PHILADELPHIA (October 10, 2023) – The vitality and economies of U.S. downtowns have steadily improved since the profound health, economic and social disruptions of 2020. Various metrics – employment, hotel occupancy, retail sales, and housing prices and rents – all show positive trends. But most city centers have not fully returned to 2019 levels of activity. An extensive national research report by Philadelphia’s Center City District (CCD), entitled Downtowns Rebound: The Data Driven Path to Recovery, provides a detailed and comparative look at the state of recovery in 26 of the largest U.S. downtowns and contains recommendations about how to accelerate recovery.
Downtowns Rebound utilizes real-time, anonymized cellphone data from Placer.ai to measure the various rates of return of visitors, residents and workers in 26 U.S. downtowns as of June 30, and documents how this impacts their post-pandemic trajectories.
“The fundamental questions that this report attempts to address are: Can – or should – we restore the status quo of 2019, or do downtowns need to reinvent themselves, learning to thrive under fundamentally changed conditions? What is the impact on the range of employment opportunities that city centers provide? What are the most effective strategies for downtown’s business, civic and political leaders to pursue?” stated CCD President Paul R. Levy, who presented the report’s key findings at the International Downtown Association (IDA) annual meeting in Chicago.
The Downtowns Rebound report seeks to assist in answering these questions by providing real-time data on the impact of the pandemic and subsequent events on the state of recovery in 26 of the nation’s largest downtowns. It begins by providing a standardized definition of downtowns, both the core commercial areas and the immediately adjacent, primarily residential areas, updating the same methodology CCD developed for Downtown Rebirth: Documenting the Live-Work Dynamic in 21st Century U.S. Cities, published in October 2013.
The report then focuses on three key groups who gather in downtowns: residents, workers and visitors. Recovery rates are calculated using data aggregated by Placer.ai, a provider of place- specific estimates of the volume of people, based on the location of their mobile phone at different times of day. Placer calculates the volumes of three types of downtown users: residents of the area, workers in the area and the number who visit as tourists, concert or convention attendees, shoppers, diners or as visitors to doctors, dentists and other personal service providers.
Placer.ai data was then used to compare trends in 2019 vs. 2023 for 26 similarly defined downtown areas, delineated to enable apples-to-apples comparisons between cities of different sizes, economic mixes and urban characteristics. Because of seasonal behavioral fluctuations for residents, workers and visitors, the impact of the pandemic and the degree of recovery are measured by comparing the daily average volume of people downtown in Q2 2019 to Q2 2023.Top- line data from September 2023 suggests that most trends have continued their upward path as summer ended.
For those 26 downtowns, the lasting impact of the events of 2020 continue to be as dramatically different as the cities themselves. The rates of recovery from 2019 to mid-2023 fluctuate significantly among workers, residents and visitors depending on metrics like length of commute, comparative downtown populations, crime rates and mix of industries.
“The lines of recovery point upward in all 26 downtowns, though rates of ascent vary considerably,” Levy said. “For downtown managers, business, civic and elected leaders, it is essential to distinguish between the many factors examined in this report as to which are within local control, what might be influenced and those structural changes that might take decades. What’s most needed now are short-term strategies that produce visible gains.”
Some key points follow to illustrate the variations among cities as detailed in the report:
Combining workers, residents and visitors in each city, the recovery rate in Q2 2023 ranged from 69% of Q2 2019 levels in San Francisco and Washington, D.C., to 92% in San Jose and 100% in Nashville.
Nashville was the only downtown among the 26 analyzed that had fully recovered its pre-pandemic volumes by June 30, 2023, but it is also city in which visitors represented an unusually high, 78%, of all people who were downtown in 2019. Only two downtowns – San Jose and Nashville – had recovery rates reaching 90% or more of the 2019 level; only nine downtowns had recovery rates of 80% or more of 2019. What all these cities share in common is having a high percentage of downtown employment concentrated in leisure and hospitality, industries for which most work must be performed in person.
The report then compares the return rates of workers, visitors and residents and provides reasons for the variations:
In Q2 2023, the average number of non-resident workers in core downtown areas ranged from 52% in San Francisco to 85% in San Antonio. Only two cities – Nashville and San Antonio – had reached an 80% or more worker recovery rate. The median worker recovery rate was 65% among the 26 downtowns. While there was no clear overall regional pattern across the 26 downtowns, the four with the lowest worker recovery rates were all West Coast cities with a high concentration of Information Technology firms, a sector in which a great deal of work was being performed remotely even before 2020. But it is important to add that many of the high-skilled jobs that are
being performed remotely tend to be jobs whose presence creates the demand for more mid- level and entry level jobs. So remote work has broader implications for workers at all skill levels.
Recovery rates for visitors were generally higher than for workers, with Q2 2023 rates ranging from 66% recovery in San Francisco to 103% in Nashville. The median visitor recovery rate was 81%. Two cities – San Francisco and Portland – were below 70%. As discussed further in the report, some of this variation appears to reflect differences in return rates of visitors from outside the region, rather than visitors from within the metropolitan area.
Residential recovery is the most advanced in nearly all cities. Residential populations in 2023 for the 26 downtowns exceeded 2019 in every city except Boston, and ranged as high as 160% in San Antonio. The median city residential population stood at 122% of the pre-pandemic level, a sign of continuing interest in downtown living.
The report also compares the 26 downtowns’ recovery rates through the lens of their unique mixes of work-from-home duration, job density, and mix of industry sectors, with the data strongly suggesting that mixed-use downtown districts are key to success:
Placer.ai data documents that workers of all kinds who don’t live downtown have been the slowest to return to their downtown offices. Recovery rates in core downtowns in Q2 2023 varied from a high of 85% in San Antonio to a low of 52% in San Francisco. Boston occupies the median recovery rate position at 65%. In addition to perceptions of public safety, which lingers as a challenge in many cities, several other factors seem to be in play. The duration of locally mandated or employer directed shutdowns probably contributed to whether workers had ample time to settle into the habit of working from home, but the decisions of hundreds of thousands of individual employers is difficult to document.
Industry Recovery by Sector
Downtowns with a higher proportion of jobs in information technology, finance and insurance, professional and business services – sectors with high proportions of jobs that can be performed remotely – tend to have a lower rate of non-resident worker recovery. Correspondingly, the downtowns most dependent on leisure, entertainment and hospitality – industries requiring face-to- face experience – may have initially seen the greatest losses but also rebounded faster with a higher percent of workers back on site. The top three cities in terms of overall recovery – San Antonio, Nashville and San Diego – are also the three cities with highest share of leisure and hospitality employment.
Job density in in core downtowns varies significantly across cities, ranging from 825 jobs per acre in Midtown Manhattan to 355 jobs per acre in Chicago to 29 in Memphis. Density may have been a deterrent in 2020: people wanted to avoid other people if they could. Geographically, the cities with the highest job and population density are in the Northeast Corridor (New York, Philadelphia, Boston), West Coast (San Francisco, Los Angeles, Seattle, Portland) and Chicago. In most of these
cities, commuters who had relied heavily on public transit before the pandemic experienced the anxiety of being crowded together with strangers and then, during recovery, the insecurity of emptier stations and transit shelters. But downtown residential density is now a positive factor in worker recovery rates.
The growth of downtown population and employed residents from 2002 to 2019 is connected to an increasing proportion of downtown workers who also live downtown. In most of the 26 downtowns for which data is available from LEHD, the percentage of downtown workers who also live in the downtown area increased from 2002 to 2019. Cities like Philadelphia, San Francisco, Seattle, Washington D.C., Boston, Denver, Midtown Manhattan and Portland have more than 20% of their downtown workforce living within two miles of the core downtown.
What this clearly suggests is that the continuing growth of downtown residential populations not only helps with the diversification of city center land-use and the re-use of older office and warehouse buildings, it adds momentum to the return to office and the support for all those jobs that rely on the presence of other workers.
“This report opens with a basic question: ‘Can downtowns in the United States rebound and prosper?’ The answer is most definitely ‘yes,’” Levy said, “but only if we plan carefully for the goals we seek, base decisions on a clear understanding of local conditions, take informed risks and make the investments required for a vibrant and inclusive city future.”
To read the in-depth 54-page Downtowns Rebound report, accompanied by dozens of charts and graphs comparing the 26 cities in a variety of metrics and a prescription for the way forward, download it at- centercityphila.org/downtownsreport.
Center City District, a private-sector organization dedicated to making Center City Philadelphia clean, safe and attractive, is committed to maintaining Center City’s competitive edge as a regional employment center, a quality place to live, and a premier regional destination for dining, shopping and cultural attractions. Find us at www.centercityphila.org.