Such steep discounts have become normal for office space across the United States as the pandemic trends of hybrid and remote work have persisted, hollowing out urban centers that were once bustling with workers. But the losses are hitting more than just commercial real estate investors. Cities are also starting to bear the brunt, as municipal budgets that rely on taxes associated with valuable commercial property are now facing shortfalls and contemplating cutbacks as lower assessments of property values reduce tax bills.Philly faces this issue, some, but it also benefits from various historical quirks leading to the "downtown" area (center city) having a sizeable residential population, which isn't the case in every city. Office-to-residential conversions aren't cheap or practical, necessarily, but you don't have to try to create a residential neighborhood where there isn't one - it's already there.
I suspect these pieces get written more because of the commercial real estate investors panicking than the actual tax hole cities are facing, but to the extent that this real:
Mr. Peskin said that San Francisco’s $14 billion budget is facing the prospect of a $1 billion shortfall over the next few years, in part because of lost commercial real estate tax revenue.San Francisco, especially, can fix this problem easily by allowing some residential units to be built.