Philadelphia compares well to other downtowns on return to office and tourism, but not close to 2019 numbers

Center City is coming out of the pandemic far better than most downtowns due to a diversified economy and a strong residential population, according to a new report released by the Center City District.

Center City District’s new report compares populations in 25 cities in the second quarter of 2019 vs. 2023. The data show Center City stacking up well in comparison with most American downtowns. In terms of the total number of people in Center City today vs. pre-pandemic, Philadelphia ranks fifth among the downtowns studied — a far better performance than cities with a larger information and technology sector.

“Philadelphia comes out very well,” said Paul Levy, president of the Center City District, “because of the huge concentration of live work downtown. And because of the diversified economy, strong in education and health care, in hospitality, in professional and business services, but — with the exception of Comcast — we’re not that huge in IT.”

Denver; Portland, Ore.; and San Francisco, where the tech sector dominated offices pre-pandemic, have the worst total recovery numbers, with the fewest people returning to offices and the most desolate downtowns.

Nashville is one of the only cities that has seen more people downtown in 2023 than 2019. There, the bustling strip of honky-tonk bars and concert venues on Broadway attract crowds every day of the week.

“There are industries like leisure, hospitality, entertainment, which have a very low ability to be performed remotely,” said Levy. “Cities that have a significant part of their economic base built around that tend to be the cities that are back at the highest numbers.”

One way to look at the return to office is that commutes are more of a disincentive than ever. For those who live within two miles of their downtown, return to work is far higher. In Midtown Manhattan, over 100% of the workers are back — among those who live within two miles of the nation’s largest office center. Of those who live 10 miles away, only 61% have returned.

In Philadelphia, the numbers are not quite as strong — although far better than in counterparts like Washington, D.C., or San Francisco. In Center City, 85% of those who live within two miles of downtown are back while only 55% of those who live 10 miles away or more have returned to offices. Philadelphia does, however, enjoy the largest percentage of office workers who actually live in Center City.

Center City also stacks up well in terms of nonworkers returning to visit Philadelphia. The city saw the fifth greatest recovery of downtown visitors living within the region and the sixth greatest recovery of tourists from elsewhere.

At an event on Tuesday morning, Levy highlighted that perceptions of public safety are a deterrent to some suburban workers returning to Center City. While not downplaying the gun violence that has harrowed many of the city’s lower-income neighborhoods, he emphasized that downtown is actually safer than it was in 2019.

In the first nine months of 2023, according to the Philadelphia Police Department, serious crime in Center City is 5% below the same period in 2019. That comports with a recent study from the Brookings Institute, which found that Center City Philadelphia, and most downtowns, did not see a spike in violent crime during the pandemic — even if their broader cities did.

But instances of disorder — like the parades of ATVs and dirt bikes or people suffering mental health episodes on the street — are more visible than they were pre-pandemic. And for people who live in the suburbs and hear about crime in Philadelphia on the television news or on social media feeds that fuel their previously held beliefs, a shooting in any part of the city blurs into a perception that nowhere is safe.

“Dirt bikes and ATVs downtown, that’s the main complaint I hear from people coming to the Kimmel Center or who live in Center City,” said Carl Dranoff, one of the city’s major developers, at the Center City District’s presentation of its report. “All over the city, people are feeling terrorized. Nobody seems to recognize that that is probably the highest symbolic thing that people see [in the city] and are scared by.”

Levy said that the ATVs are a problem, and not one that just affects Center City. More broadly, he said that a greater emphasis on public safety is needed but without the kind of alienating “warrior policing” that has sparked so much strife.

Despite Philadelphia’s relative strength, Center City is still not seeing 2019 levels of activity — 78.6% recovery of pre-pandemic activity — although Levy noted that September’s data show a slightly stronger recovery in all of the cities studied than was shown in the report.

And while there are more residents in Center City today than there were in 2019, Levy cautioned that converting offices to residential uses could not replace the vitality of lost office workers.

That’s partly because Center City District’s report finds that many cities would have to triple the number of downtown residents to make up for the loss of office workers. In a city like Philadelphia where many of the easiest to convert buildings became apartments before the pandemic, it’s unlikely that a mass conversion will take place — despite some recent high-profile projects.

Philadelphia is also building off a relatively weak base. Unlike many of its counterparts in the Northeast, West Coast, and Chicago, high-end office jobs did not shift toward Center City pre-pandemic. A much greater share of the office sector is concentrated in the suburbs regionally than in most older cities.

The city’s unique reliance on the wage tax means there is a strong incentive against jobs being relocated downtown as well, especially in the era of hybrid work where many people who don’t live in the city will be more resistant to coming in.

“Our preexisting strengths helped us and in the case of our preexisting weaknesses, if you live in the suburbs and you don’t come back to work you’re exempt from the wage tax suddenly,” said Levy. “That’s a place where a preexisting problem was exacerbated.”