Mayor Parker is considering more days in-office for city workers to help Center City bounce back

Philadelphia City Hall, crowned by its oversized William Penn statue, is emblematic of the city. SEPTA’s station beneath the towering edifice ties the transit network together, and the family-friendly attractions of Dilworth Park have become a favorite of tourists and locals.

Why, then, are the offices immediately adjoining the beloved Second Empire structure struggling so badly?

According to data from commercial real estate services company Jones Lang LaSalle (JLL), only one of the six private-sector office buildings that surround City Hall has more than 80% occupancy. Two of Center City’s largest office complexes — the Wanamaker Building and Centre Square — are in serious financial trouble and have the lowest occupancies of all.

“When multiple office buildings in an area empty out, which has happened around City Hall, the people who used to be there throughout the day are gone and that has a major impact,” said Tom Weitzel, managing director of JLL in Philadelphia. “Retail is affected, public safety issues arise, and the area can quickly become unappealing.”

By JLL’s estimation, pre-pandemic there were 21,000 office workers around City Hall. Today the number is closer to 13,000 and substantially less on Mondays and Fridays. According to data from the Center City District, the pedestrian foot traffic count in the area is far below 2019 numbers and is modestly lower than the recovery rate for Center City as a whole.

There aren’t easy policy fixes that Mayor Cherelle L. Parker’s administration can pursue to turn the situation around.

Most other major cities have more restrictive zoning downtown than Philadelphia, so they are trying to rewrite those rules to encourage office-to-residential conversions or other uses.

But Philadelphia already allows a gamut of land uses, and a full 10-year property-tax abatement is in place for building conversions. So there aren’t obvious tweaks to provide incentives to building owners and developers to repurpose their spaces.

Real estate industry leaders pointed to two reasons office workers aren’t coming back: fears about public safety around City Hall, and a void left by municipal employees who are mostly working from home.

“The clean and safe message is a big part of why this section of the city has not performed as well as we would hope,” said Lauren Gilchrist, Philadelphia executive vice president at Newmark, a commercial real estate services company. “Part of the ongoing challenge is the lack of return of city office workers to the cluster of municipal buildings around City Hall.”

Despite no statistics showing that major crime is higher today than it was in 2019, there’s a pervasive perception among office workers that the area around City Hall has become unsafe since the pandemic. Stakeholders wonder whether increasing the foot traffic and eyes on the street by bringing municipal workers back to the office more consistently might lessen those concerns and bolster retail.

The municipal workers union cautions that a return to in-office hours five days a week would harm recruitment efforts, but the administration is exploring the idea.

“The private sector is right when they talk about return to work,” Parker said in a statement. “It is incumbent that city workers come back to the office for the future of Center City. Philadelphia can only truly say we are ‘open for business’ when all of our workers are back in the office Monday through Friday, and you’ll be hearing more from me on the city’s plan to bring city workers back — soon.”

Buildings such as Wanamaker, Centre Square, and One South Broad have unique challenges and individual tales of woe. They are all historical structures in an era when many office users are downsizing and moving toward newer buildings with modern amenities to lure workers back.

They are also encumbered with a combined $530 million in debt and a cascading series of vacancies.

“I have 70 employees at One South Broad Street, and it’s like pulling teeth to get them to come back to work,” said Michael Betancourt, managing director of Aion Partners, the New York-based company that owns the building. “Because of vagrancy, crime, and the quality of life, my workers are afraid to come in. The sun goes down; they want to leave.”

Evidence suggests that crime is not on the rise downtown, or even higher than it was pre-pandemic. A Center City District analysis of police data showed that major crimes were far lower in 2023 than in 2018 or 2019. A 2023 study from the Brookings Institute found that crime downtown made up a negligible amount of citywide incidents. A follow-up study found that homelessness in Center City is substantially down from before the pandemic.

“The gap between perception and reality may in part be explained by significant changes in downtown foot traffic, which made unsheltered homelessness more visible,” the Brookings report on homelessness reads.

That’s especially true on SEPTA, where ridership on the Market-Frankford Line — the route that struggles with passenger smoking, drug use, and littering — is at only 58% of pre-pandemic levels as of November.

Something similar could be true of crime. There were muggings or the occasional shooting in Center City pre-pandemic, but because many commuters are downtown less frequently, they may assume that high-profile violent incidents such as those recently in SEPTA’s City Hall station or Macy’s itself are the norm.

None of this is to say that crime doesn’t occur downtown or to deny the demoralizing effects when it does. Weitzel of JLL says the final push for a large tenant that exited Centre Square came when an assistant to the CEO was mugged in front of the building in 2021.

Weitzel says workers are using safety as an argument against coming into the office more.

“This is directly from a client of mine who told me that every time he tells his employees to come to work more often, they tell him how it’s unsafe,” Weitzel said. “Whether it’s true or not, it’s being used. It’s the city’s obligation to change that perception.”

Adding more police presence downtown, and especially around City Hall, could theoretically ease concerns. But given the low incidence of crime downtown, law enforcement resources are likely better targeted in other neighborhoods.

Hence the focus on increasing the number of pedestrians on the street.

The Kenney administration required workers to come back for two days a week. In practice, schedules were left up to departments to decide, and, in many cases, little enforcement was in place.

“The location [around City Hall] is a challenge, and the slow return of municipal and government workers is definitely a big part of it,” said Ashley DeLuca, who co-leads a team focused on distressed office buildings at Ballard Spahr. “It’s a lot of public-sector office buildings that are right around City Hall, and filling those back up would go a long way to keeping that area vibrant.”

Mayors in other cities have had little luck mandating a fully in-person workweek for municipal employees. New York City Mayor Eric Adams promised a five day in-office workweek during his 2021 campaign, but that drive sputtered out. By the end of last year, the new policy was for three in-person days for local government workers.

As in New York City, some in Philadelphia are worried about compounding an already dire municipal worker shortage, with 4,600 positions unfilled last year. Municipal office workers are generally paid less than their private-sector counterparts, and most are required to live in the city. Losing a flexible schedule could further undermine the city’s attempt to hire, especially with a regional unemployment rate of 3.3%.

“I understand your wanting to revitalize Center City, but you don’t want it to be at the sacrifice of being able to fill vacancies,” said April Gigetts, president of AFSCME District Council 47, which covers white-collar municipal workers.

Gigetts said no return-to-office negotiations have occurred with the Parker administration.

“You really have to be competitive with the private sector,” Gigetts said. “People want to have that work-life balance.”

The city also could actively enforce the two-day requirement, or require Tuesday through Thursday, as Independence Blue Cross announced that it will begin to do in the spring. Last year, Comcast announced they would bring workers back four days a week, which is also the policy at major companies that own offices such as Brandywine Realty Trusts.

Bringing the public sector back to the office would allow the mayor to press for more from the private sector, office boosters argue.

“We’re really excited about a mayor who seems to really believe in in-person work, both for her team and city wide,” said Prema Gupta, CEO of the Center City District. “The whole downtown benefits from that.”