Center City Digest, June 2021

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This edition of the CCD and CPDC quarterly newsletter includes: CCD President, Paul R. Levy's cover essay making the case for returning to work (below); CCD 2021 Budget Details; profiles of our essential on-street workers, Summer Park Events, New communications campaigns and CCD/CPDC Reports; How you can support downtown’s recovery.

To view the full newsletter, download- Center City Digest, June 2021.

State of Center City 2021

With vaccination rates rising across the region and new cases declining dramatically, both the City and State lifted nearly all health safety restrictions in early June. Regional shoppers and visitors are returning downtown. SEPTA, the Philadelphia Convention and Visitors Bureau, Ready.Set.Philly!, Visit Philly and Center City District (CCD) have all launched communications campaigns to bring back the diverse market segments that converge to create a vibrant downtown.

Some things are easier than others. Even as more indoor dining has been permitted, the number of outdoor seats at restaurants within the District grew from 3,716 in January to 6,262 in May, a 68% increase. At the end of April, only 53 of 1,906 ground floor premises within the District (2.8%) remained boarded; 37 new retailers opened in Center City in 2020; seven more openings have been announced for 2021; and brokers report strong leasing activity. Cultural institutions are seeing a steady surge of visitors (with the rainy Memorial Day weekend providing an unexpected gift of attendance at Parkway museums). With conventions still on the horizon, hotels are filling rooms with visitors from across the region and nearby cities. Passenger volumes are rebounding significantly at the Philadelphia International Airport.

Missing in Action:
What’s missing are office workers. In April, the Commonwealth and City dropped their remote work mandates, aligning guidelines for office with those for retail, restaurants, cultural institutions and casinos. In May, occupancy restrictions were relaxed. Effective June 2, the remaining density, maximum capacity and distancing regulations were dropped. Still, a May survey by the Building Owners and Managers Association (BOMA) of tenant occupancy in 18 downtown office towers found only one at 75%, one in the 30% to 40% range, five between 20% to 30% occupied and 11 below 20%.

After 16 months of continuing anxiety, lingering hesitancy over COVID remains a constraint on transit ridership, elevator comfort and office occupancy. The absence of schools and child-care keeps many families at home. Nearly every national survey of employees reveals a preference to work remotely several days per week. Whether this creates productive and innovative companies is a different matter. With the prevailing sentiment allowing voluntary selection of in-office workdays, the BOMA survey found occupancy strongest Tuesday through Thursdays. This may signify an expanding weekend syndrome, understandable since vacations have largely been off-limits for more than a year.

Remain Skeptical of Surveys:
There is a serious discussion to be had about optimal conditions for collaboration and innovation, acculturation for new employees, career advancement for younger workers, as well as for customer service. There may be variations by type and size of business. A year from now we should know if those CEOs and managing partners who take a leadership role, encouraging or commanding a full return to work, pull ahead of their competitors or have a harder time retaining employees.

There is a simple rule I’ve adopted in the last year when reading the torrent of surveys and forecasts: Don’t believe everything people say in the mood of this moment; remain skeptical about definitive predictions about the future. Recognize we’ve lived through an all-consuming global trauma still raging in many places. Think of analogies to major accidents or serious surgery or to those who survived natural disasters or terrible wars. A tentativeness lingers, the fear of recurrence remains real. Whether your prescription is “get back on the horse that threw you” or “give people time and space to recover at their own speed,” it’s likely that responses to surveys in six to 12 months will yield different results. Note, too, that Philadelphia quickly rebounded from the Yellow Fever of 1793 that killed 10% of our residents and from the Spanish Flu of 1918 that killed 1%. Both recoveries were marked by innovation and productivity.

The Larger Implications:
Individual businesses and organizations will make their own decisions about how and when to return. However, we know the collective impact of staying home. Every 500,000 square feet of occupied office space holds 3,300 desk jobs and creates employment for five building engineers, 18 cleaning staff and 12 security positions. Multiply that times 40 million square feet of downtown office space, and that’s a significant number of jobs at risk. From the standpoint of City finances, a substantial portion of the City’s and School District’s real estate tax base and the lion’s share of BIRT revenues come from the commercial office district. At least 50% of city wage tax revenues are generated downtown. A delayed or incomplete return to work will mean more fiscal challenges for the city, with impacts on services and quality of life in all neighborhoods.

Pedestrian traffic has steadily rebounded in 2021, exceeding volumes on sidewalks during any week in 2020. Still, we are at just 65% of pre-pandemic levels with 100,000 office workers yet to return. That means loss of demand for transit workers, taxi and rideshare drivers, retail and restaurant employees – all of the hourly and service workers from our neighborhoods whose positions don’t afford opportunities for remote work. This translates into lost business travelers to fill hotel rooms and eat in restaurants. Weak demand yields vacancy.

If you would like the Center City you left behind in March 2020 to be here when you return, consider how truly interconnected our economy is, not simply by digital technology, but by face-to-face interaction and sidewalk vitality. Recovery comes from the decisions we make.

State of Center City 2021 opens with a review of CCD activities in the last year, when our on-street teams and park staff were designated essential workers. With remarkably sustained support from all property owners within the District and with generous contributions to our foundation, we were able to keep everyone working, sweeping and pressure washing sidewalks, removing graffiti from building facades and street furniture, creating temporary art installations on boarded premises.

Our Community Service Representatives continued patrols throughout Center City, joined now by 11 new, civilian bike patrol officers to enhance public safety. The Ambassadors of Hope, an outreach partnership of the CCD, Project HOME and the Philadelphia police, continues to help homeless individuals come off the street and connect with shelter and services. We kept our four parks open to the public, programmed with safe activities for children and for all Philadelphians. Our staff worked with retail associations and the City to implement highly successful streeteries. We promoted open businesses, takeout and two modified Restaurant Weeks.

The State of Center City and our monthly Economic Recovery reports contain data published by others in industry specific reports, as well as original research and analysis conducted by our staff, designed by our in-house graphics team and supported by the generosity of members of Central Philadelphia Development Corporation. These reports provide a roadmap for recovery and a path beyond the pre-pandemic status-quo.

Philadelphia now has a unique opportunity to reposition itself. The temporary infusion of American Rescue Plan (ARP) funds enables the City to restore cuts, make long-overdue changes in tax policy and free up resources for permanent, equitable and transformational investments in economic development that can set the city on a path toward faster and more inclusive growth. It's time to come back. It's time to get to work.

Paul R. Levy