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Corporate caution may slow Wilmington’s recovery

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The Market Street corridor is especially dependent on Wilmington’s office workers, and their absence this summer could challenge businesses’ ability to survive the pandemic. | DBT PHOTO BY JACOB OWENS

WILMINGTON – With Delaware now officially into Phase I of its recovery plan and Phase II targeted to start in just a few more days, many businesses statewide are beginning to breathe a sigh of relief that customers are walking through the door again.

Businesses in downtown Wilmington, however, face a much more difficult road to recovery.

While they repair their storefronts following the May 30 civil unrest that led to vandalism and looting and prepare to follow the social distancing guidelines required during the COVID-19 pandemic, the bigger reason for their woes can be found stretching across the city’s skylines: Corporate America.

Delaware Business Times reached out to 10 of the largest private employers in the city, which employ more than 20,000 workers, about their plans to return workers to the office. Many declined to discuss their plans in detail on the record, but none were considering returning many, if any, workers to downtown offices in June. Others explicitly said that they won’t be returning until as late as Labor Day.

The primary reason for the cautious approach to a return is that corporations are finding that remote working has been surprisingly productive. Many representatives at the city’s largest employers said that technology has allowed their workers to fulfill their duties from home, absolving companies from having to risk the spread of the virus in their offices with a return.

With uncertainty over whether a second wave of the virus may return this fall, many companies are choosing to play it safe and not be forced to send workers back home a second time this fall. That caution is draining the budgets of many small businesses though, and even the city’s estimates for fiscal year 2021 wage taxes have fallen by $6.5 million since the pandemic began.

Jim Butkiewicz, professor of economics at the University of Delaware, said the trickle-down effect of office workers remaining home for the summer will be a big problem for city businesses.

“Even if they come back to the city, will they sit down at a restaurant and eat lunch or will they get some takeout and take it back to the office where they might feel safer?” he said, noting restaurants depend on dine-in service to upsell offerings.

Cautious and unhurried’

Many companies have had skeleton crews reporting into the office to maintain facilities or continue necessary operations, and their numbers may not grow quickly.

Major city employers, such as Navient, Barclays and AAA, don’t expect to have workers return to offices in June, and perhaps even longer. | DBT PHOTO BY JACOB OWENS

Loan servicing company Navient reported that less than 10 of its 350 downtown employees were currently coming to the office. Nationwide, about 90% of its 5,800 employees are working from home.

“Because of the success of this temporary model, they will largely continue to do so for the time being,” said Paul Hartwick, spokesman for Navient. “We are monitoring evolving government orders and health guidelines in the states in which we operate and have communicated to our team that our approach for returning to the office will be cautious and unhurried.”

At Bank of America, employees will return to the office in phases, starting with roles that would be enhanced by working from the office, company spokesman Trevor Koenig said. That return would be guided by the company’s medical expert board, the U.S. Centers for Disease Control and Prevention (CDC), and national and local government plans.

“We will move slowly and carefully, driven by business need, with safety as our highest priority,” Koenig said, noting that a return will be phased in and employees will be notified at least 30 days ahead of time.

Amtrak spokeswoman Beth Toll said that all non-unionized Amtrak employees who are able to work from home have been asked to do so.

“Amtrak has a team working on recovery plans, including how we will begin to increase our employee presence at various Amtrak worksites. To keep our employees safe in their worksites, we expect that employees will be returning back in phases – slowly and deliberately – and in accordance with the most up-to-date CDC guidelines,” she said.

At St. Francis Hospital, which has begun to offer elective surgeries, procedures, and patient visits again, office staff who are able to work from home are continuing to do so until at least July 1.

“We are continuing to closely monitor the guidance from the Department of Health and the CDC regarding returning colleagues to the workplace,” added Ann D’Antonio, vice president of marketing and communications for the hospital’s parent entity, Trinity Health Mid-Atlantic.

M&T Bank is one of the few companies that has publicly said that employees won’t be returning this summer, targeting a return of Labor Day at the earliest.

Nick Lambrow, M&T’s regional president for Delaware, said that the bank has formed a task force to determine “how to execute a safe, staggered, and incremental return to the office when the time is right,” leaning upon guidance and data from health authorities.

‘We’ve suffered so bad’

The downtown businesses that may suffer the most from the corporations’ caution are the restaurants that have fed their workers.

Tim Pawliczek, owner of Cavanaugh’s, said that his restaurant is almost entirely dependent on office workers, law firms and the city’s courthouses. Before the pandemic, Cavanaugh’s was only open for four hours a day, Monday through Friday for lunch and had a robust catering operation to serve the businesses and juries, serving 44,000 lunches last year.

“We haven’t been open at night in 16 years, but we opened for dinner about two weeks ago,” he said. “One thing you have to understand about doing business in Wilmington is you’ve got a fish where the fish are, and for years it was lunchtime.”

If the office workers don’t return for an extended period of time, Pawliczek said that his catering business’s revenue will take a big hit.

Uben Pinto, co-owner of DiMeo’s Pizza, said that his shop will be affected by the lack of office workers downtown. | DBT PHOTO BY JACOB OWENS

Uben Pinto, a co-owner of DiMeo’s Pizza on Market Street, said that his business depended heavily upon serving the city’s office workers, both through deliveries to their buildings and from workers stopping in for a slice on their lunch breaks.

“Ever since COVID arrived, our business has been down at least 65%,” he said. “We still do some delivery business at night, but probably 90% of our lunchtime business is gone.”

When informed that many office workers may not be returning for several more weeks or months, Pinto sighed heavily.

“We’ve already suffered so bad,” he said. “If they don’t come back, I don’t know what’s going to happen or if we’ll survive.”

Scott Stein, co-owner of Bardea Food + Drink on Market Street, said that his restaurant revolves around a nighttime dining experience, but it also draws a significant daytime business.

“Dinner is the true Bardea experience with our full menu and people coming from long distances at night, but we’ve been trying to build our daytime business,” he said. “I’m concerned about the number of people working from home who will not be here for business lunches, but I’m taking it one day at a time and we will somehow prevail.”

Other businesses affected too

The impact on downtown businesses hasn’t been limited to restaurants though.

“It’s been awful, flat out terrible,” said Jed Hatfield, president of Colonial Parking, the city’s largest private parking garage manager with some 9,000 spaces, when asked about the impact on his business over the past two months.

A large portion of Colonial’s customers rent parking spaces monthly for use while working downtown and that business dried up, Hatfield said. The company was forced to furlough or cut hours for about 60% of its staff.

“We did some discounting programs in April and May so that people still had a place to park,” he said, estimating that revenues in that period were still down about 40% compared to last year. “The daily parking turned off immediately and the monthly parking has trickled down.”

Hatfield said that many of his large corporate users are staying current with their contracts for blocks of parking spaces, but utilization of Colonial’s lots was down nearly 90% during the pandemic. He agreed that smaller companies seem more anxious to return to their offices while the largest ones don’t seem to be in any rush.

“That’s probably the biggest concern for us – the whole uncertainty around, ‘When does the world return?’” he said.

Leonard Simon, owner of the city’s last haberdashery Wright & Simon on Market Street, said that his business is less dependent on office workers, although they do contribute to his sales.

“Being a niche business, I’m a destination store,” he said, noting that some of his customers do work downtown but he believes they would still come in even if they didn’t. “We do see some drop-in business from office workers around Christmas if they are searching for a gift. I don’t expect to see one such sale for Father’s Day this year.”

Providing a lifeline

In a hope to provide something new to entice more patrons downtown, a coalition of city entities is backing Curbside Wilmington, a program that will boost outdoor dining and curbside retail pickup.

City organizations are planning to enhance Market Street this summer as a way to draw more customers downtown. | DBT PHOTO BY JACOB OWENS

Jennifer Kmiec, executive director of the Committee of 100, a nonprofit association of Delaware business leaders that works to promote responsible economic development, said the program is aimed at drawing more of the city’s residents out to businesses.

“We know there is an awful lot of folks working from home in the apartments up and down Market Street and in that surrounding area,” she said. “We know that getting them out and comfortable and giving them a great experience is going to be critical, because the corporate lunch crowd is going to be down for a while.”

Kmiec, who said Committee of 100 was working on the program with Downtown Visions and the city’s Office of Economic Development, said that the program gives restaurants the option to turn parking spaces into parklets, where tables can be set up. Funds have been set aside to beautify the areas to make an appealing experience, she added.

The Curbside Wilmington program is currently scheduled to kickoff June 12 and run to July 31, although Kmiec said that organizers hope that it may last the entire summer if popular. An early plan to shut down part of Market Street for the program was opposed by tenants due to concerns about a drop in traffic, but Kmiec said they are discussing possibly doing that for a happy hour and hosting some outdoor music to add to the ambiance.

“I feel like there’s a lot of pent up demand,” Kmiec said. “It may still take a little bit more consumer confidence to get folks to drive in from the far suburbs, but we feel like the folks that are already in the city, especially within walking distance, will welcome us with open arms.”

By Jacob Owens

[email protected]

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