022 as having any less disruption in supply chains than in 2021.'

"Price also commented that low vaccination rates in key developing countries will likely lead to additional shortages of raw materials and components similar to those that continue to impact automakers, apparel manufacturers and homebuilders," Ebersole said.

Those costs have been passed to consumers on everything from groceries, to lumber, to Christmas trees.

2. Warehouses continue to sprout

For years, Berks County has been considered a part of the East Coast's growing logistics hub and it doesn't look like it's going to slow down anytime soon as projects are in the works in at least seven townships.

For motorists in Berks, it seems like there is an endless stream of tractor-trailers along Interstate 78 and Routes 61, 222 and 422.

According to an annual report of warehouse demand, the markets in Berks County and along the I-78 and I-81 corridors continue to be strong.

CBRE Research, a commercial real estate services and investment firm, found that Berks County has 33.4 million square feet of warehouse space with 2.4 million under construction. The total vacancy rate was 14.4%.

In its reporting, CBRE lumps Berks with two Lehigh Valley counties: Lehigh and Northampton. Overall, that region has about 135.8 million square feet of inventory and 8.2 million under construction. The vacancy rate was 7.3%

CBRE also includes the I-81 corridor between Scranton and Maryland in its reporting. For the entire area, there was 469.5 million square feet of space with a total vacancy rate of 7%.

Looking ahead, demand remained strong from e-commerce and traditional retailers, the report said, and the total development pipeline in the entire region exceeds 16.8 million square feet.

3. Hollywood Casino Morgantown

First proposed in 2018 after Penn National Gaming Inc. won the Category 4 license for the area, and delayed for months because of the coronavirus pandemic, the Hollywood Casino Morgantown opened its doors on Dec. 22.

The Wyomissing-based company's 44th casino, located just 17 miles from headquarters, features the gaming industry's latest innovations and some unique additions Penn National officials say will attract gamers in an increasingly crowded market. The $111 million facility near Route 10, Interstate 176 and the Pennsylvania Turnpike sits on a 36-acre plot that was originally slated to have a shopping center.

The 81,425-square-foot building has 750 slot machines and 28 table games plus room for 10 more table games, which is the limit allowed for a Category 4 license. There are also two hybrid games where players can wager with a live feed from table games.

Besides gaming, the casino will offer a Barstool Sportsbook along with Red Lotus Asian Kitchen and a branch of Tony Luke's, the iconic Philadelphia cheesesteak stand. Seating for the bar and Tony Luke's can accommodate about 100 diners. Red Lotus is located on the other side of the floor, adjacent to six Asian-themed table games. The Barstool Sportsbook will have an old-school stadium theme with three eye-catching features besides an area where customers can wager on their favorite teams.

For those who like to smoke while playing the slots, there's a place to go. An area for smokers to play has been built off the main casino floor and will feature 160 slot machines.

4. Fairgrounds Square Mall

The demolition of the bulk of Fairgrounds Square Mall was completed and visitors to the remaining stores at the Muhlenberg Township shopping center have noticed the new greenspace between them.

Fresh pavement, including a roadway between Boscov's, Burlington and the AMC Theatres, has been laid down.

The next question, that's surely been asked by many Berks County shoppers, is what's next?

A representative of Hull Property Group, which purchased Fairgrounds Square in 2016, said this week that things are currently on hold. The Augusta, Ga.-based company said it is looking for new tenants.

The demolition and greenspace was part of a plan Hull presented in 2018. It also included a new retail strip, a hotel, another perimeter restaurant and a townhome community.

Muhlenberg Township Manager Brian Harris confirmed that Hull has no concrete plan at the moment, but the township will listen to any future plans for the 51-acre parcel. He added that zoning could be flexible if only part of the property will be developed.

5. Worker shortage

Berks County certainly wasn't alone with a worker shortage.

The U.S. experienced acute labor shortages. After shedding 22 million jobs during the pandemic, companies refilled more than 18 million jobs — and complained that they couldn't find enough workers.

In September and October, employers listed 1.4 job openings for every unemployed American, the most in records kept for 15 years.

A rise in early retirements, a shortage of affordable child care, the reluctance of many restaurant workers to return and a drop in immigration contributed to the labor shortage.

The government also expanded unemployment aid and gave relief checks to households, bolstering their savings and allowing the jobless to be choosier about their next employer.

What made the shortage a headache for many business owners was the loosening of COVID-19 restrictions brought a flood of consumers ready to spend money.

Berks County's unemployment rate, at a pandemic high of 18.4% in April 2020, was down to 5.8% by October.

However, it seemed every restaurant in Berks County had or still has help wanted signs or ads for servers and kitchen staff this year, and no aspect of the business is spared by the labor shortage, from full-service restaurants to fast-food establishments to bars and brewpubs and coffeehouses.

Slowly but surely, hiring has risen across the service industry along with the increase in numbers of people going back to work in the second half of the year.

Additionally, some in the industry have taken approaches to remedy the labor shortage, including paying higher wages, reducing operating hours, pivoting to counter service or a takeout-only model and, in some cases, even closing altogether — either temporarily or permanently.

Still, while in business, many restaurant staffs continue to be stretched thin, owners say, and it's unclear when or if the situation will change.

6. Tower Health woes

A year into the pandemic found Tower Health trying to get on more sound financial footing. When CEO Clint Matthews, who led the acquisition of several Philadelphia-area hospitals, unexpectedly retired in February, Tower turned to board member P. Sue Perrotty, a retired banking executive, to lead the financially floundering system.

Tower, Berks County's second largest employer, was hit by bond downgrades in March.

By May, Tower announced it would restructure its medical group, impacting nearly 200 doctors and other staff in a move to improve its troubled finances.

Perrotty was named interim CEO in the expectation that the situation would be resolved by July. She was named CEO and given a contract by September, an acknowledgment that the process to unravel the system is deeply complicated.

By July, Tower had announced what it called a strategic alignment with Penn Medicine and had transferred its transplant program to Penn. It signed a nonbinding letter of intent that the two systems would explore potential areas of collaboration over about six months.

In September, Tower announced the closing of Jennersville Hospital and a nonbinding agreement to sell Chestnut Hill Hospital and about 20 urgent cares to Trinity Health Mid-Atlantic.

The moves were welcomed by bond rating agencies that gave the health system an improved outlook as stable. Tower's bond ratings remain in junk territory.

In October, Tower wrote off $370 million in the value of its Philadelphia area hospitals as a result of its attempts to sell them. Tower posted a $243.5 million loss for fiscal 2021, which ended June 30. It was an improvement over fiscal 2020, when Tower lost $415.3 million.

In November, staff and the Chester County community cheered the pending sale of Jennersville and Brandywine hospitals, but those hopes were dashed a few weeks later. This year appears to be ending in disappointment after Tower killed the deal as it found the potential buyer, a relatively new company, unable to handle the purchase.

Now, Tower is days away from closing Jennersville Hospital and about a month from closing Brandywine Hospital, leaving southern Chester County without a hospital. The community and emergency services leaders are seeking ways to cope with the great loss. It's not clear what other changes 2022 will bring.

7. Downtown Reading redevelopment

Slowly, but surely, Reading's core is seeing long-promised improvements.

Alvernia University's College Towne, a 125,000 square-foot project at Fourth and Penn streets, opened in September and includes the city's first Starbucks. On the opposite end of Penn Square, developer Alan Shuman purchased the Wells Fargo building at Sixth and Penn for $2.3 million with the intention of putting retail and restaurants on the first floor. The structure was built in the 1990s on the site of the beloved former Pomeroy's department store.

Other Shuman projects include the Medical Arts building at 230 N. Fifth St. that is planned to include 39 market rate units, renovations to the Berks County Trust building at Sixth and Washington streets, and the former Elks Lodge (Trexler Mansion) at 46 S. Fifth St.

Another prominent corner set for redevelopment is Fourth and Washington streets where the Spak Group plans to rehabilitate two dilapidated properties to the current building code and use them as a mix-use of residential and commercial space.

8. Ozzy's site sold

Ozzy's Family Fun Center, the long-time amusement destination in Ontelaunee Township, closed permanently in late 2020. The property at 5411 Pottsville Pike was sold to Stork's Plows in August.

Previously named Family Grand Prix and best known for its go-kart racing, the facility underwent an aggressive expansion beginning in the late 90s.

During the 2000s, the business rebranded as Ozzy's Family Fun Center to reflect the addition of laser tag, a roller skating rink, athletic courts, ropes course and an indoor playground to its existing amusements: go-karts, miniature golf, bumper boats, batting cages, arcade games and snack bar.

Ozzy's was among the non-essential businesses that were shut down at the onset of COVID-19, then it did not immediately reopen once hospitality and amusement businesses were allowed to resume operations. After a brief return later in 2020, Ozzy's closed permanently soon after.

Stork's Plows intends to relocate operations from its home of 35 years along Route 183 in Penn Township to the 9.5-acre site near the intersection of Routes 61 and 73 after paying $3 million for the property.

Jeen Stork, business manager for Stork's Plows, said the plan is to move the business to the new location next year, with hopes to hold a grand opening in September 2022.

9. Moselem Springs for sale

The Moselem Springs Golf Club in Richmond Township is for sale or seeking an operating partner.

The 245-acre property — which includes a private 18-hole golf course and clubhouse facility with restaurant, pub, banquet room and lodging — is listed for $2.35 million by Leisure Investment Properties Group.

"The owners are looking to either recapitalize or, if they get an offer to sell, they'd consider a business partner or selling," said Steven Ekovich, executive managing director for Leisure Investment.

Ekovich continued that the members of the Flippin family that comprise the current ownership group, Moselem Development Co., are at "different ages and times in their life" and "are ready to move on and do other things."

"Hopefully, if a new partner comes in, they'll really take over management of the course," Ekovich said. "Or, if someone purchases it, they obviously will."

"They (the family) are looking for someone to take this to the next level. They love the asset and are not interested in having someone come in to rape and pillage the property. They're looking for somebody who shares a vision of the same legacy."

The owners were targeting before the end of the year to find a capital source or buyer.

Regardless of the precise terms, Ekovich was confident that Moselem Springs will remain in the golf business.

10. Gas prices follow upsurge in driving

During the coronavirus pandemic, with people working from home or canceling vacations, cars sat in driveways. As a result, gas prices plummeted.

Fast forward to 2021. Consumers returned the road with a vengeance, driving up demand. Pump prices soon followed.

The average passed $3 per gallon in May, according to GasBuddy, which monitors gas prices across the country, as demand increased from motorists wanting to hit the road after a year of the pandemic.

It's the first time the price has persistently stayed over that mark since summer 2018, according to GasBuddy records.

Other contributing factors included hurricanes, a lack of workers and OPEC.

Hurricane Ida passed through the U.S. Gulf Coast about in September, shutting down key oil refineries in that area for an extended time, and the average cost for gas has continued to go up.

Another factor has been a lack of logistical support, as oil and gas are yet another consumer product waiting to be offloaded at ports and trucking companies that ship them are experiencing worker shortages, according to Forbes.

In recent meetings, the Organization of the Petroleum Exporting Countries, along with key oil-producing nonmembers, agreed to not increase production after previously agreeing that they would.

After briefly dropping to below zero during the coronavirus pandemic in April 2020, the price for a barrel of oil went above $80 in the fall.

By Christmas, prices in Berks had started drifting back under $3.50 per gallon, after hovering above $3.60 at some places around Thanksgiving,

Reading Eagle Top 10 Business Stories for 2021

1. Lingering effects of COVID

2. Warehouses continue to sprout up

3. Completion of Hollywood Casino Morgantown

4. Green space at Fairgrounds Square Mall

5. Worker shortage and the complicated reasons why

6. Tower Health woes

7. Downtown Reading redevelopment

8. Ozzy's site sold

9. Moselem Springs for sale

10. Gas prices follow upsurge in driving