COVID-19 / Economics / Jobs / Philadelphia / Real estate

What will Center City’s post-pandemic recovery look like?

There's a direct correlation between getting people to feel safe going to work again, and businesses in Center City being able to thrive, say these real estate pros.

Center City in 2017. (Photo by M. Fischetti, courtesy of Visit Philadelphia)
Paul Levy knows it’s a cliche. The Center City District director is saying it anyway: “While we still have a long way to go, I think that cliche ‘light at the end of the tunnel’ is extremely important to us now.”

At a meeting focused on recovery from the pandemic Tuesday morning, CCD members spoke about what the path to getting folks back into offices, restaurants, schools and other public spaces may look like in the coming months.

The conversation happened the same week that the United States — and now, Philadelphia — began rolling out Pfizer’s COVID-19 vaccine to healthcare and other frontline medical workers. It’s a relief to many that the process is beginning, but there’s still a ways to go before the average person might feel safe commuting to work.

Levy gave a quick run-through of the org’s latest report on the path to recovery, before jumping into conversation with panelists Jack Soloff, senior managing director of Newmark Knight Frank; Clayton Mitchell, SVP of Jefferson Real Estate and Facilities; Deborah Buhles, VP of administration at Comcast; Paige Jaffe, managing director at JLL; and Jim Pearlstein, president of Pearl Properties.

The biggest effects of the pandemic include that after 11 straight years of job growth in the city, the pandemic has destroyed the last five or six years of progress, Levy said. It’s been most severe in service and hospitality industries, largely for hourly workers interacting with the public. Unemployment currently rests at about 10.6%, Levy added. But ongoing claims show that it’s starting to slow, and some might be returning to work.

Read the report

Office occupancy has not been more than between 5 and 10% throughout the pandemic, Levy said. And 92% of workers who participated in an October survey said the only thing that would make them comfortable coming back to the office would be a widely available vaccine. For those who expect to go back to the office some time next year, 60% said they believe it will happen in late spring or early summer. And the highest reason for wanting to go back to the office in some capacity was for face-to-face collaboration, Levy said.

Throughout the region, 275 conventions were canceled, and hotels haven’t yet reached above one third of where their business was last year. A big part of getting folks back into offices will include getting people comfortable riding SEPTA again, which will include spreading info about the transit authority’s precautions in place. Downtown retail and restaurants are doing relatively OK: Most have adapted to outdoor dining, but aren’t near occupancy levels at the same time last year.

The return to offices and schools will be directly tied to business in those areas, JLL’s Jaffe and Pearl Properties’ Pearlstein both said. While many people reside in Center City, hundreds of thousands more usually commute in from other neighborhoods, and the lack of daytime population is hurting business, Jaffe said.

“First and foremost, we need to get people back to their offices, we need them to feel safe there and comfortable on public transportation,” she said. “We need them to come to a city that is vibrant and clean and safe. And then we can start to rebound from there.”

Newmark Knight Frank’s Soloff said that while some people are thinking of office buildings as closed, many actually remain open with heightened safety precautions. And while an ongoing future-of-work question resulting from the pandemic is whether companies will need less office space than before (or any at all), those who will return might actually need more, to account for social distancing efforts, he said.

“With the pandemic, I think we’re going to see an increase in square foot per employee,” Soloff said. “It’s going to be interesting to see where that falls, depending on who will continue to work from home.”

And the region’s booming life sciences industry is certainly creating a demand for more lab and office space, Soloff said, especially in University City and the Navy Yard. (Check out all the development happening in UCity right now.)

A Center City District meeting Tuesday, Dec. 14, 2020, focusing on recovery from the coronavirus pandemic.

Mitchell, who works with departments across the spectrum at Jefferson, said that in the healthcare industry, there’s been a mix of employees continuing to go to work (such as hands-on physicians and other frontline workers), while folks on the business side have been working from home. A good chunk of those people might always work from home, he said. But healthcare technologies like the adoption of telemedicine have made leadership rethink how much real estate the system needs.

“Health systems are dealing with the efficacy of telemedicine,” Mitchell said. “I believe Jefferson took a huge bet into telemedicine, as did a lot of other health systems. I think that necessarily stops people from being on the streets and I believe there’s a part of that that’s part of the future.”

At Comcast, Buhles said, there’s been a small number of employees who have come into the office after the company assessed health and safety precautions like a health screening at the entrance, wearing a mask at all times and enhanced cleaning. They’ll gradually return to work as a company in a phased approach, she said.

“One of the hurdles is fear of the unknown,” she said.

Before people come on site, they have a lot of questions, Buhles added, so the company has tried to over-communicate about precautions and safety measures. She also recognized that video conferencing is the future of their business: It levels the playing field for some folks in the office and others who’d traditionally call in. She also said Comcast will continue to see a lot more flexibility in where and when people work.

“I think everyone is really excited to collaborate,” Buhles said. “I think there’s so many teams that are excited to get together again, and I think in general, everyone’s really excited to see their coworkers.”

While these returns to offices in mass numbers is still likely six or so months away, we might begin to see the effects of vaccine distribution and lower community spread result in a slow return to normalcy midway next year. But Levy called out a caveat.

“We don’t simply need to rebound,” he said. “We were a high-poverty city — we need to do much better.”

Companies: JLL / Thomas Jefferson University / Center City District / Comcast
Series: Coronavirus

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