The Numbers
Old Philadelphia is the site of the Declaration of Independence, 238 years ago. But the city’s mantra today is “the New Philadelphia.” And it’s not just a Chamber of Commerce slogan, says Natalie Kostelni, writer for The Philadelphia Business Journal. “Millennials are opting to live and work downtown, and that’s driving a growth of investment in new construction – residential, commercial and retail.”
According to the Philadelphia Retail Marketing Alliance, there are 61,896 residents in Philadelphia’s signature “Center City Core.” That’s a 63-percent increase in just four years. The median per capita income there is $50,345, the average household income $105,000.
The Pulse
A 1997 tax abatement for commercial developers has led to the development of downtown projects like Midtown Village, a mix of residential and retail that includes the historic Wanamaker’s Department Store building; and Market East, a $12.4 million redevelopment project by the Pennsylvania Real Estate Investment Trust (PREIT) as well as The Macerich Co. (Santa Monica, Calif.). Century 21 has committed to the new development, going into the old Strawbridge & Clothier building.
“As a result of an improving economy and all this residential growth, we’re having the best retail year ever,” says Michelle Shannon, vp of marketing and communications for the Philadelphia Retail Marketing Alliance.
The Hotspots
West Walnut Street, which includes tony Rittenhouse Square, has always been the city’s premier fashion avenue. But in 2013, rents increased by as much as 35 percent, higher than any other retail rental increase in the country. That has led to spillover onto parallel West Chestnut Street (where Uniqlo and Nordstrom Rack are opening this month) and, increasingly, to areas east of Broad, like Washington Square, the Convention Center and a revitalized Old City District around Independence Hall.
But Kostelni notes that there’s also growth away from Center City, like in University City, where the University of Pennsylvania has invested in the once-sketchy neighborhood. “Cranes fill the skyline there and apartments are under construction,” she says. “That area now has the highest office rents in the city.”
Obstacles/Opportunities
All this growth may come at a cost. If downtown rents continue to spiral upwards, popular local retailers like Joan Shepp, Boyd’s, Sophy Curson, Commonwealth Proper and South Moon Under may find themselves priced out of the picture.
Also, notes Kostelni, while it’s nice to see all those cranes, “the cost of construction in Philadelphia is the same as it is in New York but we don’t get nearly the rents. That’s why those tax abatements have been so valuable.”