State of Center City 2022
State of Center City 2022
State of Center City 2022
State of Center City 2022
State of Center City 2022
State of Center City 2022
State of Center City 2022
State of Center City 2022
Does Center City Philadelphia have what it takes to come back?
Philadelphia has charted the course that many other cities may need to follow on the path to recovery from the global pandemic, mixing live and work together in a compact, walkable setting. Nearly all new developments in and around Center City continue this trend, intermingling uses and blurring boundaries between property types: offices enriched with cafes and gyms; apartments with co-working and dog-friendly spaces; apartments atop labs; hotels mixed with residential units; condos and rentals in the same building, with health clubs, restaurants and retail animating ground floors. While the State of Center City 2022 tracks trends by industry, the interactivity of these diverse property types and uses accounts to a large degree for Center City’s past success and will be key to full revival.
For the full report, download- State of Center City 2022.
State of Center City Section Highlights
The best way to achieve progressive goals of expanding public services, affordable housing, and education is by supporting the growth of businesses of all sizes, creating more jobs, and growing the city’s tax base.
Philadelphia lost 126,500 jobs in the initial two months of the pandemic, but then steadily rebounded during 2020 and 2021, restoring 88,100 jobs (70%) by February 2022. But with 714,700 jobs, 95% of pre-pandemic levels, Philadelphia was still below regional and national rates of recovery. The most significant losses were in hotels, restaurants, performing arts institutions and museums, all sectors that depend on face-to-face interaction. Jobs in the office, health care and educational sectors were impacted less seriously, but thousands of downtown employees shifted to working from home, withdrawing their purchasing power and economic impact from the center of the city.
By the start of the second quarter of 2022, pedestrian counts on West Market Street and mobile phone location data showed a substantial increase in non-resident workers in Center City. The return of conventions, leisure travel, and arts and cultural events, increased hotel occupancy and hospitality employment. The number of open restaurants and retailers reached 80% of downtown storefronts, with many new tenants scheduled to open during the balance of this year. Transit ridership and off-street parking volumes rebounded and new housing production surged to historic highs.
To learn more, download the Economic Recovery chapter or the full report- State of Center City 2022.
In the past two years, CCD significantly expanded its basic clean and safe services, added programming to its parks and promoted restaurants and retail. The Police Department restructured deployment with new targeted beats to support the return to work.
CCD’s 148 on-street staff did not miss a single day in the last two years. Cleaners swept, vacuumed and power-washed sidewalks, removing graffiti from buildings and street furniture. Landscape teams planted, pruned and watered trees, maintained sidewalk planters, filled parks with tens of thousands of bulbs and upgraded street lighting.
To enhance safety, CCD deployed new bike patrols seven days per week, supplementing the role of our Community Service Representatives (CSRs), and working in partnership with Philadelphia Police. In 2021, CSRs had almost 154,000 sustained conversations with pedestrians seeking directions, responded to inquiries from businesses, or addressed safety, first-aid or streetscape problems. In 2021, our Ambassadors of Hope (AoH) homeless outreach teams, working in partnership with Project HOME and with crisis intervention-trained police officers, persuaded 140 individuals to come off the street and connect with services and shelter.
Through the last two years, CCD supported downtown businesses in a variety of ways. CCD is using social media to support the return to work and has launched a business attraction effort called Philly Works (phillyworks.com) seeking to position Philadelphia as an affordable alternative with shorter commute times and a better live-work balance. CCD’s Restaurant Week promotions in spring and fall of 2021 encouraged outdoor dining, takeout, and delivery options and observance of health-safety protocols.
To learn more, download the Center City District chapter or the full report- State of Center City 2022.
In the fourth quarter of 2021 and again in the first quarter of 2022, the Center City office market experienced positive net absorption, though overall vacancy remains high.
Throughout 2020 and 2021, remote work enabled businesses to continue to function and pay rent. But suburban residents, directed to work from home, were exempt from the City’s wage tax and all workers, regardless of home location, significantly reduced their expenditures on transit, parking and downtown retail services. Vacancy rates increased from 12.7% in 2019 to 18.3% in 2021. By the fourth quarter of 2021, however, the Center City market experienced positive net absorption after 18 months of contraction.
A central challenge for the office districts in all cities will be finding a new equilibrium after two years of remote work. A survey by Central Philadelphia Development Corporation of 114 downtown employers and institutions, administered in January 2022, at the height of the Omicron variant, provides some guidance for the future. While most respondents believed that greater flexibility about working location would continue for the foreseeable future, 63% expected to keep their current office footprint, 16% planned on expansion, while 21% anticipated contraction.
To learn more, download the Office chapter or the full report- State of Center City 2022.
Innovation in biotechnology and other sectors has been driven by basic research conducted at universities and health care institutions, spurring real estate development in University City that is spilling over into Center City.
Health care and education provide the largest share of Philadelphia’s jobs and constitute the second largest employment sector in Center City. These institutions are also a major driver of economic growth, attracting research and venture capital, educating the workforce and graduating entrepreneurs, researchers and tech workers, and fostering startups that are expanding Philadelphia’s role as a major center of innovation.
To learn more, download the Health Care & Education chapter or the full report- State of Center City 2022.
Following the pandemic-driven decline in tourism in 2020, individual leisure travel and group and convention demand rebounded in 2021, lifting the average daily room rate in Center City hotels to $182 in 2021, just 10% below the 2019 level.
Leisure and hospitality is the third largest employment sector in Center City, providing a range of job opportunities in hotels, restaurants and bars, performing arts organizations, and museums. The sector is highly concentrated in Center City, with 45% of Philadelphia jobs in accommodation and food services and 51% of citywide positions in arts, entertainment and recreation located downtown. Declining hotel occupancy in 2020 led to a citywide decline in traveler accommodation employment from 7,300 to 1,900 between March and May 2020, but these jobs have gradually recovered, reaching more than 6,100 by September 2021. As tourism rebounds, conventions return and business travel resumes, the hospitality industry projects full recovery will take at least 18 to 24 months.
To learn more, download the Conventions & Tourism chapter or the full report- State of Center City 2022.
Downtown arts and cultural organizations, among the largest concentrations in the country, were challenged by the pandemic, but adapted with virtual programming and outdoor performances, and are now rapidly recovering.
Greater Center City is home to 498 museums, theaters, dance, and other cultural organizations, the second largest concentration of downtown arts and cultural organizations in the country. In addition to clusters along the Avenue of the Arts, the Benjamin Franklin Parkway and in Old City, cultural venues can be found in nearly every neighborhood in Greater Center City. They draw visitors from across the region and nation; visits are often accompanied by dining and shopping excursions. Their economic impact is therefore calculated not only by the jobs they directly create, but also by the customers they bring to hotels, restaurants, retail, transit and parking garages. During the past two years, many organizations survived by live-streaming performances or instituting online educational programs, leading to innovations that will outlive the pandemic.
To learn more, download the Arts & Culture chapter or the full report- State of Center City 2022.
Downtown retail has proven resilient, with vacancy declining and brokers reporting an uptick in tenant interest and leasing activity. So far this year, 42 businesses have announced openings and many more are expected.
The retail sector in Center City regained considerable strength throughout 2021. Sustained by demand from 70,000 residents in core Center City, the third largest downtown residential population in the country, retail recovery accelerated in 2021 and the first quarter of 2022 as tourists and office workers cautiously returned. One of the silver linings of 2020 and 2021 was the growth of “streeteries” that added new vitality to Center City, keeping many restaurants active during the most challenging months.
Since March 2020, Center City District welcomed 135 new storefront businesses, including 73 food and beverage establishments, 38 retailers, and 24 service providers. Of these, 41% were national or international brands and 59% independent businesses or regional chains. Center City’s vibrant sidewalks offer customers the ability to discover a mix of local and regional retailers and restaurants.
To learn more, download the Retail chapter or the full report- State of Center City 2022.
Federal recovery dollars allowed both SEPTA and PATCO to restore 93% of their of pre-pandemic service levels, sustaining the heart of the region’s multimodal transportation network as ridership recovered.
Center City is positioned at the center of a multimodal transportation network with 14 rail lines connecting to three states, three rapid transit subway lines, five trolley lines, and 29 bus routes, with direct access from I-76, I-676 and I-95. Amtrak’s William H. Gray III 30th Street Station is the second busiest on the northeast corridor.
Transit ridership continued its slow recovery during 2021, reaching 52% of pre-pandemic levels by year-end. SEPTA is rethinking its bus system to provide more comprehensive coverage, conducting quarterly customer service surveys and offering flexible pricing options, including new passes with a three-day workweek option.
To learn more, download the Transportation chapter or the full report- State of Center City 2022.
Greater Center City’s population increased 38% percent from 2000 to 2020, while becoming better educated and increasingly diverse. With more than 17,000 units currently under construction or permitted, these trends are likely to continue.
During the last two decades, Greater Center City has become the fastest growing residential section of both Philadelphia and the entire region, as the population from Girard Avenue to Tasker Street, river to river, increased by 38% from 2000 to 2020 to more than 202,000 residents. Philadelphia has the third-largest downtown residential population in the country.
Population growth, from an increasingly diverse and educated population, supported a surge in housing production during the last two decades, as values continued to rise at a faster rate than the city as a whole. Demand has come from job growth, from students and recent graduates of the city’s colleges and universities and from national demographic factors such as the large cohorts of millennials, empty nesters and retirees.
Housing development has accelerated to the highest level in decades, with more than 17,000 units under construction or permitted by end of 2021, representing 50% of the citywide total in 6% of the city’s land area.
To learn more, download the Downtown Living chapter or the full report- State of Center City 2022.
In 2021, 28 major development projects representing $4 billion in investment were completed or underway from Fairmount to Washington avenues, river to river. Another 40 are in the planning or proposal phase. Most are mixed-use projects that support continued residential growth and stability in the downtown economy.
During the last two decades, Center City was transformed from a 9-to-5 office district to a 24-hour downtown, as more than nine million square feet of office space was converted to residential or hotels. Philadelphia has already charted the course that many other cities may need to follow, mixing together live and work in a compact, walkable setting. Nearly all new developments continue this trend, but now offer an intermingling of uses within the same development, further blurring boundaries between property types: offices enriched with amenities; apartments with co-working space and dog-friendly facilities; apartments atop lab space; hotel and residential; condo and rental in the same building as health clubs, while restaurants and retailers animate ground floors.
To learn more, download the Developments chapter or the full report- State of Center City 2022.
To search the interactive Developments map, visit the Downtown Real Estate Developments page.
In The News
May 5, 2022 | Philadelphia needs more workers to return to fully recover, says Center City District, Audacy
May 5, 2022 | Center City district calls for more businesses in Philadelphia to return to office, WHYY
May 5, 2022 | Philly’s got more tourists, conventions, restaurants and shows. So why haven’t workers come back?, The Philadelphia Inquirer