Philadelphia experiences robust job growth, but it is not in sectors that address office vacancy issues.
Philadelphia has experienced notable job growth in recent years, surpassing several major cities in the United States. However, this surge has not translated into a demand for office space within the city, as detailed in a comprehensive report from the Center City District (CCD), a business improvement organization. The report analyzes 15 years of data concerning office leasing, vacancy rates, and employment trends across Philadelphia and its suburbs.
One of the primary findings highlights that the job growth in the region has been predominantly concentrated in sectors like healthcare, where a substantial portion of employment is not situated within traditional office environments. Industries such as finance, insurance, and real estate, which are typically significant contributors to office occupancy, have shown minimal growth in recent years within Philadelphia.
Clint Randall, CCD’s vice president of economic development, emphasized the need to assess the region’s economic trajectory since the Great Recession, especially in the context of the post-pandemic recovery. The report reveals that between 2009 and 2024, jobs in the healthcare sector alone experienced an impressive growth of 44%, constituting nearly a third of all jobs in the region.
In total, Philadelphia has seen a 13.6% increase in jobs from 2020 to 2024, marking an uptick compared to previous periods. This recovery is significant, especially when considering that job growth rates during the post-recession years from 2009 to 2014 were much slower, at only 4.1%. During the last four years, Philadelphia outpaced San Diego, Boston, and Los Angeles in job growth, situating itself above the national average among the nation’s 25 largest counties.
Despite this positive trend, employment in sectors that rely heavily on office space has only seen about a 1% increase since 2020—insufficient to significantly bolster demand for office leasing. Both Philadelphia and its suburban counterparts are grappling with high office vacancy rates, hovering around 20%, reflecting the ongoing adjustments in workplace strategies as firms experiment with hybrid and remote work models.
In terms of geographic competition for office jobs within the region, Montgomery County has historically dominated. Yet, as of 2024, Philadelphia has captured a higher percentage of regional office jobs, now standing at 32.7% to Montgomery County’s 31.4%. While modest, this shift indicates a potential rebalancing of employment opportunities.
Looking ahead, CCD’s report encourages development incentives along key thoroughfares, like Market Street, to stimulate job growth and, subsequently, office demand. Randall advocates for initiatives that make Center City and Philadelphia appealing as a living and working environment, enhancing its competitiveness compared to suburban locales. To maintain this momentum, the region must ensure it remains an attractive place for talent, with an emphasis on livability, affordability, and distinct advantages over other metropolitan areas.
