Title
Authorizing the Council Committee on Commerce & Economic Development to hold hearings to investigate commercial office building market viability in Center City Philadelphia.
Body
WHEREAS, Center City is the commercial and economic hub of the City of Philadelphia and the Delaware Valley, containing over 42.7 million square feet of office space; and
WHEREAS, Since the COVID-19 pandemic, the increase in hybrid and remote work has caused companies to reduce their office footprints to accommodate shifting employee attitudes and trends towards in-person work; and
WHEREAS, These conditions have put immense pressure on Center City's office market, whose Class B and C office spaces that make up a larger share of the city's old office building stock than the continually popular Class A "trophy" office spaces, have faced spiking vacancies and reduced property valuations that threaten the stability of the city's finances and economy; and
WHEREAS, The office vacancy rate in the City of Philadelphia rose from 17.3% to 19.1% between 2021 and 2024 according to analysis by global real estate services firm Jones Lang LaSalle (JLL), which considers a healthy vacancy rate to be about 12%; and
WHEREAS, One South Broad, Centre Square, and the Wannamaker Building-boasting 42%, 47%, and 65% vacancy rates respectively according to The Philadelphia Inquirer-have faced inordinate leasing challenges, with Centre Square and the Wannamaker Building being put into receivership in 2023 after failing to pay back loans and foreclosing; and
WHEREAS, The assessed value of Philadelphia office buildings is expected to plummet by $1 billion as building owners appeal their property assessments downwards according to Finance Director Rob Dubow, forcing property owners to shoulder a greater burden to fund the city; and
WHEREAS, Tenants such as Radian in Centre Square have been subleasing their space to a hospital system following their relocation to the suburbs; and
WHEREAS, Office-to-resi...
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