The latest date from the U.S. Bureau of Labor Statistics (BLS) shows the Pittsburgh economy ended 2025 with modest growth overall, but with mixed conditions across industries.

Unemployment remained unchanged at 3.6 percent but was down from 3.9 percent in September and 4.6 in August. Total nonfarm employment decreased from November to December but was up 1.1 percent from the end of 2024.

Construction employment declined the last month of the year and was 1.1 percent under December of 2024. Manufacturing employment remained relatively flat monthly and annually, rising by 0.2 percent over the course of last year. Education and health services employment climbed by nearly 3.5 percent through 2025, while profession and business services employment posted about 2.5 percent growth during that same time.

Data from Tall Timber Group’s research shows regional construction was significantly higher in 2025 than a year earlier for nonresidential/commercial projects and significantly lower in residential starts.

Nonresidential/commercial construction was buoyed by strong activity in owner-occupied commercial and non-profit buildings, manufacturing, and mega projects (which accounted for roughly $1 billion in 2025). The total contracting and starts (including construction put in place at the UPMC Heart and Transplant Hospital and the Airport Terminal Modernization Program) jumped nearly $800 million to $5.212 billion in the seven-county metro area. That was an increase of 19.9 percent over the 2024 total.

In the major property subcategories, construction fell by 448.1 percent in higher education, and by 35.8 percent in office despite increased leasing and tenant improvement activity, but rose by 48.3 percent in K-12, by 35.0 percent in industrial, and by 43.3 percent in healthcare because of the major projects underway.

The outlook for 2026 is for the prevailing trends to continue. Headwinds facing higher education, healthcare, and commercial real estate remain and will blunt the amount of new construction started this year. Conditions for industrial properties and office tenant improvements will create more demand for construction. Demand from non-profits, owner-occupied businesses, manufacturing, and energy-related businesses will be higher. Public construction should slow as legacy pandemic-era funding runs out; however, several large K-12 projects will get into the bidding process.

This year will mark the winding down of construction at the new airport and UPMC’s Heart and Transplant Hospital, with a total impact of less than $200 million put in place. Data centers replacing these mega projects are underway, although the projects located within the metropolitan area at Shippingport and Springdale will not be starting until at least the second half of 2026.

Pittsburgh’s new housing construction fell by 7.6 percent compared to 2024, primarily due to a 22.9 percent decline in multi-family starts. The slowdown in multi-family units continues to be the result of delays rather than project cancellations. More than 8,200 units remain in the entitlement pipeline, either as approved projects or in review. Higher construction and borrowing costs, more cautious investors, and regulatory burdens continue to slow the development process compared to the pre-pandemic market conditions. Construction of single-family homes rose by 7.7 percent, or 226 homes, compared to 2024. Builders pulled permits for 3,156 new homes in 2025, more than one-third of which were townhouses or other attached homes.

New home construction will be higher in 2026, as increased lot development activity in 2025 and slightly lower mortgage rates should create more opportunities for new single-family homes. The challenges facing apartment development are unlikely to recede in 2026, especially as the first of the units started in 2024 come on line; however, the pipeline suggests that starts should be somewhere in the 1,800-to-2,000 unit range.

The biggest local construction news pertains to data centers. After roughly a year of speculation, due diligence, and scattered press releases surrounding a half dozen sites throughout Western PA, construction is imminent on three or four sites.

Site work is underway at the Homer City Redevelopment, a $15 billion data center development that is starting with the construction of a large power plant to serve the hyperscale users that will build or occupy the future data centers. Kiewitt, the engineering-procurement-contracting (EPC) firm overseeing the project, has begun to award contracts for foundations and other early-stage scopes of work. Homer City Redevelopment expects to be producing power by the end of 2027 on the 3,200-acre site, ultimately delivering up to 4.4 gigawatts to power the fully-developed data center campus.

In Greene County, a 910-megawatt data center development known as “Project Hummingbird” is well into the entitlement and due diligence phase. The project is proposed for 1,400 acres along the Monongahela River at the former Robena Coal Mine. International Electric Power (IEP) will supply the power for the project, which should cost $20 billion or more to complete. Dave Spigelmyer, IEP senior vice president, says the project is on pace to start moving earth in April or May. JLL is touting a second quarter 2028 delivery for the first data center facility. No EPC had been signed by the end of January.

Align and Frontier Group are moving along a similar timeline in Shippingport, where a redevelopment of the former coal-fired Bruce Mansfield Power Station is expected to provide 3.6 gigawatts of power to the co-located data center campus by late 2028 or early 2029. Work to construct a 900-megawatt gas-fired power plant is set to begin in 2026. Holder Construction, the EPC for the $10 billion Shippingport Industrial Park, has been getting preliminary pricing on trade packages, including for the first 300,000 square foot data center building. No hyperscale user has been identified as of February 1.

Perhaps the most publicized of the proposed data centers is TECFusion’s Keystone Connect, the planned redevelopment of the 1,395-acre former Arconic research and data center facilities in Upper Burrell Township, east of New Kensington. TECFusion announced its first lease for the development in mid-January to TensorWave, an AI neocloud platform for training and inference. The TensorWave lease is small, requiring 10 megawatts of power, which will allow it to operate out of Arconic’s former data center on the site. TECFusion proposes to scale the development to one gigawatt, using existing natural gas on site to generate electricity.

The Springdale development, proposed by Allegheny DC Property Company at the former Cheswick Power Plant site, is relatively smaller. Reported by its owner’s representative Brian Regli, to max out at 180 megawatts, the development would be a $3 billion to $4 billion investment, depending on the cost of the 200,000 square foot cooling plant that will serve the data center.

While only the Homer City project has seen boots on the ground thus far, the recent progress at other sites suggests that more than one project will be drawing a substantial number of skilled construction workers before the year is out. The marketing materials for several of the developments talk of labor requirements that exceed that of Shell’s polymer plant in Monaca. Assuming that one or more of these data center and/or power plant projects begin in earnest in 2026, Pittsburgh’s construction workforce will see new billion-dollar opportunities just as the two most recent, the Airport Terminal Modernization Program and the UPMC Heart and Transplant Hospital, are wrapping up.

While the data centers are headline story, there are doings worth sharing in the city proper. On his first full day in office, Pittsburgh Mayor Corey O’Connor signed an executive order launching a comprehensive review of the city’s permitting system, aiming to speed development and simplify approvals. The order directs multiple city departments, including City Planning, Permits, Licenses and Inspections (PLI), and Mobility and Infrastructure, to identify deficiencies and recommend reforms within 60 days. Currently, Pittsburgh has no standardized timeline for permit approvals, and inconsistent requirements and resubmissions often extend project timelines for developers, small business owners and homeowners alike.

The latest pull from Pittsburgh’s PLI open data source reveals a potential expediting of the process is underway. This dataset, which is filtered for commercial permits for new constriction, additions, alterations, and replacements with project values over $100,000 shows that January of 2026 saw 33 such projects approved, the highest figure in two months.

The mayor framed the overhaul as central to economic growth and competitiveness, noting that peer cities such as Cincinnati, Cleveland and Columbus have faster and more streamlined permitting systems. Business groups, including NAIOP Pittsburgh and the Allegheny Conference, welcomed the move, citing the financial risks associated with prolonged approval periods.

In February, the O’Connor administration launched a demolition initiative targeting 23 blighted properties across the Hilltop neighborhoods, including Knoxville, Beltzhoover, St. Clair and Arlington. Three of the identified structures have already been demolished, with 20 more scheduled to be taken down in the coming weeks. The demolitions are framed as an early step in the mayor’s broader commitment to address neighborhood blight, an issue that residents and city council members say generates persistent complaints and contributes to population loss.

A long-planned effort to remake Smithfield Street into a more pedestrian-oriented corridor is set to begin this summer, starting with $6.3 million in work between Forbes and Sixth avenues. The full project, estimated at up to $25 million, will unfold over three to five years and aims to widen sidewalks, add landscaping and public gardens, install curb bump-outs and reduce traffic to two lanes with limited parking. The street itself will be fully reconstructed, and pedestrian access to businesses will be maintained through temporary pathways and bridges during construction. Each block is expected to take roughly six months to complete. The project is structured in three phases stretching from Fort Pitt Boulevard to Liberty Avenue and is expected to enhance safety, support retail activity and create a more vibrant corridor in the Golden Triangle.

In mid-February, Pittsburgh’s Urban Redevelopment Authority board voted to move forward with the creation of a $50 million Golden Triangle Investment Fund aimed at supporting downtown revitalization. The fund would be financed through a Transit Revitalization Investment District (TRID), a transit-focused form of tax increment financing that would capture 75% of future incremental real estate tax revenue within a designated district covering downtown, most of the Strip District and a significant portion of the North Shore. The remaining 25% of incremental revenue would continue flowing to the city, Allegheny County and Pittsburgh Public Schools. The goal is to have the fund established by the end of the year, with bond financing used to generate upfront capital.

The fund is intended to support major redevelopment projects, strengthen transit-oriented activity and finance public infrastructure needed to support regional economic and transit goals. In related actions, the URA agreed to hold the 200 Ross Street building off the market to allow PMC Property Group to evaluate a market-rate residential conversion and approved several additional housing and property transactions across the city.

In early February, O’Hara Township has enacted a new mixed-use zoning overlay designed to support the next phase of reinvestment at the RIDC O’Hara Industrial Park. The amendment allows for residential development and complementary commercial uses along defined sections of the park near Route 28, while maintaining the underlying Suburban Manufacturing zoning. Township officials and RIDC say the overlay responds to changing post-pandemic market conditions and evolving workforce preferences by enabling housing, small-scale retail, hospitality and mixed-use buildings alongside existing office and industrial operations. The goal is to modernize the park, reduce vacancy risk and strengthen the long-term tax base without displacing its core employment function.

In mid-February, S&T Bank announced a three-year initiative to refresh approximately 75 percent of its 74-branch network, beginning in 2026 with updates to 19 locations by the end of the year. The effort starts at the bank’s headquarters in Indiana, Pennsylvania, and is described as a significant multiyear investment, though no total budget was disclosed. S&T operates 36 branches in Southwestern Pennsylvania, and renovations will include enhanced lighting, open floor plans, new flooring and furniture, branded finishes and redesigned spaces intended to support both everyday transactions and more in-depth financial conversations.