Love Those Millennials in Philly?
For those of you looking for examples of how Philadelphia’s tax policies discourage job creation within the city, I have one for you. The headline of a recent New York Times article read, “Conshohocken, Pa., an Old Steel Town, Now an Office Hub.” Four buildings totaling 1.25 million square feet of space are proposed for this small area that still exhibits the scars of a hardscrabble community that once was and is bursting at the seams with all sorts of real estate development. Can’t wait to see all the traffic jams on the Fayette Bridge at rush hour!
Why is Conshy so attractive to developers? Well, it seems that millennials are attracted to “new urban-type environments” that are easily accessible by train or bicycle to the Center City. In other words, Conshohocken is being molded into a densely developed urban setting (a city!) that kids who desire the cool Center City lifestyle can easily commute to. These kids, by the way, now represent a significant percentage of the population here. Makes you wonder why developers don’t just develop office buildings in Center City so young folks can simply walk to work.
But don’t hold your breath.
As the article states, the office rents in Conshohocken are comparable to Center City, “but that is significantly lower than city rates when taxes are taken into account.” Jeff Mack, a veteran commercial real estate player in the region, is quoted as saying, “Philadelphia taxes add $10-$15 per square foot to commercial rents.”
Yes, there are more building cranes in town. But by and large, these are apartment buildings under construction. Presumably they will house all the young people who will be commuting to Conshy. This portends to be a short-term high for Philly. As these kids grow up and have families, the tug of better schools and backyards will be tough to resist.
This, in a nutshell, is why it is so hard to watch as our city leaders -– particularly City Council –- do nothing to change our tax structure. They better get busy. Because in about 10 years the sound of building cranes will be replaced with the sound of moving vans transporting the millenials and all of their belongings to the ’burbs.