Real Estate Development & Redevelopment in Keystone Opportunity Zones

2/2/2026

Real Estate Development and Redevelopment in Keystone Opportunity Zones (KOZs) Across Pennsylvania 

Pennsylvania’s Keystone Opportunity Zone (KOZ) program has become one of the most powerful economic development tools in the state, particularly for real estate redevelopment. Designed to attract private investment into underutilized and distressed properties, KOZs offer substantial tax incentives that can dramatically improve project feasibility and long-term returns.

For developers, investors, and property owners, KOZ-designated sites present unique opportunities to reposition existing buildings, redevelop obsolete industrial sites, and bring new life to urban and legacy commercial corridors across the Commonwealth.

What Are Keystone Opportunity Zones?

Keystone Opportunity Zones are designated geographic areas where qualified businesses and property owners may receive significant state and local tax abatements for a defined period of time.

Key benefits of KOZ designation can include:

  • Abatement of state and local business taxes
  • Relief from real estate taxes on improvements
  • Abatement of state personal income tax on business income
  • Abatement of certain local earned income and net profits taxes

While specific benefits and timelines vary by zone and municipality, KOZ incentives are often most impactful when paired with redevelopment projects that involve substantial capital investment.

Why KOZs Matter for Redevelopment

KOZs are particularly effective for redeveloping older industrial, commercial, and institutional properties that might otherwise struggle to attract investment due to high carrying costs or market constraints. 

Common redevelopment uses within KOZs include:

  • Adaptive reuse of former factories and warehouses
  • Conversion of obsolete office buildings into mixed-use projects
  • Industrial redevelopment for manufacturing or logistics users
  • Technology, life sciences, and innovation campuses
  • Mixed-use residential and commercial developments

By reducing tax burdens during critical early years, KOZs can help bridge financing gaps and accelerate project timelines.

Opportunity Examples Across Pennsylvania 

Pittsburgh and Southwestern Pennsylvania

In the Pittsburgh region, KOZs have played a role in redeveloping former steel-era and manufacturing properties into technology, research, and advanced manufacturing facilities. Areas along the Monongahela and Allegheny Rivers have seen industrial repositioning and mixed-use redevelopment driven by KOZ incentives and public-private partnerships.

Philadelphia and Southeastern Pennsylvania

Philadelphia contains some of the most visible KOZ redevelopment success stories in the state. Former industrial buildings, warehouses, and underutilized commercial properties have been transformed into:

  • Life sciences and research facilities
  • Creative office and innovation hubs
  • Mixed-use residential and commercial developments

KOZ incentives have helped attract both local and national developers to neighborhoods undergoing long-term reinvestment. 

Harrisburg and the Capital Region

In Harrisburg, KOZs have supported downtown and riverfront redevelopment, including office, hospitality, and mixed-use projects. Proximity to state government, healthcare institutions, and regional transportation has made KOZ sites attractive for employers and investors seeking central Pennsylvania locations.

Erie and Northwestern Pennsylvania

In Erie, KOZs have been used to reposition legacy industrial and port-related properties into manufacturing, logistics, and technology-driven uses. These projects often combine KOZ benefits with workforce development initiatives and infrastructure improvements.

Wilkes-Barre and Scranton (Northeastern Pennsylvania)

The Wilkes-Barre–Scranton region has leveraged KOZ incentives to redevelop former industrial buildings into flex industrial, office, and mixed-use projects. With strong highway access and proximity to major markets, KOZ sites in this region continue to attract distribution, manufacturing, and service-based users.

Williamsport and North-Central Pennsylvania

In Williamsport, KOZ-designated properties have supported the adaptive reuse of historic industrial and commercial buildings, encouraging downtown revitalization and small business growth. KOZ incentives help offset redevelopment costs often associated with older structures.

What Makes a KOZ Project Successful?

Successful KOZ redevelopment projects typically share several characteristics:

  • Strong understanding of local zoning and land-use regulations
  • Alignment with municipal and regional planning goals
  • Realistic assessment of infrastructure and environmental conditions
  • Coordination with economic development agencies
  • Clear exit or long-term ownership strategy tied to the KOZ timeline

KOZ incentives are most effective when integrated early into project planning and financing.

Looking Ahead: KOZs as a Long-Term Development Tool

While many original KOZ designations are approaching expiration, the program continues to shape development decisions across Pennsylvania. Even as zones mature, KOZ-driven projects often leave lasting impacts through job creation, tax base expansion, and neighborhood revitalization.

For developers and investors focused on redevelopment and value-add opportunities, Keystone Opportunity Zones remain a critical consideration when evaluating sites across the state.

Final Thoughts for Landowners and Developers

KOZ properties offer a powerful combination of tax incentives and redevelopment potential, particularly in Pennsylvania’s cities and legacy industrial markets. When properly evaluated and executed, KOZ projects can unlock value in locations that might otherwise remain underutilized. Understanding where KOZs are located, how incentives apply, and how they interact with local zoning and market demand is essential to maximizing their benefit.