GlobeSt.com EXCLUSIVE: CBRE's Walters Urges Incentives That 'Level the Playing Field'

The oversupply, he says, "is a consequence of a stagnant economy that is just beginning to climb back and major tenant lease expirations taking place over the next 24 months. Although a majority of the tenants are likely to remain in Center City," he says, "many will require less space."

While these conditions are not unique to Philadelphia, Walters acknowledges, "the situation represents a prime opportunity for government entities, at both the state and city level, to enact significant tax benefits uniformly, across the board, rather than selectively, in order to kick-start business expansion and growth. Uniform tax relief here, including a gradual reduction of the city wage tax, and other incentives, offered without picking one project or another, recognizes the long-term needs of our city."

"The negative consequences of using preferential zoning and incentives leads to artificial increases in supply where demand doesn't support it," Rudin adds. He points to overbuilding, which occurred on the West side of Manhattan in the late 1980s, as an example. "The negative impact not only led to almost a real estate depression there, but also extended beyond real estate," he says. He sees similarities in Philadelphia's current climate, which could be "exacerbated by increasing supply ahead of demand."

In addition to the creation of a "level playing field," Walters urges "a cohesive strategy among leadership in government, business and the real estate industry to better outline what Philadelphia has to offer." He cites, "our infrastructure, proximity to recreational areas, great museums, great restaurants and world-class medical and educational institutions," as examples.

"Getting the word out in a cohesive voice," he says, "would not only reduce existing Downtown vacancies, but also make Philadelphia a strong magnet, not just for bringing growing companies in the tri-state area to Center City, but, even better, for landing a major corporation or two for the Greater Philadelphia region. That's what it will take to increase demand and make Philadelphia competitive throughout the Middle-Atlantic region and all along the Eastern seaboard." The two-year timeline in which existing Downtown tenants will secure new leases, he concludes, makes uniform incentives and a cohesive marketing strategy critical now.