Suddenly, the train pulls out of the crumbling North Philadelphia industrial corridor and, from a bridge over Fairmount Park, you can look toward Center City, its skyline dominated by the sharp headdress of One Liberty Place, Philadelphia Electric's nerve-wracking flashing sign, and a clump of other office towers. This tiny area - about 10 blocks wide and three deep - is the heart of productive Philadelphia, the center of the most profitable parts of the service economy.
There are ambitious plans to add to this skyline: a light-colored obelisk for Mellon Bank, a zippy evocation of Radio City for Bell Atlantic, Linpro's ominous black bookends, One Liberty Place's slightly shorter brother, and the prospect of an enormous office precinct over the railroad tracks north of 30th Street Station. All emerged from a sense of euphoria that Philadelphia was finally having its turn as a boom town.
Although the bloom came off the boom more than a year ago, the announcement by Cigna Corp. that it might pull 4,400 employees from 15 Center City buildings into a single, probably suburban location came as a shock. Keeping Cigna here after it was formed by the merger of INA with Connecticut General was one of the greatest economic development coups of the last decade, and Cigna's workers pay about $7 million worth of city wage taxes annually.
The giant insurer has not totally ruled out staying in the city, however. Developers in both city and suburbs have until a week from tomorrow to come up with proposals for a massive development to accommodate the workers. Unquestionably, the city's economic-development officials would like to keep all of Cigna's employees here, but any concessions made for Cigna would probably set off a wave of other threats by employers and might jeopardize the city's tax base.
In other words, any one-time crisis solution inevitably will be a policy that will affect the future of the entire city. Cigna is hardly unique in having a lot of employees based in Center City who really do not need to be there. The question is how to deal with that.
Center City locations are most essential for people who must regularly interact with people from other companies, lawyers, accountants and other service professionals. Downtown locations have a certain intensity that seems to help keep executives sharp. But these groups do not amount to a high percentage of the work force of most companies.
For most others, a Center City location is strictly optional, at least from the employer's point of view. It has the advantage of access to a larger labor pool than any single suburban location, which is not a negligible factor. But that edge is harder to quantify and assess than the major advantage of the suburban sites: Office space in a new Center City office tower can cost as much as 50 percent more per square foot than space in a new suburban complex.
You should note that I did not say "comparable" space, because the spaces simply are not comparable. Because of high land costs, Center City space is almost inevitably high-rise, a form of construction that is inherently more expensive to build and to operate than the sprawling four- to eight-story buildings characteristic of the suburbs.
The high-rises require more material. They are built under congested conditions, which cause delays. They must give over much of their volume to lobbies, emergency exits and elevators. It costs more money to operate those elevators, wash the windows and provide security.
Moreover, the very tall, richly finished buildings of the new generation of skyscrapers are designed to lure law firms and other high-ego businesses that are not likely ever to move themselves to an office park in Conshohocken. They are made to be more expensive, for tenants who are willing to pay for visibility and prestige.
Cigna has all the visibility and prestige it needs in its corporate headquarters at One Logan Square, which it has said it will keep.
But a large number of the jobs at Cigna and in the financial and insurance industries, which account for a very large chunk of the occupants of Center City offices, are what have become known as "back-office" jobs. Typically, these are clerical in nature, repetitive and frequently tied to computers. They are jobs that have little contact with the upper executive levels - and which, in our age of instantaneous telecommunications, can be done virtually anywhere.
These are essentially the factory jobs of the information age. And while it enhances both the city's economic climate and the workers' psyches to be able to run out to do some shopping during lunch hour, or to meet at a bar near the office after work, these factors do not show up on the corporate balance sheet.
The move to find less-expensive locations for such jobs is not new, even in Philadelphia. PSFS moved most of its back-office functions into the former Bulletin building at 30th and Market Streets. Mellon Bank has accommodated its back-office functions at the former Lit Bros. store, keeping a lot of employees downtown in space that costs less than new construction at the same time it saved a landmark. The Independence Mall vicinity, whose office space rents for less than that near City Hall, has long been a back-office location.
The building boom has brought with it a sudden and dramatic increase of office rental rates, a rise that might prove not to be sustainable in view of the likely oversupply of new office space. Center City high-rises might turn out to be a bargain during the next few years, but still, Philadelphia companies cannot afford to be careless about how they use their downtown space.
In New York City, where this problem hit earlier and even more severely, the response has been to look beyond Manhattan for suitable back-office sites that combine the advantages of both city and suburb. Such efforts, which have
concentrated so far on downtown Brooklyn and a close-in area of Queens, have captured some of the jobs that might otherwise have left the city completely, and have provided an impetus for the improvement of some places that were deteriorating.
In Philadelphia, whose central business district is exceedingly compact for a metropolis of its size, it is not necessary to look very far from Center City to find very large, well-served development sites whose prices are low enough to make mid-rise, back-office development possible. Broad Street, both north and south of City Hall, seems an obvious expansion corridor for lower- cost office development. There are even some large, old buildings that would more sensibly be converted into offices than apartments, which has been the prevailing pattern.
It also would be useful to identify some areas farther from Center City, in what was once the city's employment core, for development as urban office parks. The area around Wayne Junction in Nicetown, for example, has excellent transit and highway connections, a lot of underused land, and a lot of room for improvement. It could compete with most suburban sites.
North Philadelphia Station, which is already slated for renewal, could also
serve as the focus for such a development. That area has some existing buildings - some of the ones you see from the train - that might prove suitable for modification.
The city can't possibly afford to provide enough subsidies to make Center City high-rises financially competitive with suburban office parks. Center City is unique in the region, and it has to attract businesses willing to pay a little more to be there. But if the money that the city might spend buying off such potentially footloose companies were put into planning, improving and marketing sites within the city that are truly comparable to suburban ones, the result could be permanent improvement of neighborhoods and the people in them.
There is plenty of accessible land available for private, back-office developments that can compete on its merits with sites in the suburbs and elsewhere in the country. Philadelphia has to find a way of retaining the nuts-and-bolts jobs of the contemporary service economy and make them benefit the city's residents. The Cigna shock could get that process started.
In the long run, it is not possible to sustain only a tiny spot of dynamism in the sprawling city. It is folly to neglect all the territory between Center City and the suburbs. Philadelphia must be more than a many-pinnacled skyline glittering above a ruin.
