Center City Philadelphia Continues To Add Retailers
With a vibrant restaurant scene, plenty of convention traffic and nearly 100,000 residents, Center City Philadelphia has attracted attention from retailers.
Randall Shearin

There are more than 200 outdoor cafés in Center City Philadelphia, part of a thriving restaurant scene.

Center City Philadelphia — the heart of the city’s downtown — has always been the center of activity, in addition to being a top tourist and convention destination. Philadelphia has some incredible dynamics downtown that make it attractive for retailers and restaurateurs. First, the city has one of the most populous downtowns of America’s large cities. Second, 13 colleges and universities have campuses downtown. More than 9,000 businesses have offices downtown, supplying a huge downtown workforce and providing for plenty of daytime traffic. Add all that to a thriving convention business and it is easy to realize why Center City Philadelphia is at the top of the list for many retailers and restaurants.

Shopping Center Business recently spoke to Paul Levy, president and CEO of the Center City District; Joe Coradino, president of PREIT-Rubin, and Lawrence Steinberg, principal of Michael Salove Company, to find out more about what makes Center City a popular place.

The Center City District was incorporated to aid downtown’s attraction of businesses. While the CCD works on issues that makes downtown more attractive — capital and infrastructure improvements, landscaping, lighting, safety and the like — it also has started a significant effort to attract more retail and restaurants to its already thriving market.

Even though it is the fifth largest city in the United States, Philadelphia has the third largest downtown population in the country — behind New York and Chicago. With a population base of 92,000 — 30 percent of which are between 25 and 34 years old — Center City serves as its own market, especially when you add in the more than 235,000 office workers and 10,000 hotel rooms downtown.

“Since the 1990s, the downtown has really diversified,” says Levy. “We have a really strong office core. But we have added about 7,000 hotel rooms and 25,000 new residents over the last 10 years. We’ve gone from 9-to-5 downtown to a very strong live-work environment with a strong hospitality industry.”

Philadelphia felt that its retail environment hadn’t recognized that fact a few years ago, so the Center City District set out to do something about it. The CCD launched a campaign to attract retailers and restaurants and aided local retail brokers and landlords in attracting new tenants.

Brooklyn Industries is one of the latest retailers to open in Center City.

Philadelphia has had a thriving local restaurant scene downtown since the 1970s, with some world famous names. Celebrity chefs Jose Garces and Stephen Starr have multiple restaurants in the market. In 1991, the city had 62 fine dining restaurants downtown. Today, thanks to explosive growth in the residential population and the convention and tourism trade — the city opened a new convention center in 1993 — that number has grown to more than 200. In addition, there are more than 200 outdoor cafés, 50 bars and 40 coffeehouses. The convention center is being expanded to be the largest east of the Mississippi River. Between 1997 and 2008, 110 buildings downtown were converted to residential uses.

“All of this translates into significant, spendable income,” says Coradino. “Philadelphia is now beginning to capitalize on that. You have the restaurant renaissance that just continues and a significant number of new retailers.”

New retailers like The North Face, Lacoste, Armani Exchange, Lucky Brand Jeans, Blue Mercury, Brooklyn Industries, Sephora, Club Monaco and Brooks Brothers are among retailers who have opened new stores in Center City recently. Apple recently signed a deal for a 12,000-square-foot store on Walnut Street as well. Other retailers already in Center City include Barney’s Co-Op, Diesel, Anthropologie, Barnes & Noble, Williams-Sonoma, Old Navy, H&M, Tiffany & Co., Banana Republic, Kiehl’s and Borders Books.

“In 2010, the level of interest and demand from retailers has picked up significantly,” says Steinberg. “Our demand is four times what it was in 2009. They’re looking on Walnut Street and Rittenhouse Square, where rents have fallen slightly from $140 to about $110 or $120 per square foot. There are a number of national retailers looking to take advantage of the rent. We also had a few vacancies [on Rittenhouse Row] when typically we don’t.”

To aid retail, the Center City District brought brokers together and amassed all available space on its web site, making a central portal for retailers to check space availabilities.

“No broker wants you to get between them and their client, and we respect that,” says Levy. “We’re not in the business of showing space or making commissions. We are in the business of raising the profile and providing a tremendous amount of demographic information so people can make decisions and shine a spotlight on available openings.”

The CCD has also issued a retail report in 2009, detailing retail opportunities and select availabilities within the city, as well as demographic information. The city also has a lot of features that make it attractive to different types of retail.

“While the first stop for [national] high-end retailers in the Philadelphia is generally King of Prussia, we usually get their next store in Center City,” says Steinberg. “We do have a great draw here.”

On South Broad Street, the city has a lively performing arts district with theaters and the Academy of Music. These venues feed the restaurants and retail along Walnut Street. The 10,000 hotel rooms provide a good base for tourism retail and restaurants. The strong office population provides the need for service retailers. So far, CCD’s efforts are paying off.

“Walnut Street and the Rittenhouse Row area are being talked about the same way that Fifth Avenue is talked about in New York,” says Coradino. “As pioneer retailers have moved to Philadelphia and begun to perform, other retailers are interested in following.”

PREIT is beginning to plan its remerchandising efforts at The Gallery at Market East, planning to begin construction in 2011. At 853,000 square feet, The Gallery is the largest retail project in Center City. It is just north of the new residential population, and between the historic district — comprised of the Liberty Bell and the Constitution Center — and the convention center. The main station for the SEPTA commuter rail system also sits below the project.

“The Gallery, for many years, has been a blockade to everything around it,” says Coradino. “We’re looking to introduce a significant food component and make this more like the Ferry Building in San Francisco or Grand Central in New York City and make it more of a connector. The intention is to redevelop The Gallery so it can embrace all the new constituents of the area.”

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