Alan Domb (Credit: Domb's Facebook page)
It hasn't been easy emerging from the post-COVID era. It's been five years since lockdown and the pandemic made its mark in Philadelphia. We're going to explore several ways the pandemic has affected the city. The first of the series explores how the pandemic has impacted the economics of Philadelphia.
"Let me tell you how it will be/There's one for you, nineteen for me/'Cause I'm the taxman." Taxman: The Beatles
The Fabs' gem penned by George Harrison could be the theme song for Allan Domb.
The veteran Philadelphia developer who serves on the city's Tax Reform Commission is frustrated by how Center City businesses are coming out of COVID.
"We're slowly recovering post-COVID in Philadelphia since the demand for office space just isn't there because of the tax structure in (the city)," Domb said while calling from his Center City office. "What this city needs to realize is that we're no longer on an island. People have choices and we need to adjust to the tax policies. We have to do something soon since I believe that we have reached a true crisis point."
The numbers back Domb. According to recent statistics, Center City's 43.4 million square feet of office space has 10.2 million feet sitting vacant.
An office space that is for sale at 1206 Chestnut Street in Center City (Credit: myelisting.com)That's a staggering rate of almost 24 percent, which is nearly double what it was in 2019.
"There is a downward spiral in Philadelphia," Domb said. "Look at our suburbs, which are booming. Look at what's happening with King of Prussia, Malvern and Conshohocken in terms of office space. They're all doing great. Look at the right side of City Avenue, which is doing well and it's just across the street from Philadelphia, which isn't doing well."
The Philadelphia business tax is 13.7 percent. That's less than the 15.1 percent in New York City but that's double the tax rate in Boston and Texas.
"Philadelphia has to make it competitive and it just simply isn't working," Domb said.
There's no debating the statistics. A total of 540 new office leases were signed in Philadelphia in 2024. Only 10 were from outside companies.
"The rest were already there and most of those decided to downsize," Domb said. "The tax is choking small entrepreneurs. The city is in a downward spiral because of the tax situation."
However, Domb believes that hope is not lost.
"We need help from the federal and state governments," Domb said. "We need help with tax credits. We need to fill these office buildings with new companies that employ residents and pay taxes."
The commonwealth of Pennsylvania committed more than $60 million to help Pittsburgh give its downtown a boost.
"We should get that kind of assistance since we send more tax dollars to Harrisburg than Pittsburgh," Domb said. "Hopefully that will change."
Domb believes Philadelphia needs to eliminate the net income portion of the Business Income Receipts Tax (BIRT) to lure companies into city offices.
"We have to start making changes soon," Domb said.
It's much worse for Center City than it was prior to the pandemic but Domb believes there is reason for optimism.
"Under our current leadership they recognize the issue," Domb said. "That's the first part of the solution. They support where we need to go. Now it's all about making changes happen with taxes in Philadelphia. That's essential for our growth and viability. We have to do something with all of the downsizing and people working from home.
"The good news is that changes can happen. If we make the changes, we'll be in a better situation."
