Center City District To Businesses: We Can’t Rewind To 2019
Businesses should stop waiting for workers to return five days per week and should instead imagine multiple uses for Center City’s future, the city's business improvement district says.
Center City District measures the health of the heart of Philadelphia in an annual review of foot traffic and space usage and released the 2024 State of Center City report Wednesday.
While traffic has improved, it isn’t what it was in 2019, and more offices continue to close up shop. They aren’t being replaced by new users. Last year, there were 192 leases signed for offices, down from 195 in 2022. There were 422 office leases signed downtown in 2018.
“It might be time to stop talking about recovery,” Prema Katari Gupta, president and CEO of Center City District, said at an event Wednesday. “Maybe our cities will never go back — no matter how hard we will them — to where we were in 2019. It’s time to embrace the unanticipated strengths but also the exposed vulnerabilities and really work hard to build a downtown that the region needs.”
About 70% of workers are coming into work downtown compared to pre-pandemic. That means about 82% of office space is being used on a given day, a better rate than Chicago, Nashville or Washington, D.C.
But the primary industries that take up space in Philadelphia are contracting, Clint Randall, Center City District vice president of economic development, said at the event. Some companies from nearby markets are growing by relocating or adding space downtown, he said, but they don’t move the needle much.
“Those success stories are mostly quite small,” Randall said. “They're usually biting off a suite at a time.”
Most office activity is happening in Class-A space, which made up 46% of all office deals in Center City over the last year despite accounting for just 26% of total inventory, the report shows.
A shift to improving Center City as a residential attraction has helped and will continue to, Gupta said.
“We have a 25-year history of converting office buildings to residential. Our mixed-use downtown is the envy of many pure cities that are struggling with monoculture,” Gupta said.
“I feel really optimistic that, coming out of Covid, we are borrowing particularly from these European models of work where everything is a little bit more blended,” she added later.
The number of people living downtown has increased 3% since the pandemic began. But while 201,439 Philadelphians now live in Center City, more than pre-pandemic, that number is down from 203,000 full-time residents in last year's report. More supply is coming online to keep the growth going: There were 2,844 new housing units completed in 2023, a five-year high, and there are 7,181 more units planned to be added in the years to come.
Retail and hospitality have also been rebounding, CCD’s report shows.
Hotel occupancy rose to 61.4%, and the average daily room rate rose to $219, helping boost total hospitality revenue by about 14%. Storefronts were 84.5% occupied at the end of the year, a slight improvement from 84% in the last annual report.
This has all spurred weekend foot traffic back to 100% of what it was prior to the pandemic.
“I believe we've hit critical density,” Parkway Commercial Properties President Brian Berson said.
Another challenge Center City still must overcome is public perception of its crime rate, Gupta said. That negative perception has particularly hit public transit hard.
“Less than 1% of major crime happens in or around our property,” SEPTA Chief of Staff Liz Smith said. “But if you read the news articles, you think as soon as you step on the El, something terrible is going to happen to you.”
Gupta touted the mayor’s campaign to take on public safety and quality of life issues like alleyways that have fallen into dereliction.
“Panhandling, roaring ATVs and untended dumpsters understandably make residents, workers and visitors feel unsafe,” Gupta wrote in the report.
There were 9.9 nonviolent crimes per day in Center City in 2023, down from 11.9 per day in 2019.
