Downtown Vitality: A Deeper Look Into Office Trends

Contact:
JoAnn Loviglio
T 215.440.5546
jloviglio@centercityphila.org

FOR IMMEDIATE RELEASE

New Report Analyzes Latest Pedestrian Traffic and Results of Office Sector Survey

PHILADELPHIA (May 11, 2023) -- Pedestrian activity in Center City has continued its gradual two-year upward trend, buoyed by a substantial ongoing increase in downtown residents as well as the return of visitors and a slower but notable return of office workers, according to a new report from Center City District/Central Philadelphia Development Corporation (CCD/CPDC).

The report, Downtown Vitality: A Deeper Look Into Office Trends, has a twofold objective: It analyzes current pedestrian levels based on the latest Placer.ai anonymized cellphone data and CCD’s on-street sensors, and it provides added context on the office sector from a CCD survey conducted last month of Center City and University City companies and organizations.

Center City pedestrian volumes rebounded to 79% of February 2020 levels with more residents living downtown now than in 2019. Visitors were at 75% of 2019 levels and at 90% on weekends. Office workers were at 56%, slightly down from March 2023 and largely due to the Easter and Passover holidays. But the number of non-resident workers present in the last two non-holiday weeks of April 2023 was slightly higher than the last two weeks of March 2023 and overall, April 2023 worker levels were 14% higher than April 2022. This is part of a two-year, slow but steady process of returning to work in Center City.

The slow rate of worker return is a pattern similar to most major U.S. cities, though Philadelphia had a higher rate of return than about half of the largest U.S. cities at the end of 2022. But this slow process has prompted a national dialogue about the future of work and about offices with concerns heightened by rising interest rates and signs of an economic downturn in several sectors.

To better understand factors behind these trends among the business, professional, technology and financial services firms that occupy office buildings in downtown Philadelphia, CCD distributed an electronic survey to 250 companies or organizations located in Center City or University City. The Building Owners and Management Association (BOMA) also circulated the survey to their members. Sixty-five firms responded to the survey, which ran April 10-28.

“Some academic and media narratives that declare the death of offices do not align with either our pedestrian counts nor with what we’re hearing from many of the businesses who responded to our survey,” CCD President Paul R. Levy said. “There has been a gradual but steady increase in the number of people returning to the office district. Like a very cool spring when the leaves open slowly, change from day to day may be imperceptible but the cumulative change is significant.”

Among 64 responding companies, 76% said their workers were in the office at least three days a week; 9% were in four days per week and 23% were in five days per week. None were fully remote. The top two benefits cited by respondents for increasing in-office work was “the value of face-to-face meetings for collaboration with colleagues” and “better ability to mentor staff.”

Asked to rank a series of three factors they saw as barriers to bringing employees back to the office more frequently, the top answer was “Our employees have grown accustomed to working from home and we are unable to change that.” The second biggest barrier among responding employers was concern that they would not be able to attract the best job candidates, and the third barrier was that their employees feel unsafe walking or riding transit in Center City. All three factors were ranked relatively close together.

While only about one-fourth of respondents have developed special programs or incentives to encourage a return to the office, most of the others were interested in learning about what those employers were doing. Some of the incentives include free breakfast or lunch, happy hours, and other events conducive to socializing. The report includes direct accounts from three different employers about how they are achieving success.

To encourage everyone to return to Center City, CCD has doubled its public safety staff to 100 and has partnered with major building owners, transit agencies and public safety professionals to engage workers directly at lunchtime in building lobbies. This spring, CCD is expanding its collaboration with more office buildings to bring the entertainment and social events that CCD produces in Dilworth Park into office plazas at day’s end—enhancing the spaces that surround places of work and reinforcing in public spaces the same benefits that social interaction brings to the workplace.

The Downtown Vitality report also noted that occupancy levels in Center City office buildings declined from 87% in 2019 to approximately 81% at the end of the first quarter of 2023—a far less precipitous decline than in many other downtowns but, if it persists, a trend that can have a significant adverse effect on jobs in ancillary services and on the city’s real estate tax base. At the same time, Philadelphia has a long and successful record of repurposing older office buildings for housing and hotels and growing experience with new life-sciences laboratories.

“Cities are not the passive results of immutable trends. They are acts of creation: the results of business, civic and political leadership,” Levy said. “Conditions have changed substantially in the last three years but the objectives remain the same: a clean, safe and attractive city with vibrant sidewalks and public spaces; innovating organizations that create jobs with living wages; and opportunities for people of all educational and skill levels. These objectives require in-person leadership, not actions by remote control.”

For details on the survey and pedestrian trends, along with explanatory charts and maps, download the new 8-page report, Downtown Vitality: A Deeper Look Into Office Trends.

In The News

May 16, 2023 | More Philly office works will come back in-person on multiple days, downtown boosters predict, The Philadelphia Inquirer
May 16, 2023 | Report shows increase in downtown foot traffic as Center City continues to rebound from pandemic, The Philadelphia Tribune
May 15, 2023 | Office workers incentivized to return to Center City amid slow but steady pandemic recovery, KYW Newsradio