Philadelphia, PA vs. Pittsburgh, PA: Which Is Better for Businesses?

Published: 08-02-2022  Category: General CRE

Pennsylvania is a good place for businesses. Just ask the many Fortune 500 companies like The Hershey Company, PNC, Comcast, and Dick’s Sporting Goods that call Pennsylvania home.

Philadelphia and Pittsburgh, two of the state’s most bustling cities, are both great options for businesses who are considering a move to Pennsylvania.

To help you figure out which city is best for your business, we’ve laid out an overview of the commercial market in each one.

After reading this article, you’ll be able to make an informed decision about where to start or move your business, as well as whether it’s better to buy or rent space for your location.

Population Comparisons

Compare the population of both Philadelphia and Pittsburgh so you can understand more about the people who live there.

These people will be your potential employees and

Average Demographics

Philadelphia is the sixth largest city in the U.S. and has a population size of 1,576,251.

The city has a lot of historical significance – this is where the Declaration of Independence was signed and where the Liberty Bell still stands today.

Let’s look at some other important population statistics for Philadelphia:

  • 52.7% of the population is female.
  • About 58% of the population is between the ages of 18 and 65.
  • The median age is 34.7 years old.

Pittsburgh is the second largest city in Pennsylvania and has a population size of 300,431.

Some other important statistics for Pittsburgh include:

  • 51% of the population is female.
  • About 65% of the population is between the ages of 18 and 65.
  • The median age is 33.3 years old.

Pittsburgh is significantly smaller in population size than Philadelphia, but the people are also younger.

This may be important, for example, if you plan on conducting retail activity and your target audience is between the ages of 18 and 65.

Median Household Income

Philadelphia and Pittsburgh have very similar median household incomes.

This number is a measure of the economic well-being of either city.

The median household income in Philadelphia is $49,127.

The median household income in Pittsburgh is $50,536.

Commercial Real Estate Comparisons

Compare the commercial real estate statistics of both Philadelphia and Pittsburgh so you can see how profitable or costly each one is for your business.

Average Commercial Rents

The average cost of commercial rent in Philadelphia is:

  • Class A Office Space: $36.08 per square foot.
  • Class B Office Space: $27.37 per square foot.
  • Class C Office Space: $24.68 per square foot.

The average cost of commercial rent in Pittsburgh is:

  • Class A Office Space: $28.71 per square foot.
  • Class B Office Space: $21.33 per square foot.
  • Class C Office Space: $18.45 per square foot.

In general, Pittsburgh’s rent prices are less expensive than Philadelphia’s. Keep this in mind as we discuss other factors to consider.

Commercial Vacancy Rates

The commercial vacancy rates let you assess how competitive each market is.

  • The commercial vacancy rate in Philadelphia is 9.03%.
  • The commercial vacancy rate in Pittsburgh is 15.74%.

Looking at these numbers we can see that Philadelphia is the more competitive market with less vacant space than Pittsburgh.

In other words, the demand for office space is higher in Philadelphia.

CRE Market Outlook for 2022

Philadelphia’s economy is booming – the city is performing better than the national economy and is on track to reach almost 775,000 jobs in the next few years.

One area where Philadelphia is underperforming is in-person activity, which affects retail businesses.

Pittsburgh’s economy isn’t bouncing back from the pandemic as fast as Philadelphia. However, the city continues to see slow, steady growth.

The majority of the population works in healthcare, education, and retail trades.

Commercial Activity Comparisons

Commercial activity is strong but different in Philadelphia and Pittsburgh. Both cities have their own strengths and weaknesses when it comes to business activity.

Here is a quick comparison of the four primary commercial real estate sectors in Philadelphia and Pittsburgh.

Retail: In-Person Shopping Versus Online Shopping

Philadelphia struggled with in-person retail activity after the pandemic. However, the city is starting to bounce back. In a recent report, the city’s taxable retail sales were 94% of pre-pandemic levels and restaurant sales were at 74% of their pre-pandemic level.

In Pittsburgh, 10% of the population works in retail trade. Downtown Pittsburgh continues to grow despite the pandemic.

The walkability and accessibility of the area make it a destination for both visitors and locals.

Industrial: Warehouse & Facilities Activity

Philadelphia has a wide range of industries with warehouse and facility activity.

The Ports of Philadelphia are some of the largest ports in the world, making the city a prime location for a distribution hub.

Historically, Pittsburgh is known for being a manufacturer in the steel industry.

Now, Pittsburgh is a hub for industrial tech activity. The area’s tech industry accounts for about 13% of all U.S. tech companies.

Office: Office Space Activity

Philadelphia is more bustling with office activity, with just over 9% vacancy rate.

There’s a wide range of office spaces available in Philadelphia – from smaller space to spaces with over 500,000 square feet.

Office space in Pittsburgh isn’t in as high demand but there is still activity and space available.

Multifamily: Vacancy Rates & Leasing Activity

Both Philadelphia and Pittsburgh have started to slowly recover from the pandemic which saw many city dwellers flock to the suburbs.

In Philadelphia, the city is seeing more development starting to happen after a slow construction year in 2021.

In Pittsburgh, development is in progress for more than 3,700 units with an additional 7,000+ in the planning and approval stages.

Deciding Which Location Is Right for Your Business

While Philadelphia is in high demand for industrial business and office space, Pittsburgh is booming in retail and multifamily activity.

The city that is better for your business depends on what type of activity you’ll be conducting.

Use all the factors we’ve talked about in this article to guide you as you figure out which city is right for your business.

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