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Center City is bouncing back from the pandemic, but businesses still have recovery work ahead

The end could be in sight for the COVID-19 pandemic, but Philadelphia businesses have a lot to do to stabilize and strengthen ahead of the next challenge.

Crowds are returning to Rittenhouse Square, and businesses are regaining hope.
Crowds are returning to Rittenhouse Square, and businesses are regaining hope.Read moreHEATHER KHALIFA / Staff Photographer

Fourteen months into the fight against COVID-19, Center City business leaders, who have bounced from worry about severe losses to celebration of growing recovery, now are preoccupied with another goal: how to keep improving.

Remote work and videoconferencing played a major role in weathering the last year — and could continue to transform many workplaces — even after the coronavirus passes, city officials and major business players said Tuesday in an online meeting on the future of Center City. Among a slew of wishes, they want the city’s roughly 30,000 employers to bolster job creation and reduce positions that pay less than $35,000, which is below the city’s median income.

Officials hoped, too, that the city would continue to support vehicle-free corridors so pedestrians could more easily visit restaurants and shops.

The return of office workers would herald the revitalization of Center City, said Lauren Gilchrist, senior director of research at Jones Lang LaSalle, an international commercial real estate services company. The significant loss of office workers downtown — 168,000 in January 2020 but just 59,000 last month — has contributed to a $1 billion loss for retailers.

The Commercial Real Estate Development Association is planning to urge City Council to reintroduce a job creation tax credit, which in the past has lured new businesses into the city, said Gilchrist, co-chair of NAIOP, known until 2009 as the National Association for Industrial and Office Parks. The tax credit originally offered $5,000 each year for five years to companies that created at least 25 full-time positions that met a wage threshold. The credit increased demand for office space so much that it had to be scaled back to a onetime payment, she said.

Gilchrist also noted that the change in worker behavior during the pandemic could hurt the city’s wage tax collection as people who live in the suburbs request tax relief while working from home.

Other concerns included managing health and safety in Center City, Gilchrist and speakers on Tuesday said. From the end of last June to the beginning of December, the Center City District partnered with Ambassadors of Hope, Project HOME, and the Philadelphia police to help those who struggled with chronic homelessness and mental health issues. The outreach helped 300 people find more stable housing and got 101 people into what the Center City District called the “mental health commitment process.”

Another widely visible problem, business leaders said, has been ATVs that routinely rip through the streets, including congested Center City. Residents have called for Philadelphia police to ramp up their efforts to curb the ATVs, which state law permits only to be on trails in Pennsylvania’s forests.

“It’s a major problem,” said Jim Pearlstein, president of Pearl Properties, a luxury developer associated with 14 residential buildings in Philadelphia. “I question why the administration isn’t [doing] more on this issue. ... Someone from the city has to step up and take a lead on that.”

Center City still has considerable economic work to do, Paul Levy, president and CEO of the Center City District, said Tuesday. “Citywide, in the last decade, we grew slowly and grew far fewer family-sustaining jobs compared to the suburbs and other big cities.”

In the last decade, larger cities have surpassed 1970s job levels, but Philadelphia has never recovered and remains 22% behind the previous mark, he said. The ‘70s saw the city’s manufacturing industry and other major players begin to leave, and population decline. Levy said businesses not only need to recover from COVID-19, but also from economic struggles preceding the pandemic.

Philadelphia has about half the Black-owned businesses of such cities as Washington, Atlanta, and New York, Levy added. That figure is of concern in Philadelphia, with 44% of residents identifying as Black.

In Center City, 37 new retailers opened in 2020. In the first three months of 2021, there were seven more: American Heritage Federal Credit Union, Remi Ricotta, Lost Bread Co., Cockatoo, Poke Burri, Lamberti Pizza & Market, and Giant. So far in April and May, El Merkury and Sweet T’s Bakery opened in Reading Terminal Market, and Cloudline Physical Therapy and Bar Poulet elsewhere, said JoAnn Loviglio, a spokesperson for the Center City District.

Many real estate developers continued to push forward with construction during the pandemic, Levy said. Twenty-five projects were finished or in progress in Center City, and $3.4 billion had been invested to make sure projects would be seen to completion. Projects included an 18-story office building at 2200 Market St. and an apartment building along the Schuylkill.

Increased housing — including luxury residences that some local residents have criticized as inaccessible to many — could be a boon to Philadelphia as residents from New York City, in particular, leave in pursuit of a lower cost of living. “Philly doesn’t have highs and lows like other cities, and it can use that to its benefit,” Pearlstein said.

Guests from New York City and elsewhere who have been checking in at Kimpton Hotel Palomar downtown say they are visiting to explore the city and look for housing, said Carol Watson, the hotel’s general manager.

“I just feel very encouraged that the Philadelphia region is really headed in the right direction,” she said.

Philadelphia benefited during the pandemic from not being as dependent on offices in Center City as other large cities, Pearlstein said. In metropoles with major dependence on office workers, he said, city activity could wilt by evening when employees left for the night.

“From that standpoint, we have a lot of things to be thankful for,” he said. But “let’s face it, we are not sure what this means.”

Despite reduced dependence on office space in Philadelphia, interaction is still needed, said Jerry Sweeney, president and CEO of Brandywine Realty Trust, which has 1,200 properties in its portfolio.

“We’re all tired of Zoom and team meetings,” he said, and described “an impending sense of urgency” to return to the office. “It’s been very challenging, and getting people back to the office is key.”

Businesses are doing “triage,” he said, “but the ability to grow and create enthusiasm really comes from personal interaction.”