Philadelphia, says Schweiker, shares some of the problems of all major cities, which include "declining blue-collar jobs, a struggling public school system and safety concerns." Nevertheless, he adds that the slowing rate of decline reflects "an increase in the number of people moving back into the city from suburbs, and also to young adults--especially college graduates--choosing to settle in the city."

Other factors in the city's favor, Schweiker says include the quality of life in Center City, job growth in key sectors, the city's residential property tax abatement program, and a shift in preferences away from suburban locations and sprawl to urban location by some demographics, including empty nesters and young singles.

At the same time, the bureau's report shows that the Philadelphia metro area experienced a 2.5% population increase between 2000 and 2007. "While the city has been relatively flat for employment, jobs are growing in suburbs, albeit at a slower rate. Other reasons include education, safety, taxes, and the housing and credit crunch," Schweiker says.

The problems facing Philadelphia, points out Schweiker, are long-term, and he praises Mayor Michael Nutter for "working on a host of these fronts to find solutions." One result, he says, is that violent crime decreased "substantially" in the first six months of the year.

Another critical component is that city government is becoming "much more business friendly on several fronts, including continuing reductions in the city wage and business privilege taxes," says Schweiker. "Making the city more competitive through reductions in business taxes could mean more jobs. Other solutions could include anticipated casino revenues to reduce wage and property taxes."

He points out that a recent CareerBuilder.com survey ranked Philadelphia number one for college graduates when considering availability of jobs, wages, cost of living "and especially housing and quality of life."

Spencer Yablon, manager of corporate affairs for Marcus & Millichap's Philadelphia office, notes that the city's tax burden is still high, and that burden belies the fact that the metro area is cited as relatively affordable compared to the cost of living in New York or Boston. "It is more cost effective for developers to build and for businesses to locate outside of the city limits," Yablon tells GlobeSt.com. "Unlike the aforementioned cities, you can live in the suburbs outside of Philadelphia and still be a 15- to 25-minute car ride from downtown."

Yablon says the residential shift toward the Pennsylvania and New Jersey suburbs is "more of a shift to transit oriented living. Apartment renters, condominium owners and single family homeowners are more often taking the train into the city given the rising cost of gas."

In Philadelphia's favor, however, is its location and ease of access to other East Coast cities, "with major highways leading to New York, New Jersey, Delaware and Maryland, as well as a major airport 15 minutes from downtown." He adds, "major employers in the city are extremely stable and are anchored by the education and healthcare. Softening of the business privilege tax would persuade businesses to stay in Philadelphia and would entice others to strongly consider relocating here."