Philly’s Old City is loved by tourists and residents alike, but it takes a hit from the pandemic

Nine months into the pandemic, 26 businesses — almost all locally owned — have shut down in Old City or relocated from the neighborhood of the Liberty Bell, Independence Hall, and Elfreth’s Alley.

At the same time, 16 new shops have recently opened in Old City and three more are about to go live — a bright sign for brick-and-mortar retailers, according to the Old City District, the economic development group for the area’s 300 businesses.

Still, the winter ahead is long. COVID-19 cases are surging and the departure of longtime neighbors — from the restaurant FARMiCiA to the women’s clothing store Smak Parlour — has worried local business owners in the one-square-mile neighborhood, which used to attract about 12,000 tourists a day pre-COVID while retaining the affection of locals.

“Old City really is all small business,” said Ashley Peel, co-owner of Philadelphia Independents, a Philly-centric gift store that curates its wares from local artisans. “There just aren’t really any chain stores, except for CVS and 7-Eleven.”

The neighborhood has been pummeled with setbacks in the last two years. In early 2018, an arson fire on Chestnut Street damaged the block so badly it caused neighboring businesses to close. Last December, a federal government shutdown limited tourists, and the next month, a water main broke at North Third and Arch Streets, flooding nearby businesses and rerouting traffic for more than two months. Internet competition has hurt many small retailers. And then came the pandemic.

With blocks of small businesses sporting curated window fronts, the neighborhood has long invited residents and tourists to troll for goods that are hard to find or unique. When businesses across the city closed in March and tourism all but disappeared, so did a large chunk of the customer base in Old City.

“We’re really a part of the heart of the city,” Peel said. “Not just for locals, but for tourists, too.”

» READ MORE: Report shows how Center City retail has been decimated by the pandemic

Like merchants elsewhere, Old City stores have resisted the pandemic by ramping up online sales and curbside delivery. Restaurants offered outdoor dining, and the neighborhood closed off restaurant-heavy South Second Street to cars every week, transforming the street into a street-eatery.

Peel listed every item in her shop on her online store and managed to gain business even as Philadelphia Independents closed March 16 before reopening June 12.

The shop did well when thousands of Philadelphia residents cheekily referenced living in the city where “bad things happen,” she said. Those mugs and shirts sold well.

“The ‘bad things happen in Philadelphia’ thing that [President Donald] Trump said in the September debate — that’s just been a whole other thing for us,” Peel said. “People just thought that was hilarious. Philadelphians are very self-deprecating.”

Unlike neighboring districts in Center City where chains and outlets dominate, Old City is its own world along the Delaware, sporting a mix of small, local furniture stores, salons, casual and upscale restaurants, clothing boutiques, and eclectic stores crammed with antiques, books, and tourist souvenirs scattered along narrow side streets. The layout of many buildings — tall, small, and skinny — is often ideal for small businesses, said Job Itzkowitz, executive director of Old City District.

“Chains don’t find Old City’s architecture to be functional for them,” Itzkowitz said. “Target doesn’t want to be in a space like that.”

The mom-and-pop-shop makeup of the neighborhood declined in the last several months. The vacancy rate for commercial space is 10% to 11%, or about the national average, Itzkowitz said. And the future is uncertain.

“Businesses of all types have received various grants or low-interest loans, though the grant programs were likely insufficient to cover this long a period of economic impact,” he said.

The list of closures included Momo’s Treehouse, City House Hostel, JK Gourmet Deli, Pinot Boutique, Liberty Bell Food Market, Snap Kitchen and City Tavern. Another casualty, Customs House Coffee, mostly served employees and visitors at the nearby U.S. Customs House on Chestnut Street. AT&T, which occupied a prominent corner of Market Street, was the only national retailer that closed.

There’s more commercial space open now than normal in Old City, but interest remains high for those properties, said Billy Creagh, principal and broker for National Realty. “I’m showing a lot of spaces and I’ve actually been really busy.”

Creagh said he had noticed essential businesses, such as food or convenience stores, doing well during the pandemic and seeking to upgrade to a spot in Old City. Average pricing, he said, is about $30 a square foot.

He had been negotiating a letter of intent with a landlord about how a new tenant could use a 550-square-foot property on Chestnut Street where a passport photo office had been for about 15 years, across the street from the U.S. Customs House. Creagh said he is in talks to have the property become a convenience store.

“I’m seeing a shift of retailers who are making money now and seeing an opportunity for a space that became available to them because of the pandemic,” he said.

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Pedestrian traffic has fallen substantially, Itzkowitz said. The district records the number of pedestrians around one side of North Third and Market Streets, showing an average of 3,829 people walked there last April compared with 1,104 this April, a 71% drop.

Pedestrians grew more numerous in subsequent months, though it never matched the same time last year. In November, the street has an average of 2,251 pedestrians — about 63% of last year’s number of 3,587 people.

At nearby Independence National Historical Park, the number of visitors also plummeted, according to the National Park Service.

The park counted 309,348 visitors in March 2019, compared with 91,800 this March. The number plunged even more dramatically in April, from 455,740 to 20,057.

In October, the last month for which data are available, there were just 85,774 visitors, compared with 362,563 last year.

“Our customers understand small business is struggling so much and want to come out and support however they can, especially with the holiday season upon us now,” said Peel, who started Philadelphia Independents with business partners Jennifer Provost and Tiffica Benza in 2014. “There was a huge outpouring of support for Small Business Saturday — the whole weekend, not just Saturday. I shed a little tear at the end of the day.”

Some business owners shut their stores to retire or to tend to family obligations, not because they were forced out of business by the pandemic, Itzkowitz said.

For some, there was the lure of less costly real estate. The locally owned Italian restaurant La Locanda del Ghiottone relocated from North Third Street to Port Richmond and changed its name to Il Ghiottone. The 2,336-square-foot lot in Old City, which includes a small parking lot, is for sale for $1.9 million. The 963-square-foot Port Richmond property was listed for $350,000.

The popular farm-to-table restaurant FARMiCiA was blunt, saying its departure was “due to the coronavirus pandemic.”

» READ MORE: Philly may have a coronavirus vaccine next week. But the city sees a post-Thanksgiving spike, with more cases in nursing homes.

“A lot of our neighbors, both retailers and food businesses in neighborhood, and several others, have been hard hit and it changed the fabric of the neighborhood,” said Mike Cangi, co-founder of United By Blue, an apparel store and cafe with locations in Old City and University City.

Cafe Couleur, Charm Hair & Skin, Halo Hair, Midnight Lunch, and Wild Honey Salon were among some of 16 new businesses that opened, with some shops, such as Kindred Collective, taking over empty space from the recently closed Geisha House, a women’s clothing store. The Wedding Factor had relocated from South Street to its new space on North Third Street that was formerly home to Never Too Spoiled, another women’s clothing store.

Penzey’s Spices is relocating from the Bourse to Market Street, and Shaking Seafoods will also open there; men’s apparel store Damari Savile will open on North Second Street.

For some newcomers, Old City has been welcoming.

“Things have been going really, really well,” said Angelo Pizza, founder of the Angelo, a pizza shop that opened on Market Street on Small Business Saturday.

“We’ve been sold out every day this week,” Pizza said.

The space had been on the market for more than a year when Pizza’s real estate agent showed it to him.

“This area was definitely one of the standouts, and the property itself is right on Market,” he said. “It was kind of a no-brainer.”