Restoring, Returning, Reanimating

The global pandemic, local stay-at-home mandates and civil unrest created extraordinary challenges for all cities. In Center City, pedestrian volumes initially plummeted by 72%, as office workers, hotel guests, regional shoppers, students, theater and restaurant patrons disappeared. At night, streets were devoid of cars, sidewalks were empty. From the very start in March 2020, we had all of our on-street and park employees designated “essential workers.” The central lesson from the Center City District’s founding 30 years ago suddenly had renewed resonance: the revival of economic activity and vitality is founded upon confidence in a public environment that is clean, safe and attractive. As the rate of vaccination steadily rises in 2021, Philadelphia needs to set the twin goals of achieving 100% recovery of employment lost during the pandemic and then moving far beyond that to more dynamic and inclusive growth.

For the full report, download- State of Center City 2021.

State Of Center City 2021 - Returning to Offices, Reanimating Hotels, Restoring Jobs

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CCD focused on creating a clean and safe environment and programming its parks, always conscious of health safety guidelines.

CCD promoted Center City’s sidewalk level businesses that remained open, encouraging takeout from restaurants, reminding residents across the region through traditional advertising, email newsletters and social media about the unique shops, boutiques and fine dining opportunities downtown.

Well-managed parks and civic spaces are defining public amenities of downtown. To provide safe spaces for social gathering, Center City District expedited repairs to Dilworth Park, turned the fountains on by early summer, frequently cleaned socially distanced seating and programmed activities that restored vibrancy without attracting large crowds.

CCD cleaners power-washed sidewalks and removed graffiti from building facades and street furniture. They painted boarded-up storefronts and installed new artwork on many. CCD commissioned 200 decorative banners created by Philadelphia artists. Our landscape teams planted street trees, filled park flowerbeds with tens of thousands of bulbs and upgraded street lighting. We continued to provide fee-for-service cleaning for five adjacent residential neighborhoods.

To learn more, download Reanimating the Center of the City chapter or the full report- State of Center City 2021.

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Office vacancy rates in Center City increased by 2.5% between Q1 and Q4.
Office rents increased by 2.2% in Center City.

The commercial office sector was profoundly disrupted by the March 2020 public mandates requiring telework in response to the pandemic. Building managers and tenants moved quickly, retrofitting space, upgrading air-handling systems and instituting new cleaning and health safety protocols in lobbies and common areas. Most imagined the interruption would be a matter of weeks, a few months at most. However, when infection rates persisted through summer and spiked in the fall, longerterm questions began to emerge about the future of work in office buildings.

Most firms adapted quickly to virtual meeting platforms. Following telework mandates, throughout 2020 no more than 10% of employees on average came into their offices. The absence of 115,000 professional, tech, business and financial services workers and thousands of non-essential health care and education employees, caused SEPTA ridership, parking garage occupancy and pedestrian volumes on Center City sidewalks to plummet, posing significant challenges for restaurants and retail. Many cleaning, security and other operations personnel in office buildings were furloughed. The return of office workers is essential to restore the jobs in building services, public transit, retail and restaurants.

To learn more, download the Office chapter or the full report- State of Center City 2021.

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Employment in health care and higher education sectors increased by 10% between 2009 and 2019.

In 2020, Philadelphia’s health care institutions were the epicenter of the response to the COVID-19 epidemic. Jefferson Health and Penn Medicine converted parking lots to walk-in and drive-in testing sites and then deployed multiple vaccination sites across the city and region. Temple University converted the Liacouras Center into an overflow hospital for coronavirus cases, before transforming it into a site for vaccinations. Hospital beds and personnel were consumed by the treatment of serious cases.

In 2019, health care and education provided 242,800 jobs citywide in the public and private sectors, approximately onethird of all payroll employment in Philadelphia. In Center City, these sectors accounted for 18% of employment with 55,000 jobs. During the prior decade, private health care employment growth in Philadelphia reflected the expansion of ambulatory care services – offices of doctors and other health care practitioners, outpatient care centers, laboratories, and home health care services. From 2009 to 2019, private ambulatory care employment increased 42%, while hospital employment increased 1% and nursing and residential care facilities declined 8%.

To learn more, download the Health Care and Higher Education chapter or the full report- State of Center City 2021.

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Eight hotel projects under construction or proposed in Center City will expand downtown supply to more than 14,000 rooms by the end of 2021.

No sector in Philadelphia was challenged more profoundly by the pandemic than tourism and conventions. The sudden loss of visitors rippled through the local economy, eliminating jobs in hotels, restaurants, and cultural organizations, depressing airline travel, tax revenues and vitality on Center City sidewalks. Hotel occupancy dropped from 76.3% in 2019 to 14.8% in the second quarter before inching up slowly in the fourth quarter of 2020 to 22.5%. The pandemic resulted in the loss of 600 scheduled group events, a 78% decline in international travel and an estimated loss of $3.2 billion in spending, according to the Philadelphia Convention and Visitors Bureau.

Recovery will be gradual. As vaccination rates increase, leisure travel should return first as consumers choose shorter trips to nearby destinations. In 2019, leisure travel accounted for 33% of room demand. Philadelphia’s location on the dense Northeast Corridor, well served by highways and trains, provides a distinct advantage. Business travel, which accounted for 31% of room demand in 2019, will mirror the process of business openings throughout 2021 and 2022. Conventions, trade shows and group travel, which accounted for 32% of room demand in 2019, could rebound slowly by the second half of 2021 with new safety protocols in place. Conventions may also include hybrid models with reduced in-person attendance and increased virtual programming.

To learn more, download the Conventions, Tourism and Hotels chapter or the full report- State of Center City 2021.

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Institutions moved to virtual programming to sustain public engagement

At the beginning of 2020, Center City was the setting for 357 museums, theaters, dance companies and other cultural organizations, second only behind New York in the number of arts and cultural institutions downtown, ahead of Boston, Chicago, San Francisco, Seattle and Washington. Employment in arts, entertainment and recreation increased by 40% citywide from 2010 to 2019, peaking at 13,627 jobs.

In March 2020, cultural and performing arts organizations were directed to close in response to the pandemic. Tourists and regional visitors disappeared, stages went dark and museums were ordered to close. Restrictions were briefly relaxed in July, but tightened again in late November as new COVID-19 cases surged. Institutions began to reopen in January 2021 in accordance with state and local guidelines. Overall, the arts, entertainment, and recreation sector lost 43% of its jobs in 2020.

To learn more, download the Arts & Culture chapter full report- State of Center City 2021.

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At the end of 2020, most first floor retail, restaurants and services had reopened. 

Demand for Center City retail has been built upon a diversified base of office, education and health care workers, a large and growing downtown population and an expanding number of tourists and convention attendees. At the center of the region’s highway and transit system, Center City is the most concentrated employment node in the region, hosting 42% of Philadelphia’s jobs, creating opportunity for residents of all city neighborhoods and surrounding counties. In 2019, Greater Center City’s 309,000 workers, 98,000 households and 3.5 million overnight visitors concentrated between 400,000 and 500,000 people downtown each day, generating $2.9 billion in retail, food and beverage demand.

In 2020, the pandemic and stay-at-home directives from the City and State significantly reduced the numbers of people who came into Center City each day for work, school, medical appointments, leisure and entertainment. Most downtown residents remained. The absence of others eroded the customer base for the 1,900 retail, restaurant and service businesses that occupy the ground floor of commercial and residential buildings and the indoor shopping centers within the Center City District. CCD has actively promoted downtown retail and restaurants and in spring 2021, a strong recovery is underway. CCD has actively promoted downtown retail and restaurants and in spring 2021, a strong recovery is underway.

To learn more, download the Retail chapter or the full report- State of Center City 2021.

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Philadelphia must recover from the loss of 15% of its jobs due to the pandemic.

The COVID-19 pandemic briefly plunged Philadelphia back into 1990 conditions, exposing the weaknesses and limitations of the recent revival. The initial impact of the economic shutdown was the loss of 113,400 jobs between March and April 2020, wiping out 15% of payroll employment in the city. By February 2021, employment had rebounded by 38,600 jobs, but remained 74,800 below the March 2020 level. The most serious losses were in leisure and hospitality, where jobs initially declined by 43,400 (-60%). Losses were also severe in transportation, and every other sector dependent on face-to-face interaction. Philadelphia’s employment losses linked to the pandemic were similar to other major Northeastern cities, losing fewer jobs proportionately than New York, but more than Baltimore and Washington. Philadelphia’s recovery since the low point in April 2020 has largely tracked trends in these peer cities.

Greater Center City remains Philadelphia’s largest concentrated employment center, with 41.8% of all Philadelphia jobs, a prime driver of citywide opportunity with 52% of downtown jobs held by city residents. The area holds the highest concentration of high paying jobs in the city, including 81% of Philadelphia’s jobs in information and finance and 80% of its professional and business services jobs. However, two-thirds of downtown jobs do not require a four-year college degree. SEPTA provides the link that enables 25% of the working residents of every city neighborhood to connect with opportunity downtown.

To learn more, download the Employment chapter or the full report- State of Center City 2021.

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Unlike other cities, Philadelphia kept nearly all public transportation routes operational during the pandemic.

Center City is strategically positioned at the heart of a multimodal, regional transportation network that connects the metro area’s large and diverse workforce to opportunity downtown. Center City is at the confluence of 14 rail lines, three rapid transit lines, five trolley lines and 29 local SEPTA bus routes. In January 2020, the transit system transported 300,000 daily commuters into Center City. Interstates 95 and 76, along with the Delaware River bridges, brought more than 313,000 vehicles downtown each workday. SEPTA, Amtrak and both interstates also provide quick connections between Center City and Philadelphia International Airport.

While the pandemic dramatically reduced passenger volumes on all transit modes, Philadelphia kept nearly all routes operational. Philadelphia International Airport maintained all 104 nonstop domestic and 26 international destinations throughout 2020, only suspending five seasonal international destinations, despite a 64% drop in total passengers from 2019 to 2020. Amtrak adjusted frequency of service to meet diminished demand, but continued to run all service lines, even as passenger volumes at 30th Street Station dropped by 50% from 2019 to 2020.

To learn more, download the Transportation chapter or the full report- State of Center City 2021.

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Center City residential growth was sustained during 2020.

While the pandemic impaired many parts of Philadelphia’s economy, the housing sector recovered quickly citywide, buoyed by historically low interest rates and continued interest in city living. From March to June 2020, construction, sales and leasing plummeted. However, after the first wave of the pandemic abated in the spring of 2020, local government permitted construction to resume. Leasing and sales quickly rebounded, facilitated by much greater use of digital technology for virtual open houses. In Greater Center City and immediately adjacent areas, there were more new units under construction at the end of 2020 than at the end of 2019, driven by local population growth and the movement of people from other metro areas into Philadelphia.

Despite the fact that many workplaces were empty, the stay-at-home order intensified the use of homes, especially for those with multiple adults working remotely. Dining rooms, kitchens and spare bedrooms were commandeered for work, or as places to accommodate or supervise virtual schooling. As travel, entertainment and dining options contracted, those with stable retirement or investment income found that home was the best place to shelter from the storm. While some decamped for second homes at the beach, the mountains or in warmer climates, there is little evidence of wholesale flight of the middle class from Philadelphia. To be sure, long-term patterns of movement to suburbs continued. However, even with international immigration closed down, Philadelphia continued to experience both local population growth and net migration from other East Coast cities, as the city as emerged as an attractive alternative to other higher-priced cities in the Northeast.

To learn more, download the Downtown Living chapter or the full report- State of Center City 2021.

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In 2020, 25 development projects representing an estimated $3.4 billion investment were completed or in progress in Center City.

Even though the pandemic interrupted development activity in the early spring, Center City saw a substantial volume of new investments in 2020 and continued confidence in the downtown. By May, projects that were underway at the beginning of the year resumed construction, including the Laurel on Rittenhouse Square, Arthaus on South Broad Street, Riverwalk at 23rd and Arch streets, Thomas Jefferson’s Specialty Care Pavilion on the 1100 block of Chestnut Street and the W Hotel/Element by Westin at 15th and Chestnut streets. Construction also commenced for a new headquarters for Morgan Lewis on West Market Street while several major new residential projects were announced.

Building upon a decade-long, sustained national economic expansion, 25 development projects representing an estimated $3.4 billion investment were completed or in progress in Center City between Fairmount and Washington avenues, river to river in 2020. Another 40 projects with an estimated development value of $3.6 billion were in the planning or proposal phase. More than half are mixed-use projects with a residential component and five are solely residential. Remaining projects include two commercial/mixed-use developments, three hospitality investments, three cultural and health care developments and one public space improvement.

To learn more, download the Developments chapter or the full report- State of Center City 2021.
To search the interactive Developments map, visit the Downtown Real Estate Developments page.