Bisnow Panels Suggests Education, Taxes, and Construction Costs Will Dictate The Future Of Center City Philly
Famed baseball manager Casey Stengel once said, “Never make predictions, especially about the future.” Actually, that may have been Yogi Berra, or maybe even
someDanish artist from the early 1900’s. But regardless, a Bisnow panel got together last week to do exactly what Stengel or Berra, or that Danish guy warned us about…..they tried to make predictions.
The panel consisted of Philadelphia Deputy Mayor for Planning and Economic Development, Former PA Convention Center Authority CEO Ahmeenah Young, panel moderator Stephen Aichele of Saul Ewing, Parkway Corp president Robert Zuritsky, Liberty Property Trust SVP John Gattuso , Post Bros president Matt Pestronk, Carl Dranoff of Dranoff properties, and Brandywine Realty Trust leasing director Steve Rush.
Basically, they were some big players in the Philadelphia Real Estate scene and, perhaps not very surprisingly, they did not appear to disagree on too much.
From what I gathered, the consensus was that we needed to fix the schools, lower taxes in the city especially on businesses, and try to control construction costs. There was also some strong sentiment about growing small business, encouraging entrepreneurial ventures and attracting the “knowledge worker”. It was noted that major relocations of large organizations are rare, and Philadelphia should focus more on growing the businesses that already exist within city limits. But city business taxes make that difficult as companies can go into the suburbs and avoid the high business tax on profit, gross receipts, and wages.
Panel members had some optimistic predictions for the help that the new Comcast tower will bring to the city. Not only will the construction work bring jobs, but the growth of Comcast will lead to more of these city-dwelling millennials and knowledge worker that many of these panel members agreed were paramount to continued improvement in Philadelphia.
It was noted that Philadelphia has almost the same construction costs as New York but commands nearly half the rent. This obviously puts us at a tremendous disadvantage. A typical pro forma analysis of a development in Philly does not produce a workable bottom line without government subsidies while owners in New York are making money all day long and the city is reaping the tax benefit as well.
So how do we create a situation where pro formas become workable without government subsidy? According to the Bisnow panel, it boils down to making the city more attractive. Ways to do this include (but are certainly not limited to) reforming business taxes and redeveloping portions of the city. Business tax reform will encourage businesses to stay in the city as well as attract companies to the city from outside. Areas of planned development that will add value to the city include Market St. East, North Broad Street, and the river banks of the Delaware and the Schuylkill. Other proposed areas of Philadelphia value addition include increased tax abatement for residential redevelopment, and increasing the city’s brand for hospitality. And course, efforts to reduce construction costs in the city would undoubtedly encourage construction. It was mentioned that Philadelphia has tremendous geographic value and potential to be much more valuable than it presently is.
The facts, however, are what they are – some of them are good, and some bad. There are problems in Center City Philadelphia, but there is also tremendous optimism along with projects planned and people investing in the future of Center City. While we may not be able to make predictions (especially about the future), we are much more capable of making note of the problems. While the problems are far from easy to fix, at least we know what they are.
