West Elm and Kitchen Kapers are Center City’s latest retail vacancies. But don’t call Philly’s downtown dead.

Some prominent Center City retailers are closing their doors.

The West Elm at 1330 Chestnut St. and local brand Kitchen Kapers at 213 S. 17th St. are both slated to shutter before the end of the month. Discount clothier Rainbow at 1338 Chestnut, the Rite Aid at 1628-36 Chestnut, and vintage sneaker shop atmos at 1509 Walnut St. are either already out, or soon will be.

These soon-to-be shuttered storefronts feed a doom-laden narrative. Since the pandemic stuck in 2020, and after several stores were broken into and damaged following protests that summer, there have been gloomy murmurs among some Center City watchers that retail is finished downtown.

“COVID and all that stuff made it really hard for retail outlets to stay here,” said Andrew Toriello, an assistant manager at Kitchen Kapers’ Center City location. “It definitely seems like things are kind of closing down around here. It’s a pretty negative trend.”

But retail industry experts say the situation is more complicated. Retail occupancy in Center City was at 84.5% in September, only 5% lower than it was in 2019. Restaurants and experience-oriented, non-shopping retail offerings have surged back, even as traditional retailers face increased competition from online sellers post-pandemic.

“Downtown continues to attract out-of-area national, large-footprint restaurants, as well as what we’re defining as ‘competitive socializing’ concepts — indoor golf, darts, shuffleboard,” said Steven Gartner, executive vice president with the local branch of CBRE, a commercial real estate services firm. “Center City continues to be the central location that these operations can serve the entire region.”

By the end of 2023, 46 food and beverage outlets had opened downtown with another 20 on the way, according to a report on the regional retail industry from CBRE. Of the 32 openings being tracked by the Center City District, almost all of them are food, beverage, or activity based, known as “experiential retail” in industry parlance.

“There’s this perception that downtown retail is dead,” said Prema Katari Gupta, president and CEO of Center City District, in a December 2023 interview. “But we are back at 85% occupied. What’s going on in the retail industry is not just downtown and Philadelphia-specific. There’s massive disruption because people are buying more things online.”

Experiential retail is not just restaurants and bars, but also includes storefronts that offer activities, from yoga to dart halls and gaming parlors.

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Just down the block from the soon-to-be shuttered West Elm is the new Barcade, where customers can have a drink while they play vintage arcade games. This summer’s openings include Flight Club, a national chain that offers high-end food and darts games, and the escape room Beat the Bomb. An indoor minigolf course, Puttshack, will be opening on Chestnut Street soon.

“There’s a tremendous amount of new activity that will far outweigh and absorb the vacant space left behind,” said Jacob Cooper, partner at MSC Retail. “We’re busy with net new tenant interest in not just Center City, but peripheral neighborhoods. That gives us extreme confidence in the growth of retail in Center City.”

The lingering large-scale vacancies in Center City speak to this trend, too.

Cooper says the challenge is that many of the spaces being vacated, such as the West Elm (19,000 square feet), the Rite Aid (almost 13,000 square feet), or the former Gap at 1510 Walnut St. (over 23,000 square feet) that closed in 2020, are larger than what most of these new kinds of tenants are looking for.

Cooper says spaces of 15,000 square feet or more are often very challenging to fill in their present configuration. Some Center City retail property owners are adapting to that, where possible, by carving their space into multiple storefronts.

The property at 1608 Walnut St., where Alo Yoga is opening, is 8,200 square feet, but the high-end athleisure brand only wanted two-thirds of that space. To accommodate, the owner carved it into two storefronts: one for Alo Yoga on Walnut and a second, smaller retail offering to be opened on Chancellor Street.

“If the owner was unwilling to put the capital into subdividing the space, that deal would never have been made,” said Cooper. “Landlords need to think smaller, and certainly more strategically, about the design to capture retailers looking for smaller spaces.”

The closures, meanwhile, have stories of their own. Rite Aid and atmos, which is closing all its stores in the United States, are going through larger corporate restructuring. A manager at West Elm declined to comment on the reason for the closure, and a corporate spokesperson didn’t respond to requests for comment.

At Kitchen Kapers, a local chain that shuttered all its suburban offerings in recent years, a manager blamed a spike in rent and increased online sales. The Chestnut Hill location will remain open.

“When they moved in 40 years ago, it was a very different situation, you could operate a mom-and-pop business [near Rittenhouse Square],” said Toriello. “People are constantly like, ‘Oh, I can’t believe you’re moving.’ You didn’t spend any of your money here! So how can it possibly be a surprise?”