2021 State of Downtown presented by Republic Bank
The inaugural State of Downtown event took place on June 19, 2019. DLP staff presented economic indicators benchmarking the health of downtown including data on development pipeline, street-level occupancy and rental rates, office market, convention and hotel, event attendance, residential market, and other relevant stats. The event also featured an expert panel who discussed various topics concerning downtown Lexington
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State of Downtown Video
CUSTOMER BASE
Prior to 2020 and the COVID-19 pandemic, downtown Lexington had a growing customer base which contributed to its success and vibrancy. The customer base can be separated into the following segments: office workers, residents, students and visitors. Each of these segments experienced significant decline in 2020 due to the pandemic. However, early signs in 2021 indicate that the customer base will rebound in 2021 and 2022 provided the pandemic is brought under control.
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COMMERCIAL REAL ESTATE
The pandemic dramatically impacted commercial real estate forcing reductions in the number of employees actually present in the office buildings, restricting street-level retail operations and driving sales and employment of frontline workers significantly down. 91% of the commercial office tenants responding to the DLP survey indicated they either closed their office or reduced staff coming to the office by more than 50%. Of the commercial office tenants whose offices remained open, 50% had an alternating schedule for their staff to be in the office. Similarly, 65% of street-level merchants, bars, hospitality and food service businesses responding to the DLP survey temporarily closed their business, 78% reduced hours and days of operation and 75% reduced staff due to pandemic restrictions. However, in spite of the pandemic, commercial real estate sales remained active, the investment pipeline of new projects continued to grow, the office market held its own with a minor uptick in vacancy rates and we saw numerous street-level businesses open.
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MOBILITY AND TRANSIT
Mobility and transit sectors were also significantly affected by the pandemic as there were significantly fewer frontline workers, office workers, event attendees, visitors and students using transportation into downtown. Ridership in the fast-evolving micro-mobility industry and in mass transit dropped drastically in 2020. Parking meter occupancy and transient parking occupancy rates in garages plummeted as did the actual presence of the monthly parkers who were absent even though the spaces were leased. These trends mirror those reflected by other benchmarks as downtown’s customers were absent for much of the year. However, as there is a return to normalcy and more customers are needing transit options, e-scooter operations will begin again and recent and planned infrastructure investments will enhance this sector driving up usage.
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LIVING AND QUALITY OF LIFE
The 2020 pandemic did not change the fact that downtown continues to provide a vibrant, safe, quality of life that attracts people to work, play, visit and spend money, although there were fewer people able to enjoy its full quality of life assets. Nevertheless, the vibrant collection of amenities supported demand that drove residential sales and high apartment occupancy. And the outlook for Downtown living and quality of life is quite positive especially as we emerge from the pandemic.
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