Center City economy is doing better than you think, business group says

There’s plenty of good news this week about Center City’s ongoing rebound from the economic turmoil of the pandemic and from the broader struggles of the nation’s urban centers. 

More people live downtown, the number of restaurants and bars has nearly returned to old levels, and foot traffic on the street continues climbing, reaching 90% of pre-pandemic figures, according to a new report from the Center City District business association. 

Philadelphia as a whole has more jobs than at any time since the 1970s, with much of that growth occurring in the central business district. 

“We are back with a vengeance, in part because people are back with a vengeance,” said Clint Randall, CCD’s vice president of economic development, in reference to the area’s resurgent nightlife scene. 

Yet those numbers could be even stronger if not for mistaken perceptions — based on pessimistic predictions, outdated pandemic experiences, selectively negative media reports and sensational social media posts — that the area is unsafe or continuing to decline, according to the organization’s president and CEO Prema Katari Gupta.

“Right after the lockdowns went into effect, there were a lot of experts who developed a lot of crisis narratives. Downtowns were dead, offices were over, dense urban living had run its course,” she said at a briefing on the report Wednesday. 

“Certainly, this was a highly disruptive event, but a lot of the disruption sort of turned into these narratives that we argue have calcified and in some ways remain, despite data suggesting otherwise,” she said. “These crisis narratives have shown remarkable staying power and continue to inform individual choices about where to live, work, invest and spend leisure time.”

Empty offices remain a drag

Gupta and her colleagues acknowledged that the Center City economy does face some real “headwinds.” 

While return-to-office mandates from the city, Comcast and other employers have helped boost the number of workers commuting downtown, the report acknowledges that “hybrid work arrangements are here to stay.” 

Looking at non-resident employees — those who work in Center City but don’t live there — 74% are back in their cubicles. (The figure is much higher — 88% — for people who live within two miles, and lower for those commuting from further out.)

The overall return rate is above that of any major downtown in the country except midtown Manhattan, but it still acts as a drag on the recovery, as some buildings remain half-empty and fewer people are around to go out for a sandwich or shop for clothes on their lunch break. 

Office vacancies continued to increase last year due to the work-from-home trend and a shortage of the high-quality, often-smaller “trophy” spaces that companies prefer, Randall said. Office occupancy dropped by about 340,000 square feet, and the vacancy rate stood at a little over 20% at the end of the year.

Center City has also been impacted by Philadelphia’s ongoing crisis of drug addiction and homelessness, Gupta said. It’s centered in Kensington, but unhoused people live and spend time downtown and in other neighborhoods. 

“There has been a bit of an uptick over the last year,” she said. “Anecdotally, we’ve noticed a population that seems to be a bit more related to the citywide fentanyl crisis.”

The city’s annual point-in-time count in January 2024 found that the number of people living on the street or in shelters citywide was up 10% compared to a year earlier. Among the unsheltered, the number in Center City had jumped 23% to 347, according to the Office of Homeless Services. Figures from the January 2025 count have not yet been released.

Another challenge is the continued economic stagnation of Market East following the collapse of a plan to build a basketball arena there — although the project’s benefits were hotly contested — and the closure of Macy’s and other stores.

SEPTA’s funding crisis and the potential shrinking of the region’s transit system could also pose a major threat to Center City and the broader economy, business and political leaders say. The dense business district is highly dependent on mass transit and could suffer from crippling traffic congestion and job losses if workers and visitors were forced to switch from buses and trains to cars.

A focus on bad news

Gupta said visible homelessness and other quality-of-life challenges may be contributing to the slow recovery of another statistic: the percentage of people who say they feel safe in Center City.

In 2019, 76% of people surveyed said they felt safe there, according to the CCD report. The number dipped as low as 48% in 2022, when the district and the city generally were still in a crime wave. 

In 2024, the number of serious crimes like homicide, aggravated assault and car theft was back down to the old rate of about one incident per day in Center City, but the percentage of people who said they felt safe downtown had only recovered to 61%.

That perception was higher among residents of the Philadelphia suburbs, 53% of whom said they felt safe, compared to 62% of respondents who live in Center City and 70% of those from outside the Philadelphia region.

Gupta argued that the persistent perception of danger reflects the stickiness of incorrect and outdated ideas about Center City, as well as a misunderstanding of the district’s challenges. People primed to see urban decline “often conflate visible homelessness and quality of life challenges with crime rates,” even though there’s no statistical correlation between the two, per the CCD report.

“We see how many people want to live in Center City. We see this uptick year-over-year in return to the office. We see our nightlife thriving. There are more places to sit and eat outside now than there were pre-pandemic,” Gupta said. “When is news coverage going to say, ‘400,000 people enjoyed a beautiful spring day in Center City, Philadelphia, without incident,’ right?”

“That’s not the stuff that gets press,” she said. “Maybe we can blame social media algorithms for that a little bit too.”

Social upheaval leads to perception gap

As an example of unbalanced news coverage, she pointed to the widely reported closure of a three-year-old Giant Heirloom market on East Market Street in December, and the less frequently reported abundance of grocery store openings over several years.  

Randall said he occasionally hears such perceptions from his neighbors in Fishtown who used to commute downtown on the El but now refuse to do so because they think SEPTA is unsafe.

“When you probe, a lot of times, it’s because they heard it wasn’t great, or their last ride was in 2021 and they haven’t dipped their toe back in the water again,” he said. “It’s this weird sort of idea that, ‘OK, I guess the experience that I had four years ago must be sort of the forever new reality.’ ”

The perception gap regarding downtown conditions — in Philadelphia and across the country — is “natural and all but inevitable” given the social and political upheavals of the last several years, said Tracy Hadden Loh, a Brookings Institution fellow who spoke at a CCD panel discussion Thursday.

“We are in a time of hyper-partisanship. We are emerging from a time of isolation,” Loh said. “We’ve atomized the way that people get information and the way that we’re spending time and who we’re talking to.”

“That moves us away from having a shared set of facts around public safety. In particular, given what was actually happening in the United States and its timing relative to the election, that is a topic where there’s been a particularly wide gulf between perception and reality,” she said.

Steady growth of housing and jobs

The reality is that Center City is doing relatively well, thanks to its role as a job center, tourism destination and place to live, and to factors like its built-in walkability and rich transit options, CCD officials contend. 

In 2021-2022, the last year-long period for which detailed data is available, the Greater Center City area between Tasker Street and Girard Avenue had gained 22,000 jobs, reaching a total of 300,000 jobs, Randall said. That was about 6,000 more than the 2019 peak, and the number has likely increased further since then.

As of last year, the biggest downtown employers were the city, with about 20,000 workers in Center City, followed by Jefferson Health (14,775), Comcast (9,355), Chubb (3,200) and Independence Blue Cross (3,000).

At the same time, Philly has been ahead of the curve, compared to other cities, on converting its glut of office space into apartments and other uses. Some 10 million square feet have been repurposed over the last quarter-century, and current projects will create 1,000 more residential units as well as hotel rooms and retail spaces, per CCD.

Last year, Greater Center City gained 3,800 housing units, which was 44% of all housing built in the city. Since 2019, it’s added 14,500 units, 4,000 of them in the core area between Pine and Vine streets.

Retail occupancy has stabilized at 83% over the last three years. Compared to 2019, there were 7% fewer food and beverage establishments, 8% fewer service providers like gyms and hair salons, and a 20% drop in other types of retailers, the report said.

Some 32 new restaurants and bars are expected to open soon, along with five new service providers and 12 other stores.

Among the report’s other highlights are the growing popularity of the Midtown Village/13th Street dining and entertainment area, which was regularly seeing more evening visitors last year than it did six years ago, and surging attendance at some cultural institutions.

The fountains, ice rink, holiday market, cafés and other attractions of Dilworth Park, next to City Hall, attracted 11.5 million visitors last year, a 34% jump compared to the previous year. Reading Terminal had 5.6 million visitors, a 20% increase, and more people went to the Museum of Art (8%) and Independence Visitor Center (9%).