A convergence of major events this summer gave Philadelphia a meaningful economic boost, but real estate players say much work still needs to be done to point the city in the right long-term direction.
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The nation’s 250th anniversary coincided with the MLB All-Star Game and six World Cup matches in the city, bringing a 50% revenue jump for Philly hotels and a short-term bump to surrounding retail and restaurants. But real estate leaders say an unattractive tax regime, quality-of-life issues and entitlement struggles continue to hold the city back.
“Philadelphia has more momentum than I could ever remember it having,” Badger Group CEO Paul Badger said last week during Bisnow’s Philadelphia State of the Market at the Live Casino.
“The key for us is, how do we now harness this momentum and turn that into investment, into lasting jobs?” he added.
Other executives at the event said Philly proper struggles to compete with the employment hubs in the suburbs.
This is in part due to the large amount businesses can save on taxes by simply moving outside city limits, Allan Domb Real Estate President Allan Domb said.
The Census Bureau found that about 23% of Philadelphia workers aged 16 or older commuted to jobs outside the city in 2024, which is the most recent data available.
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The city has committed to reducing the business income and receipts tax, which many entrepreneurs view as cumbersome, but the cuts politicians plan to enact slowly through 2039 fall short of the full BIRT elimination the Tax Reform Commission convened by Council President Kenyatta Johnson recommended in 2024.
“The tax regime in Philadelphia specifically really holds us back from the kind of growth we need to create the flywheel effect,” Alterra Property Group Managing Partner Leo Addimando said.
The city doesn’t need to contend with Texas or Tennessee, Parkway Corp. CEO Robert Zuritsky said — just the high-tax nearby locales like New York and Washington, D.C.
“We have everything here except for a shitty business environment. … It’s about jobs,” he said.
“If we’re competitive with other Northeastern cities, we will win,” Zuritsky added.
The city should follow the lead of the state, he said. Zuritsky lauded Gov. Josh Shapiro’s efforts to make Pennsylvania more business-friendly, which had led to a series of high-profile investments in the Lehigh Valley.
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Philadelphia’s homelessness crisis was also top of mind for panelists at the event.
“The city was really shining except for the homeless problem,” Zuritsky said of its time in the spotlight over the summer. “That is holding us back a bit, especially in Center City.”
Domb, who served on the Philadelphia City Council between 2016 and 2022, said there are around 400 people in the neighborhood struggling with this issue.
“We have to get these people off the street. … We need to declare a public health emergency and allow our officials to help those who can’t help themselves,” he said.
“If I lived on the street for 60 days, I’d probably go mentally ill myself,” he added. “We need to get them care.”
Smith & Roller principal Tayyib Smith said the business community in Philly is overly focused on Center City and the experience of tourists and visiting suburbanites.
“Too much of our discussion of the city is from a transient perspective,” he said.
“We have a crisis of imagination for actually investing in neighborhoods,” Smith added.
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The walkability and bike infrastructure in many of Philly’s outlying neighborhoods are deeply attractive to many young residents, who want to live in a place where they have easy access to their friends and the cultural amenities the city has to offer, Smith said.
Building more housing in these neighborhoods could help draw more young residents, but developers say the city’s entitlement process still acts as a significant barrier to new construction.
Philly's councilmanic prerogative tradition means local representatives have broad leeway to reject projects they don’t like.
Developers have also long bemoaned long timelines when it comes to pulling permits and getting projects approved by the city’s winding bureaucracy.
“What we don’t have is city government processes that line up with real estate development and how the market functions,” Addimando said.
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