One-Mile Stretch Along Penn Avenue is Becoming a Hub for AI Firms to Grow Together
As published in the Pittsburgh Business Times - June 12, 2025
Story Highlights
Pittsburgh's AI Avenue aims to establish an AI hub along Penn Avenue.
AI startups are changing office space needs in the corridor.
Pittsburgh's energy resources could attract significant AI infrastructure investment.
Editor's note: Over the past several months, efforts to brand the Pittsburgh region as a hub for artificial intelligence have ramped up significantly. At the center of these efforts, led in large part by the newly formed AI Strike Team, has been a corridor in the City of Pittsburgh’s East End neighborhoods along a stretch of Penn Avenue that has, within the past year, taken on the moniker of AI Avenue. AI Avenue is anchored by properties such as Walnut Capital’s Bakery Square, perhaps most notable for its role as the home of Google’s Pittsburgh office, as well as Liberty East, home to tech unicorn Duolingo Inc. The Pittsburgh Business Times is bringing together a panel of individuals to provide their insights and perspectives on the future of AI Avenue at a breakfast event scheduled for June 18 at Bakery Square Three. Moderated by Pittsburgh Business Times Market President and Publisher Evan Rosenberg, Corridors of Opportunity: AI Avenue will give attendees the chance to hear local experts talk about what’s ahead for the corridor. For more details about the event or to register to attend, visit our events webpage.
When it comes to quantifying the economic potential of AI for a key property he’s representing, David Koch measures up the square footage, ceiling heights and sheer acreage of his assignment at the intersection of Penn and Fifth avenues in the city’s East End.
After working to lease the Chatham Eastside property for a few years now, Koch, an executive managing director at Newmark, is focused on selling a property that totals 150,000 square feet, 80,000 of it flexible warehouse space with high ceilings, on a lot that totals more than 7 acres with parking for 600 cars.
He views the prospects of the property only improving over time given the growth of the AI industry in Pittsburgh.
“Due to the proximity to the universities, the large parking area and the ability to expand the building, this offers any AI or other prospective occupiers of space the opportunity for a variety of uses,” Koch said, further noting that the building’s owner, Chatham University, plans to sell it but is interested in leasing back some available space.
What happens to the Chatham Eastside property is being closely watched as the site also marks the beginning of Pittsburgh’s AI Avenue, a stretch of the East End that just last October received this official designation as the region looks to establish a hub for AI companies to grow together near the big universities. Much hinges on the success of this corridor, with artificial intelligence, so familiar a concept that it’s almost universally known by its initials of AI, being the next big economic thing in tech, as well as Pittsburgh’s next great hope.
‘The potential to significantly change the landscape’
AI Avenue encompasses a one-mile stretch that starts at the Penn and Fifth intersection in Larimer and ends at Liberty East, where the global headquarters of tech unicorn Duolingo Inc. occupies a nearly 150,000-square-foot office. Along the way is the mixed-use campus of Bakery Square, local home to Google and a collection of other key tech firms; a neighboring 14-acre site approved for a dense new redevelopment plan by Walnut Capital; and East Liberty’s business district.
The corridor is already home to 20 or more AI startups. Their names may not be broadly known now, but the likes of Lovelace AI, founded by former leader of Google’s Pittsburgh office Andrew Moore; Strategy Robot; and Netail Inc. are all growing firms. They share the corridor with more established entities including Google, UPMC Enterprises, Carnegie Mellon University’s Cloud Lab and a Sheetz Innovation Hub, among others. Together, they combine to create a budding sector of robotics, tech and AI companies.
In recent months, AI Avenue also was officially incorporated into the Greater Oakland Keystone Innovation Zone (GOKIZ), a status that enables tech startups to secure up to $100,000 in annual tax credits to offset state taxes or to be sold to generate funding for companies to add staff and invest in equipment.
Don Smith, president of the Regional Industrial Development Corporation of Southwestern Pennsylvania, which worked with the Pennsylvania Department of Community and Economic Development to extend GOKIZ to include AI Avenue, was bullish about its prospects.
“I think it’s really the potential to significantly change the landscape in Pittsburgh, not so much on a physical basis, but by creating a significant number of high-value companies that create high-value jobs,” he said.
‘It’s an interesting sort of dichotomy’
Zach Gumberg, a principal of family-owned LG Realty Advisors Inc., developer of the Liberty East project along AI Avenue that is also home to the region’s largest Whole Foods Market, said he sees the potential for a real boost to Pittsburgh’s economy through the use of AI in robotics, pairing established local strengths bolstered by the talent coming out of Carnegie Mellon University and the University of Pittsburgh.
With 250,000 square feet of office space at Liberty East, Gumberg is learning the ins and outs of what these fast-growing AI-oriented firms need, whether they are new startups like the unicorn Skild.ai, which is focused on artificial general intelligence to be deployed in robots and received $300 million in venture funding less than a year after it was founded, or more established entities like Duolingo, which recently announced a new focus on AI.
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Duolingo at Liberty East on Penn Avenue
Jim Harris/PBT
Yet, he also noted a prevalent concern that AI has the potential to eliminate many jobs. Recently, Anthropic CEO Dario Amodei predicted the technology could get rid of half of white-collar jobs and lead to unemployment rates of 10% to 20% in the next five years. The culling of jobs is a process already well underway, with a 2023 survey from Resume Builder revealing that 37% of responding companies using AI laid off workers that year due to their implementation of AI.
“It’s an interesting sort of dichotomy,” Gumberg said of AI. “It’s like we’re all working ourselves out of a job.”
Smith acknowledged the early stage nature of it all as well.
“Now it’s a matter of finding the appropriate use cases to apply AI,” he said. “The question is how many of these companies are going to scale to the point where they’re going to need a floor at Bakery Square or Mill 19?”
‘You’re not going to have one company taking 40,00 square feet’
At Bakery Square, Todd Reidbord, founding partner and president of Walnut Capital, acknowledged his firm’s mixed-use campus is in a bit of a transition as a result of these changing dynamics.
For one thing, Reidbord said his company must work harder to attract deals for smaller offices often by AI-related startups.
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Signs outside Bakery Square, one of the key anchor sites for AI Avenue.
Jim Harris/PBT
“You’re not going to have one company taking 40,000 square feet, but you maybe have four companies take 10,000 square feet,” he said. “We were fortunate enough that we had a lot of larger companies (in the past). But now it’s mostly smaller companies coming in.”
Two of the biggest companies at Bakery Square have either cut back or vacated completely. Google, the tech giant that helped to turn Bakery Square into a major draw, has decided to drop an unspecified amount of space at the campus.
Meanwhile, Philips, which has faced federal court orders to stop manufacturing certain sleep apnea devices made in the region, opted to fully vacate and seek to sublease a 200,000-square-foot office commitment at Bakery Office Three that it never fully occupied.
Dan Adamski, an executive managing director for brokerage in the Pittsburgh office of JLL, which is representing the Philips office sublease space at Bakery Square, reported that “interest has been steady, and fortunately we’ve seen an increase in 2025.” He expects the space and its infrastructure and amenities will prove to be “exactly what AI and tech companies need.”
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Dan Adamski, executive managing director for brokerage, Pittsburgh office, JLL
JLL
Jeremy Kronman, a vice chairman in the Pittsburgh office of CBRE, who represents both Liberty East and Bakery Square, said he also is seeing plenty of demand by AI-related companies, some very well-funded.
“The leasing activity we’re seeing is all in the software and AI sector. Or it’s corporate users that need to be next to the software and AI sector,” Kronman said. “That’s who we’re seeing and touring.”
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Jeremy Kronman, vice chairman, Pittsburgh office, CBRE
Jeremy Kronman
He said he is also seeing lots of really new startups, with demand coming from companies that didn’t exist two years ago and sometimes not even six months ago.
While in the past such startups might’ve suggested low-rent-paying newbies, Kronman said that isn’t necessarily the case now because they are “startup companies, but they’re funded Series A and B startup companies.”
Kronman explained the typical early stage companies will often start with about 5,000 to 10,000 square feet, but in 12 to 24 months may seek to double or triple their space. Such tenants often need speculatively built out office suites, along with making sure there’s strong data and power capacity.
Reidbord additionally emphasized the need for relaxed lease terms.
“From our perspective, it’s all about flexibility,” he said.
Yet, as Walnut Capital undergoes a transition, the market isn’t telling them to build a lot more office right now.
Rather, Reidbord said they are seeing ongoing need for more apartments and retail space, which in turn is also a draw for AI companies and their employees.
“One thing we’ve learned in this business is that you have to adapt,” Reidbord said.
Walnut Capital is doing so as it plots to start the redevelopment of the 14-acre Bakery Square District Connector site, an approved master plan projected to generate $500 million or more in new commercial real estate projects in the years to come.
“We’re still evaluating all the options,” said Reidbord, adding the firm is getting ready to pursue a large apartment building with some commercial space on a cleared Penn Avenue edge of the larger site. “We listen to the market.”
He reported that the City Kitchen Food Hall at Bakery Square just had its best month ever, and the firm is still optimistic about the prospects for such amenities at the campus, but added retail is still hard.
Some new stores and restaurants also are coming soon to The Meridian mixed-use redevelopment across Penn Avenue, where a new Barnes & Noble is expected to open by the end of the year along with other newcomers Shake Shack, Cava, a sushi restaurant and Giant Eagle’s new 36,000-square-foot Market District store.
‘AI infrastructure investment is a game-changer’
And as the AI industry continues to evolve, other needs for space are emerging, particularly around the huge amount of energy that’s needed to power AI.
This is an area where western Pennsylvania has a unique advantage over other regions: An already established strength in sectors such as robotics paired with abundant sources of energy, specifically a maturing natural gas industry in a region that’s home to the Marcellus and Utica shales.
Look for that to translate into the coming build out of data centers to help enable greater AI use and development.
Adamski, who has represented various natural gas companies as well as nuclear energy developer Westinghouse Electric Co., expects Pittsburgh’s energy resources will prove to be a huge competitive advantage over other markets, especially combined with the tech talent coming out of local universities.
“AI infrastructure investment is a game-changer for development. Data centers generate significantly higher tax revenue per acre than most industries. With hyperscalers seeking new markets beyond areas like northern Virginia and Columbus, Pittsburgh is positioned to attract tens of billions of dollars in investment. While every market is wrestling with higher construction costs, our energy advantages can prove to be valuable economic differentiators,” he said.
How all these various economic ingredients are used together will likely play out most dramatically in that one-mile AI Avenue corridor in what is expected to be a transformational AI shift for the region and the world.
RIDC’s Smith observed how AI’s “voracious appetite for power” is a subject that will need to be fully explored, and he expressed some caution about the whole data center strategy, seeing a need for a regulatory framework and economic incentives to meet the power demand.
“I think it’s still so early in the evolution of the economic models and you have a lot of new players chasing the data center dollars that don’t really know what they’re doing,” he said.
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Don Smith Jr., president, Regional Industrial Development Corporation of Southwestern Pennsylvania
WE ARE THE RICHARDS
Smith noted the power demands come with grid capacity concerns at a time when electricity prices are already going up, seeing a real need to add power capacity to serve both the needs of AI and residential rate payers with no desire to see their bills go up.
“There’s potential,” said Smith, noting the best economic use of AI. “But it is as yet unrealized.”
Signs of growth
As more tech and AI firms look to locate along Al Avenue, interest in retail, residential and hospitality also has risen as the City Kitchen Food Hall at Bakery Square just reported its best month ever and new stores and restaurants are coming soon to The Meridian mixed-use redevelopment across Penn Avenue. Walnut Capital is also moving forward with a redevelopment of the 14-acre Bakery Square District Connector site, an approved master plan projected to generate $500 million or more in new commercial real estate projects.
