Workers, residents and visitors have generated $1 billion in annual retail demand for goods in the downtown area, concludes a 24-page report released this week by the Center City District.
The high demand is being “driven by the downtown core and its surrounding neighborhoods” and by $8.5 billion in developments expected for Center City by 2019.
The CCD report relies on several statistics, some compiled by commercial real estate services company CBRE, Inc.
In late October CBRE reported that Philadelphia’s average prime retail rents had stabilized after an 87.5 percent increase over the last five years. The report cited only one other major U.S. city's rents - Miami's - as growing faster than Philadelphia’s.
The growth, according to the CCD report, is supported by almost 300,000 downtown workers, a record number of tourists -- 41 million to the region in 2015 -- and residents of the “core Center City” area --Vine to Pine, the Schuylkill to the Delaware -- who have average household incomes of more than $111,000.
This is complemented by a transit network that deposits several hundred thousand people in Center City every weekday and the general walkability of downtown, which makes shopping and dining easy.
“The report affirms with statistics what we all know and feel with our gut: that increases in those that live, work, and play in Center City are fueling a seven-day per week retail and restaurant explosion,” said Steven H. Gartner, managing director for retail services at CBRE.
The CCD report says that high-end retail, especially along Walnut Street, has skyrocketed over the last five years and that demand is spreading to Chestnut Street and surrounding numbered streets.
A few notable projects, the $325 million renovation of the Gallery Mall into Fashion Outlets of Philadelphia, due to be completed in spring 2018, and the $600 million, multi-phase East Market project, are creating buzz for the former neglected part of downtown, said the report. It describes Market Street as east of City Hall and the blocks to the south.
Tourism was another factor fueling the retail demand. The region's 41 million domestic tourists flocked to hotel rooms, making the city second only to New York in its Saturday hotel occupancy rate (89.6 percent). Six hotels are currently under construction and four planned for Center City.
Said Paul Levy of the Center City District: “This is not just a report on trends. This is a powerful magnet for retailers who want to be in the middle of surging demand. Two of our staff have just spent the last two days at the International Council of Shopping Centers conference in New York City talking to retailers who are looking for locations, and this report shows clearly that Philadelphia has what they want.”
For more on the ICSC New York Dealmaking Conference and its impact on the city’s retail scene, look for Sunday Inquirer’s Business Section.