As office buildings in Philadelphia continue to be converted to apartments and other uses, I wonder if one day there will be any businesses left. We are doing little to successfully attract new companies and demand for office space will continue to decline as AI is improved and incorporated into more businesses.
Are we in an office death spiral, and can anything be done about it?
I think the answers are “maybe” and “yes.”
I just returned from my Exis Global Conference where I heard from my North American partners about the continuing decline of once thriving cities like Minneapolis, Seattle, Portland and Denver. High taxes and anti-business policies have led to an exodus of companies and wealthy residents. This has resulted in funding gaps and a dramatic reduction in services and quality of life for those who remain.
The good news is that Philadelphia is not in the same category…yet.
Unlike those cities, Philadelphia is still a place where people want to live, even if there aren’t many jobs for them here. We seem to have an endless appetite for new apartments which enables developers to repurpose obsolete office buildings.
So what does this mean for Philadelphia’s future?
Well, if you are a business looking for talent and little competition, why wouldn’t you consider Philadelphia where almost half the population is currently commuting out of the city for work every day? Most people like shorter commutes so if companies located here, they would seem to have a large pool of people anxious to apply for jobs.
The explosion of new housing resulting from all of our office conversions and the rate at which these new projects are leasing up tells me that we may be on to something. We have everything employers are looking for, we just have to get the word out and roll out the red carpet.
I’m not crazy in my belief. We are already seeing this phenomenon play out in the legal profession.
Over the past few years, some of the country’s most successful law firms have opened up offices here. Why? It’s not because we are chock full of companies who are potential clients willing to pay their very high rates. It’s because we have a great pool of legal talent and these firms, due to their relative profitability, have a competitive advantage in the battle to hire them. In sum, they are here for our talent pool.
The fact that we have so many educated residents and not nearly enough jobs for them is a combination we should be marketing to the world—but only if we fix the reasons companies aren’t here in the first place. Taxes. If we reduce the cost of doing business here, why wouldn’t a company want to locate to an amazing city where there is so much talent looking for a local employer so they can walk to work?
The office-to-residential conversion phenomenon is scary in one sense, but it is also a sign of opportunity and hope. People want to live here. We just need to take advantage of this.