(Photo illustration by Natasha Khan Vicens/PublicSource)
From rising construction costs to shrinking tax revenue and the end of federal relief, Pittsburgh’s future may hinge on how developers, business leaders and governments respond to mounting strain.
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As national and global turbulence filters down — from presidential politics to trade wars and AI disruptions — Pittsburgh faces an economic inflection point.
Big developers. Small businesses. Job hunters. Pittsburgh navigates a time of turmoil.
The region has strong bones: research institutions, energy resources and a foundation of innovation. But whether it can weather a downturn may depend on how local leaders respond to stubborn population loss, Downtown decline and the fast-approaching end of federal pandemic-era funding.
Urban policy expert Bruce Katz put it plainly: “You’ve got to embrace how volatile this period is. Everyone thinks this is volatile because of [President Donald] Trump but it’s more than him.”
The shifting conditions are visible across the region’s landscape:
- Downtown leasing is down more than 60% from pre-pandemic levels, straining property tax revenue.
- Developers are contending with rising costs driven by tariffs, inflation and labor uncertainty.
- New data centers powered by natural gas raise concerns about grid capacity and automation’s impact on jobs.
- Meanwhile, the regional workforce faces pressure to adapt to AI and emerging technologies.
“Pittsburgh has a tremendous opportunity to own its future,” said Katz, director of the Nowak Metro Finance Lab at Drexel University, “but it has to understand where the opportunities are and how to unlock it.” He sees Pittsburgh as well-positioned thanks to assets like the robotics hub in Hazelwood Green, a growing tech cluster in Bakery Square and Carnegie Mellon’s AI and defense research. “Pittsburgh is unusual because it does have the starting position along multiple fronts.”
From affordable housing to economic development and workforce readiness, PublicSource spoke with developers, business leaders and government officials to understand how they’re navigating the uncertainty — and what’s at stake if the region can’t find its footing.
Cooperation is the cure to ‘a lot of chaos’
Todd Reidbord, president of Walnut Capital, a Pittsburgh-based development company, said federal funding cuts have created “a lot of chaos” and uncertainty for local developers. He emphasized the need for more cooperation among local leaders.
“Now more than ever, we need local government to be proactive in creating opportunities to grow our city, grow housing — whatever your agenda,” Reidbord said.
“The secret sauce is partnerships between state and local,” he added.
Bill Gatti, president and chief executive office of TREK Development, said residential construction projects for this year are already secured but next year’s projects will face price hikes.
TREK works on both market-rate and affordable housing projects.
“What would be a normal amount of inflation would be 2-3%, but what we’re seeing is 8% of an increase,” Gatti said.
Reidbord and other developers said variables like the changing cost of construction goods cast uncertainty over future projects.
“If you’re not sure what aluminum will cost, you have to hedge your bets, and then interest rates don’t play the way you expected because Trump is doing these things,” he said.
“We can deal with these issues, but if you layer on top extended permitting time, inclusionary zoning, not willing to support development, planning commission delays, it doesn’t happen.”
In the face of international and federal uncertainty, “we need to take away some of these factors on the local level.”
Reidbord said Gov. Josh Shapiro is attempting to help with these challenges but “he has a divided legislature so it’s difficult.”
As a result of this uncertainty, Gatti said Trek projects for 2026 have either slowed or come to a halt.
“The affordable projects are generally moving forward but they’re relying on more support from lenders and investors,” Gatti said. “Our market-rate projects are all just sitting, not advancing until we see how things are going to end up.”
Tariffs making affordable housing even harder
Nationally, signs point to an economic slowdown, and developers say tariffs are already affecting Allegheny County’s housing construction market — a trend they expect to worsen next year.
“Everything is going to go up exponentially,” said Jason Tigano, CEO of LEVEL Equity Buildings.
The nonprofit rehabilitates homes to sell for $80,000 to $120,000 to low-income households. But with a system largely geared toward rentals and rising material costs, his efforts to expand affordable homeownership in places like McKees Rocks are becoming harder to sustain.
“My costs are going to go up 20% in materials from tariffs,” Tigano said. “We get most of our lumber from Canada.”
Labor concerns add another layer: “I have crews that have gone dark because of the ICE activity. They are legal, but they’re scared.”
An April report from the International Monetary Fund warned that escalating trade conflicts and “high levels of policy uncertainty” could slow both short- and long-term growth. With economies highly interconnected, disruptions abroad are more likely to affect regions like Pittsburgh.
“Scaling back international cooperation could jeopardize progress toward a more resilient global economy,” the report stated.
The report also noted that the global economy is still recovering from recent shocks and remains vulnerable.
Meanwhile, trade tensions appear to be rising, with a federal court recently restoring former President Trump’s authority to impose tariffs under a national emergency — a move that could further drive up costs and delay development.
Demographic challenges, asset opportunities
As artificial intelligence and new technologies alter the economy, Stefani Pashman sees both opportunity and challenge for the Pittsburgh region. But so far, she said, the region’s assets haven’t translated into broad-based growth.
“There’s lots of great things happening and an immense asset base. Unfortunately none of that has yielded growth from a job, population and economic perspective,” said Pashman, CEO of the Allegheny Conference on Community Development.
“So when you come from a place of scarcity with [the] tax base, it creates limiting factors,” she said. “We’re focused on how do we turn the tide so that we have growth that positions us for investment.”
Pashman noted the uncertainty created by federal policy shifts, as well as the uneven impact of new business investments like a planned data center in Homer City.
“We’re somewhat in a positive light on the business investment side but it doesn’t mean that these other things aren’t true — that communities are in trouble, business is in flux,” she said. “Maybe we can emerge with opportunity.”
Population growth has stagnated, she said, in part because of a shortage of quality job opportunities.
“We want to see more job growth and that will in turn bring population growth,” she said. “We need good companies, the right jobs, career pathway types of jobs that create stable income for families.”
To meet future workforce and energy demands, the conference is investing nearly $20 million in workforce development.
Pashman warned that due to demand from residents and emerging technologies like AI that Southwestern Pennsylvania is projected to face a 40-gigawatt shortfall within the next five years.
A funding hangover and changing tax revenue
For the last five years, Pittsburgh and the rest of the country have enjoyed an unprecedented level of federal funding through the COVID-era American Rescue Plan Act [ARPA].
The economic stimulus is now coming to an end, and the city and region will have to come up with ways to mitigate the funding loss and ease the hangover pains, according to City Controller Rachael Heisler.
The city’s $335 million in ARPA funding has nearly run out, dropping from $46.5 million in 2024 to about $238,000 in the 2025 budget.
Funding from ARPA must be spent by the end of 2026, according to Heisler. And it’s unclear how the city will continue to support a workforce that has grown by 200 jobs since 2023.
At the same time, property reassessments of office buildings and commercial real estate have led to revenue losses. “Last year, we owed money instead of pulling in money in property taxes,” she said.
The city is also bracing for a potential hit to its so-called jock tax — a levy on visiting athletes and entertainers — which is being challenged in the state Supreme Court.
“At a minimum, $20 [million] of the $30 million we’re budgeted to collect in the next five years would be gone,” Heisler said.
In October 2024, Shapiro and regional leaders unveiled a $600 million Downtown revitalization plan focusing on converting office buildings, enhancing public spaces and upgrading infrastructure.
Reidbord warned about the limitations of that investment.
“The Downtown investment is a lot of smoke and mirrors. The state only committed $60 million, not $600 million. A third of that is for one project … that appears to be dead,” Reidbord said, referring to plans to convert the former YWCA of Greater Pittsburgh building on Wood Street into the City Club Apartments. The project appears to be abandoned after the owner’s mortgage default.
Downtown is a major driver of the city’s evolving financial situation, Heisler said.
“Our Downtown changed forever,” she said. “People aren’t coming Downtown from 9 to 5, Monday to Friday.”
With fewer commuters and more remote work, the city is collecting less from its local services tax. “Telework has become way more prevalent,” she said.
Converting office buildings into affordable housing
As Downtown struggles on multiple fronts, Beacon Communities is working to transform vacant office space into affordable housing. The development firm leverages tax credits, preservation grants and public funding to make these adaptive reuse projects possible — though economic uncertainty is beginning to weigh on the process.
“It hasn’t killed deals yet, but it’s definitely in the mix,” said Michael Polite, Beacon’s executive vice president and partner. “… Anxiety leads to pricing increases.”
In January, Beacon and its partners announced the conversion of an office building at 100 First Ave. into 93 one-bedroom apartments for seniors. Once financing is secured, construction moves quickly.
“We start right away because of the accrual of loan interest,” he said.
Contractors are anticipating volatility. “We do see [subcontractors] that are telling us they are building in a cushion until we get to closing,” he said, adding later that “with adaptive reuse, it’s like any new construction — the cost of materials is going up.”
Most of Beacon’s current projects were finalized last year, locking in costs.
“Figures are locked in unless it’s a case like COVID,” Polite said. “Now, not everything is bought on day one, so it’s possible there could be some impact as a result of tariffs.”
Eric Jankiewicz is PublicSource’s economic development reporter, and can be reached at ericj@publicsource.org or on Twitter @ericjankiewicz.
This story was fact-checked by Femi Horrall.
This article first appeared on PublicSource and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
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