Features: The Next Great American City

It just might be us. Philadelphia. What, exactly, is going on?

One recent morning, I am sitting in an office at 17th and Market streets, chatting with real estate broker Larry Steinberg about the latest sign of Center City’s revival: the suddenly stoked retail sector. “We have many more retailers looking than we have space for,” says Steinberg, a dark-haired 50-year-old who runs the Center City office of the Michael Salove Company. Among the trendy stores that have recently signed leases along Walnut Street are Cole Haan, American Apparel, and BCBG Max Azria, a fashion line favored by celebs. Sales along Walnut Street are now better than those along Boston’s chic, high-end Newbury Street.

This is a big step forward from where we were even just three years ago, when Steinberg first set up shop in the city. “Back then, it was a struggle to get H&M to come to Chestnut Street,” Steinberg remembers. “Now, they’re loving it.” So much so that the hip clothing retailer is launching a second store on Walnut Street next year.

Steinberg says the reason for the turnaround is simple: “I’m a big believer that young people — the infusion of young people that we’ve seen — are making us a world-class city.” He glances out the window, 17 floors above Market Street. “Hey, it’s alive here.” He’s right — not only about the vitality of the streets, but also about the increasingly unlined face of downtown. Today, one in three Center City residents is between the ages of 25 and 35. And these aren’t just any young people; they’re well-educated (more than three-quarters have college degrees); well-compensated (the median salary is nearly $60,000), and well-positioned to spend money (most have no kids).

So if the young people are drawing retailers here, what’s drawing the young people? Obviously, a big chunk of the credit for Center City’s current swagger goes to the Rendell administration of the ’90s — Council president John Street riding shotgun — which not only stabilized the city’s shaky finances, but also pushed a strategy of nightlife, arts and tourism that brought energy back to a depressed, closed-after-dark downtown. Pushing for change most vigorously was Mayor Rendell himself. He embraced improvements like the new Convention Center, which was pumping thousands of new tourists into town, and ideas like Make It A Night, which asked commuters to stick around for dinner and shopping in a city where no one ever stuck around. He led the cheers for the Avenue of the Arts and the building of the Kimmel Center. He helped create the Greater Philadelphia Tourism Marketing Corporation, which now has a tourism ad budget of $3.2 million — significant when you consider that the entire GPTMC budget in 1997 was $4 million. Most important, he seemed to understand that energy and attitude mattered — that good things couldn’t happen unless you really believed that good things would.

And yet in retrospect, it’s clear that equal credit goes to some of the private entrepreneurs who imagined what the city might become — and then put up their own money to drive it there. In 1995, for instance, Stephen Starr transformed a diner at 2nd and Market into the swell, swank Continental, simultaneously launching Old City as a nightlife destination and himself as our grandest restaurant pooh-bah. (Billions and billions served!) Around the same time, real estate developers began renovating B-class office space in Center City — much of it left vacant after the opening of new trophy buildings like Liberty Place in the late ’80s — into apartments and condos. Finally, in 1998, restaurateur Neil Stein, who had launched the city’s second restaurant renaissance with Striped Bass in 1994, had the brilliant notion to put tables on the sidewalk outside his Rittenhouse Square restaurant Rouge. The city fought him on it, but Stein prevailed, and his vision has been vindicated in spades. Seven years later, there are nearly 170 outdoor cafes in Center City, each one an irresistible advertisement for the glamour and élan of urban life.

“I don’t think anything better symbolizes the reanimation of the city than people sitting out on the streets at nighttime,” says Paul Levy, president and CEO of the Center City District, the quasi-public outfit that’s made its own significant contributions to the city’s beautification in the past decade and a half. “It’s a totally different world than in 1990, when the city was perceived as kind of a dangerous place.”

Indeed, it’s now the kind of place where a young person might actually want to live, which is what more and more are doing, helped in part by the 10-year property-tax abatements that have made real estate in Center City more affordable. And a funny thing happened when young people started moving into the city — their parents, and their parents’ friends, decided it looked like so much fun, they wanted to join in. Hence the latest round of Center City immigrants — empty-nester boomers buying condos and undoubtedly sharpening their credit cards to shop in all the cool new stores. And you want to talk about population trends? If the latest ones hold, Center City could have 110,000 residents in 2010, up from 88,000 today.

If it sounds like a phenomenon that has begun to feed off its own momentum — restaurants spurring real estate spurring retail spurring more restaurants, real estate and retail — well, that’s exactly right. As Levy says, “If you can be in a vicious cycle, you can be in a virtuous cycle as well. Good news begets more good news.”