Center City’s retail occupancy stays pretty stable despite retailers closing stores in recent months

Center City’s retail occupancy has stayed pretty stable in recent months despite some retailers closing stores, according to a report from the Center City District, a business advocacy group, which looked at the state of retail in downtown Philadelphia. The report also brings new insight on the strength of pedestrian traffic, as well as the state of outdoor seating in Center City.

“Center City is doing really well,” Clint Randall, vice president of economic development for the organization, said in an interview Wednesday. “We saw a slightly less than a 1% drop in total retail occupancy, which I think is honestly quite strong when you consider how much flux is ongoing in the retail world in general.”

The group is now conducting a survey that will gather insight into what residents who live and shop in Center City feel is missing from the area or what shopping experiences they want, says Randall.

“There is also strong evidence to support the fact that Center City residents leave downtown for certain kinds of shopping trips or to access certain retailers, meaning that the spending power of Greater Center City is not being captured in full by Greater Center City businesses,” Randall said in a statement about the report.

Here are three takeaways about the state of retail, outdoor dining, and pedestrian traffic in downtown Philadelphia from the Center City District report released this week.

The rate of retail occupancy declined by slightly less than a percentage point between September and May, which is the first time since 2020 that it has decreased instead of increased, says Randall, who worked on the report that came out this week and that the group puts out twice a year.

Retail occupancy in Center City was 83.6% in May compared to 84.5% in September, according to the report. That compares to 89% occupancy in 2019, and at its lowest during the pandemic, retail occupancy dropped to about 55%, says Randall.

Center City has seen some stores shutter recently, including West Elm, Kitchen Kapers, and Rite Aid. Some store closures are a reflection of larger trends at companies, the report indicates.

Outdoor Voices, the athletic apparel company, set out to close all of its stores, employees said in March, which included a location on Walnut Street, as it transitioned to an online-only business. Allbirds, a footwear business, also closed a location on Walnut Street this year, as the company said it would close 10 to 15 stores. Express, the fashion retailer, filed for bankruptcy in April, and closed three of its locations in Center City including a Bonobos-branded store, according to the report.

As stores have closed, though, Center City has seen several businesses move in recently, and more are expected to open by the end of the year, the report indicates, with many clustering along Walnut Street. Businesses recently opened or coming soon to Center City include Equinox, a high-end fitness club; Reformation, a fashion retailer; and Puttshack, a mini golf space with food and drinks.

“There is a strong case to be made that Center City has never been more appealing as a retail destination, particularly in light of how many shoppers and workers are accessible to each shopping destination by all modes of transportation,” Randall said in a statement.

The total amount of outdoor seats, which includes streeteries and café-style sidewalk seating, was larger in May than it was in September 2019 but has decreased steadily in recent years.

Outdoor seating hit its peak in summer 2021, according to the report, and over 800 restaurants once had streeteries in Philadelphia, The Inquirer has reported. Since the city introduced a new permitting process for streeteries in 2022, though, not many businesses have been able to get a permit. Some have called on the city to rethink its regulatory system, which gave out only 13 licenses to restaurants for streeteries since 2022, The Inquirer reported in April.

The report attributes the steady decline of total outdoor seating in large part to the recent regulation by the city of those spaces, which has “added cost and complexity for operators.”

“As the city’s tried to make that program more permanent, there are costs and a bureaucracy associated with it that I think have made a lot of restaurants shy away from them. So we’ve seen streeteries specifically, really dwindle,” said Randall.

Although Center City has lost almost 2,000 outdoor dining seats in the last two years, during that same time, it has gained nearly 1,000 café-style sidewalk seating, the report indicates.

Weekday evening foot traffic continues to increase steadily but is still lagging behind pre-pandemic levels, the report indicates.

Although those crowds have increased since January, the volume of pedestrians has still not fully recovered compared to pre-pandemic levels, only seeing 97,277 pedestrians in April compared to 102,857 on average in 2019.

“I think the weeknight traffic not getting back up to those levels is pretty closely tied to the fact that with people coming into the office less, I think there’s less after-work activity in terms of happy hours or happy hours that might turn into dinner,” Randall said.

Some major local employers have recently changed their policies to have workers physically in the office more. Last year Comcast announced employees would be back in the office four days a week; Independence Blue Cross said workers would return to the office three days a week, the Inquirer reported in February; and in May, Mayor Cherelle L. Parker said city workers would be expected to return to in-person work five days a week starting on July 15.

While Center City’s weekday evening traffic continues to recover, its weekend traffic surpassed 2019 levels in April. The volume of pedestrians in Center City was 275,244 in April, up from 259,246 on average in 2019.

“The fact that weekend traffic is above where it was pre-pandemic basically proves that everyone is more than happy to come and have fun in Center City,” said Randall.