Thursday, September 4, 2008

Lots of Lots today highlights the demolition of Philadelphia's St. George's Hall for another surface parking lot. Let me repeat that: Replacing the old structure will not be condos or offices, but a surface parking lot – right in the heart of the city's downtown business district.

This is the most recent opportunity to highlight a problem that is hurting the competitiveness of Philadelphia's downtown: there are a lot of surface parking lots on prime real estate.

I have been to other cities that also have this problem, but none with as competitive a downtown as Philadelphia. Marcus & Millichap shows Philadelphia as the city with the 9th lowest office vacancy rate in its 2008 National Office Report, just beating out Boston. Between 2007 and 2008 Philadelphia jumped from #32 to #28 in that report's National Office Property Index, just two ranks away from Chicago.

In light of these facts, it would seem illogical that parking lots would be the most profitable use for key downtown parcels. I am not the first to suggest solutions to this particular problem, but I hope to be one of many voices echoing them until the City addresses this issue.

1) Surface parking should not be an allowable, as-of-right use in CBD zoning districts. Parking lots reduce property values and create eyesores next to viable office towers, residences, shops and restaurants.

2) Philadelphia should adjust its tax assessment to value land more highly, in order to make surface parking lots less economically enticing. Parking lots occupy parcels of the same size as high-rise office towers; their owners should be paying taxes that are comparable to those paid on other downtown developments. Developers should be economically encouraged to build something of greater public and civic value.

Looking out my office window, I can see eight separate surface parking lots, right downtown. This is an issue that needs some serious attention.


urbanursus said...

FYI The low office vacancy rate is related more to the conversion of office space into residential units than it is of a strengthening office market. Not that this detracts from your over all point.

Greg said...

Conversions probably played a role, that factor is far from the whole story. According to the Marcus and Millichap report, the amount of new office square footage completed between 2006 and 2007 was almost double. At the same time, absorption has been going up significantly, and office employment growth has also been increasing (albeit slightly).