Philly’s got more tourists, conventions, restaurants and shows. So why haven’t workers come back?
Crime is still the top concern. And the economy could slow if the business climate doesn't improve. The city should rely more on real estate taxes instead of the wage tax, one expert said.
Center City Philadelphia has nearly recovered to pre-pandemic levels of jobs and downtown foot traffic and could be on the verge of another “Rendell moment,” recalling the city’s revival in the early 1990s, according to business leaders and a new report from the Center City District.
But the recovery could be short-lived unless City Council addresses high wage taxes and the red tape of doing business here, said Paul Levy, head of the Center City District, presenting the new “State of Center City” report, which is available on the business advocacy group’s website centercityphila.org.
Among positives driving Philadelphia’s post-pandemic growth: 80% of retail and restaurant storefronts within Center City District boundaries are open or have obtained tenants through the first quarter of 2022. Performing arts and cultural institutions fully reopened.
Tourism and conventions also have rebounded, with the average daily room rate in Center City hotels rising to $182 in 2021, from $156 in 2020. The 2021 rates are about 10% below 2019 levels, the report found.
The combination of shoppers and visitors reached 87% of pre-pandemic levels in April. But only half, or 49%, of nonresident workers have physically returned to their jobs downtown. That still helped Philly outpace New York City in the job recovery rate, Levy noted.
Philly’s poverty can be solved with more jobs, Levy said during a two-hour presentation and panel discussion held Thursday morning at the Union League before about 100 people. The group defines its Center City district as Fairmount to Washington Avenues, and river to river.
“We have the highest poverty rate because we have the slowest job growth and the lowest density of businesses,” he said. “When we grew jobs in the last decade, poverty declined.”
Tax policy must change, he said. “We have to rely more on real estate assessments and cut wage taxes. It’s more stable for the city financially, and it will help more of our small Black and brown business owners.”
Rija Beares, Greater Philadelphia Market leader at CBRE real estate firm, said technology employers and other potential leasing customers compare Philadelphia to “world class capital cities in Europe. But the stopping point is the wage and business tax. That’s when they decide not to move here.”
Still, venture capital deals soared from 2020 to 2021, rising from $3 billion to $7.7 billion, and moving Philadelphia to the sixth largest metro area nationally.
“I’m usually a complainer, but at this time I’m very optimistic,” said Robert Zuritsky, president and CEO of the Parkway Corp., a developer and parking lot company.
“Philly is having another ‘Rendell moment,’ and we just need leaders to push for better wage tax policy and jobs,” said Zuritsky, citing the city’s 1992-2000 Mayor Ed Rendell, who balanced Philadelphia’s budget, reduced business and wage taxes, and improved services to neighborhoods.
Total crime in Center City fell from 2019 and remains lower than most pre-pandemic years. But crime and safety remain top of mind.
John McNichol, president of the Pennsylvania Convention Center Authority, didn’t mince words when he spoke at the Union League panel.
“Visitors want the comfort of safety if they come to stay with us. But crisis begets competition, so we’re slugging it out with Boston, Chicago, and D.C.,” he added.
McNichol recalled a visiting doctor who asked, “Why is the toothpaste locked up in drugstores? I had to explain retail theft is not prosecuted here. We’re on a good trajectory, but if we don’t pay attention to the details, then we fall into disrepair.”
Hospitality’s recovery has been slow, but jobs are nearing pre-pandemic levels.
About 80% of the city’s jobs lost from March to December 2020 in performing arts, spectator sports, museums and historic sites recovered by September 2021, the latest available.
The Convention Center Authority’s McNichol said hotel nights are on track to hit 500,000 this year and 700,000 in 2023, compared with 380,000 in 2019.
Taxable sales at retailers and restaurants downtown rose throughout 2021, reaching 83% of the 2019 pre-pandemic level by the fourth quarter, while bars and restaurants have seen a steady increase since last year.
Philly is building more apartments, fewer single-family homes
By the end of 2021, there were more than 17,000 residential units under construction or permitted in Greater Center City, representing 50% of the citywide total in 6% of the city’s land area.
Much of that construction has been in the Market East section of town, where Thomas Jefferson University and its hospital are the largest employer.
Safety, however, has been a huge concern for the doctors and nurses, according to Clayton Mitchell, senior vice president of real estate and facilities at Jefferson University.
As a result, “we recently hired the former deputy director of the Secret Service, and we’re expanding our force visibility,” he said, even moving Jefferson’s own security service to offices on street level.
Philadelphia’s police are returning to foot patrols and more community policing
Inspector Ray Evers said at the panel session that increased visibility would help the “feel index” of safety that he says is key to retaining visitors, workers and other foot traffic downtown.
“We want people to see the police on their beats, on bikes, where the most pedestrians are,” he said. “We need more contact with visitors.”
He acknowledged a shortage of personnel but said “we’re doing the best we can with the hand we’ve been dealt.”
The educational attainment of Philadelphians has also been rising, with 31% of residents 16 or older in 2020 having achieved a bachelor’s degree or higher, according to the report. That’s up from 23% 10 years earlier and 18% in 2000.
Meanwhile, the share of the city’s 16-and-older population with less than a high school diploma has fallen to 14%, down from 29% 20 years ago. The report also found that 105,000 students were enrolled in 14 higher education institutions in and around Center City in fall 2020, and said that of the 30,000 degrees granted by those schools in the year prior, the bulk were in STEM (28%), health fields (23%) and business (20%).
Philadelphia’s plodding recovery mirrors the slow growth the city experienced from 2010 to 2019, when employers added private-sector jobs at the rate of 1.5% a year, or 26th among counties covering the 30 largest cities.
In 2019, Boston had 31% more salaried jobs than in 1970, New York had 20% more, and Washington had 18% more; Philadelphia was 21% below 1970 job levels.
Staff writer Maddie Hanna contributed to this article.