Center City Needs A Reputation Boost And More Funding To Keep Its Housing Boom Going, Leaders Say

A record number of new housing units was added to Philadelphia’s downtown in the wake of the pandemic, but corporate leaders say more support is needed to sustain the rapid population influx.

Philadelphia's urban core added 7,429 new units of housing in the last two years at the same time that 11,000 people moved in, according to a new report from the privately run nonprofit Center City District.

Yet net in-migration is starting to slow, with the rate of people moving in versus moving out of the area at 1.9% last year, down from 2.2% in 2022.

A slower housing market, the end of the city's 10-year tax abatement program, a poor downtown reputation and a lack of nearby amenities are to blame, according to Center City real estate leaders, who discussed the results of the report and how to keep population growing at a Wednesday forum.

“You can’t fill these apartments if people don’t want to move here,” Briana Wilkins, vice president of development at Parkway Corp., said during the panel discussion. “People don’t want to move here if the city’s dirty, if there’s a perception that it’s unsafe [and] if it’s not a good place to live. So pick up the trash. Turn on the lights. Control the crime.”

Panelists said Center City struggles with perceptions it is dangerous even as the area has a low violent crime rate, according to Philadelphia Police Department data and a 2023 Brookings Institution report that called the area “remarkably safe.”

But a new regime in charge of the city could change minds, Wilkins said, adding she was excited about Mayor Cherelle Parker’s administration and the potential to alter the narrative.

“We can start to see that change already happening, which is really important,” Wilkins said.

The region bounded by Tasker Street, Girard Avenue and the city’s two rivers has seen its population grow 3% since the pandemic began. 

Newcomers arrived even as office workers stayed home. Philly's in-office population declined 8% over the pandemic years, according to the report, but that didn't stop an influx of new residents, led by young, college-educated workers.

Part of the appeal has been the city's cost of living. The average rent in the area is $1,996, well below neighboring major cities in the Northeast. More than half of new Center City residents hail from greater Philadelphia and other parts of the state, followed by 15% relocating from New York and 8% relocating from Florida.

International graduate students, office workers, remote employees and commuters to New York make up a large portion of those living in apartment and condo complexes in Center City, said Gianni Parente, regional investment officer at property group EQT Exeter.

But in addition to cleaning up its act on the perceptions front, Center City must do more to keep its young populace around, especially as they age, he said.

“We need stuff that can also compete with the suburbs,” Parente said. “Unfortunately, with Covid, we’ve lost a lot of convenience stores that have shut down or changed character and the sporting goods stores and things that are bigger in the retail mix.”

The area also needs a boost in lending and funding for new housing, especially now that the city's 10-year tax abatement program has wrapped up, panelists said. That program exempted new residential construction from its first 10 years of property taxes and was replaced by a policy that exempts residential properties from 100% of property taxes in the first year and goes down 10% annually thereafter.

To get things moving faster, Parente proposed lobbying the Pennsylvania government to press for federal funding that would kick-start new housing projects, adding that Philadelphia accounts for most of the job growth in the commonwealth. 

Panelists also pointed to new Department of Housing and Urban Development guidance on how certain block grants can be used for conversions of offices to apartment rentals as a potential tool in the city's belt.

Maintaining growth is key, panelists said, especially as Center City’s addition of housing units since 2011 has managed to closely keep pace with population gains.

“Given these trends and the macroeconomic conditions keeping many out of the for-sale housing market, it is reasonable to expect that the apartment market will remain strong,” Center City District Manager of Economic Development and author of the report Lauren Smith told Bisnow.

Corporate leaders said sustaining Center City growth is possible, although it might not be as easy as it once was.

“Boston, New York, D.C. all started their stride maybe 10, 20-plus years ago,” said Bryan Oos, Toll Brothers Apartment Living regional director of acquisitions and development. “It’s complicated, is the long and short of it.”