Doing Business in Pittsburgh

Is Pittsburgh a Good Place to Start a Business?

Pittsburgh has evolved from its steel industry roots into a thriving hub for technology, healthcare, education, and finance, making it a fertile ground for new and established businesses. Several key statistics and factors highlight why Pittsburgh is an excellent place to start and sustain a business.

Business Environment

1. Economic Growth: Pittsburgh’s economy has diversified significantly, with technology, healthcare, and education playing major roles. The region is home to many successful startups and major companies, including Duolingo and Thoro.ai​.​​
2. Supportive Ecosystem: The city offers a robust ecosystem for business growth, including numerous incubators and accelerators. Programs like the Job Creation Tax Credits (JCTC) and various tax incentives help stimulate economic development and attract new businesses​ (Pittsburgh Region. Next is Now.)​.
3. Labor Market: Pittsburgh boasts a highly educated workforce, with a significant proportion of residents holding advanced degrees. The city has the fifth largest share of educated millennials among the top 40 metro areas. The civilian labor force in Pittsburgh has seen steady growth, with employment figures increasing over recent years​.

Business Success Rates

1. Startup Growth: According to the Pittsburgh Regional Alliance, the region has experienced a steady increase in business startups, supported by the city’s strong infrastructure and vibrant community​.
2. Real Estate and Infrastructure: The real estate market in Pittsburgh supports business growth with relatively stable vacancy rates and ongoing development projects. The availability of high-quality office spaces and competitive leasing rates make it attractive for businesses to set up operations​.
3. Economic Indicators: The Pittsburgh metropolitan area has shown resilience and adaptability in its economic performance. The total nonfarm employment has grown, indicating a healthy job market and economic stability. Key industries such as healthcare, technology, and education are driving this growth​ (Bureau of Labor Statistics)​.
4. The success rate of businesses in Pittsburgh is relatively high compared to national averages. According to a report by the U.S. Small Business Administration, about 80% of small businesses in Pittsburgh survive their first year, and around 50% make it to the five-year mark. These figures are bolstered by the strong support systems and networking opportunities available in the city.

Incentives and Tax Benefits

1. Corporate Tax Rates: Pennsylvania’s corporate tax rate is currently 8.49%, with a scheduled reduction to 4.99% by 2031. This reduction is expected to make the region even more attractive for business investments​
2. Financial Incentives: Pittsburgh offers various financial incentives, including tax abatements, tax increment financing, and tax-exempt financing, which help reduce the costs associated with starting and running a business​ (Pittsburgh Region. Next is Now.)​.

Does Pittsburgh Have Too Many Businesses?

Despite its thriving economy, Pittsburgh is not considered over-saturated. The city’s economic diversification has allowed various sectors to flourish without excessive competition. For example, the tech sector is booming, yet there is still ample room for new startups, particularly in niche markets. In 2023, Pittsburgh’s tech sector saw a 203% increase in investment, totaling $3.12 billion, despite a nationwide decline in tech funding. This highlights the strong support and potential for growth in the city’s tech ecosystem.

Furthermore, Pittsburgh’s real estate market remains accessible, with relatively lower costs compared to other major U.S. cities. The average cost of commercial real estate in Pittsburgh is significantly lower than in cities like New York or San Francisco, making it an attractive option for new businesses. The city’s vacancy rates have remained stable, and new developments continue to support the growing demand for office and industrial spaces.

Hiring Employees in Pittsburgh

Finding and hiring great employees in Pittsburgh is relatively easy due to the presence of top-tier universities and a skilled labor force. Carnegie Mellon University and the University of Pittsburgh produce graduates who are well-equipped to meet the needs of modern businesses. Additionally, Pittsburgh’s cost of living is lower than the national average, making it an attractive destination for talent.

Additionally, the Pittsburgh region has seen consistent job growth across various sectors. From September 2021 to September 2022, the Pittsburgh metropolitan area added 32,300 jobs, with significant increases in sectors such as leisure and hospitality (13,100 jobs) and trade, transportation, and utilities (6,100 jobs). This steady job growth, combined with the presence of a highly educated workforce, makes Pittsburgh a fertile ground for business startups and expansions.

Community Support for Local Businesses

Pittsburgh’s community is highly supportive of local businesses. Initiatives like the Pittsburgh Downtown Partnership (PDP) and the Urban Redevelopment Authority (URA) provide essential resources and funding opportunities for small businesses. The URA, for instance, has been instrumental in funding projects that convert underutilized office spaces into affordable housing and mixed-use developments, thereby revitalizing downtown Pittsburgh and creating a supportive environment for new businesses. In 2024 alone, the URA invested $1.8 million in small businesses, provided 30 small business loans or grants, and created or preserved 222 affordable housing units​ (Pittsburgh URA)​​

Additionally, the PDP collaborates with local businesses and community leaders to enhance the downtown area, offering programs and events that drive foot traffic and economic activity. Local residents exhibit strong loyalty to homegrown businesses, significantly contributing to a robust market for local goods and services. This communal support is reflected in the success of numerous local startups and small businesses across the city.

Top Businesses in Pittsburgh by Category

Pittsburgh’s diverse economy supports a wide range of industries. Here are some of the top businesses by category:

1. Technology
   • Duolingo: A leading language-learning platform with a global reach.
   • Argo AI: A self-driving technology company.
2. Healthcare
   • UPMC (University of Pittsburgh Medical Center): One of the nation’s largest healthcare providers.
   • Highmark Health: A leading health insurer and healthcare provider.
3. Education
   • Carnegie Mellon University: A top-ranked private research university.
   • University of Pittsburgh: Known for its research contributions and academic excellence.
4. Finance
   • PNC Financial Services: One of the largest banks in the U.S.
   • Federated Hermes: A global investment manager.

Conclusion

Pittsburgh is a promising city for starting and growing a business. With its supportive community, diverse economy, and access to skilled labor, the city offers numerous advantages for entrepreneurs. While the market is competitive, it is not overly saturated, allowing new businesses to carve out their niches successfully. Whether you’re in tech, healthcare, finance, or any other sector, Pittsburgh provides a conducive environment for business success.