Many Center City office buildings have been sitting empty over the past five years, but COVID-19 is not the only culprit for this reality, writes Allan Domb for Philadelphia Magazine.
Decades of business-unfriendly tax policies have driven businesses and workers away.
The latest statistics show from Center City’s 43.4 million square feet of office space, 10.2 million remain vacant. That’s a nearly 24 percent vacancy rate — almost double the 2019 figure. With plenty of expiring leases, vacancies are projected to increase by a minimum of one million square feet annually through 2027.
This poses a major problem, as empty office buildings lose value, and in turn, the city stands to lose a significant amount in property tax revenue when these buildings are reassessed. Empty buildings also result in fewer jobs for service employees and decreased foot traffic for downtown restaurants and retailers.
To reverse this trend, Philadelphia should look at its business taxes. Businesses here pay a tax of 1.14 percent on their gross revenue, as well as 5.81 percent on their net profits. Scraping this decades-old business tax structure could play a key role in getting businesses to return to Philadelphia.
Read more about the issue and how a longtime businessman and former City Councilman believes it should be addressed in Philadelphia Magazine.
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