When we hear about thriving businesses, we often imagine them to be located in one of the nation’s major business and tech hubs: San Francisco, New York, Los Angeles, Chicago, Seattle. The cost of living and of doing business in these cities, however, is often exorbitantly high, with office rental rates in San Francisco clocking in at an average of $93 per square foot.
We’ve put together a list of some of the top cities in the US to start a business that may not immediately come to mind, taking into consideration factors like the health of the local economy, the talent pool, the variety of industries in the area, and the overall business friendliness of the environment.
A rapidly changing city, Houston is a great place to start and grow a business for a variety of reasons. The first, in our book, is a diversifying economy — though the oil and gas sectors have historically reigned, the city’s industrial makeup is expanding. Startup accelerators like MassChallenge Texas and the Sears Building’s Innovation Hub, as well as new coworking solutions, are attracting a variety of entrepreneurs across multiple industries. This is in part due to the high influx of millennial residents: Houston has dominated US cities in terms of net influxes of millennials.
Additionally, there are low financial barriers to entry when starting a business — tax rates are relatively low, and office space costs are affordable at an average of $29 per square foot across the Houston MSA (a third of the cost of office space in San Francisco).
The Houston economy is faring well, with an unemployment rate of less than 4% for the better part of 2019. Houston residents also benefit from one of the lowest costs of living in the country.
Miami is undoubtedly one of the most small-business-friendly cities in America. More than half of Miami-Dade County’s workforce is employed by small businesses — this comes in stark contrast to many other parts of the country, where large corporations dominate when it comes to local employment. The city’s mayor, Francis Suarez, is known for being pro-small business, and Miami was ranked the top city for small business growth in 2019.
The county’s industrial diversity — with dominant industries including but not limited to tourism, finance, media, trade, and agriculture — give those looking to open a business in the region a variety of opportunities.
Though Miami’s average asking rents are a bit higher than some of the other cities on this list, at just under $42 per square foot, Miami’s average annual revenues for small businesses are high, coming second only to New York’s. Additionally, companies will benefit from both the county’s and Florida’s business-friendly tax structures.
The Mile-High City is quickly becoming a major US tech hub — however, though the tech industry is booming, a variety of industries drive Denver’s economy, including aerospace, energy, finance, and more.
Denver also boasts a healthy economy. The Denver MSA enjoys a low unemployment rate of 2.3 percent, and employment grew 2.2% year-over-year from October 2018. Additionally, the city is very friendly to businesses. Colorado also has one of the lowest corporate income tax rates in the nation: the flat rate sits at 4.63 percent. And the costs associated with doing business are relatively low. For example, the average asking rent for Denver office space is around $30 per square foot. The combination of these business-friendly factors has very likely contributed to the overall health of Denver’s businesses: Just under 70% of Denver-based businesses reported making a profit, ranking it fifth in commercial profitability among metro areas in the nation.
It’s clear that the city deeply values entrepreneurship. The city famously hosts its yearly Denver Startup Week, a free event that aims to “[celebrate] everything entrepreneurial in Denver” and that is the largest such event to do so — not just in the US, but globally. Additionally, in 2019, Denver was named the top metro area in the country for women seeking to open a business — an indicator of an encouraging, progressive business environment.
One of the most rapidly growing cities in the US, opportunities in Austin are continuously cropping up. Most notably, Austin is a growing tech and startup beacon, with 5,500+ startup and tech companies that have set up shop in the area famously dubbed “Silicon Hills”. Tech isn’t the only industry in the area, however; other economic drivers include construction, hospitality, biotech, education, and more.
It’s no wonder that talent is flocking into the area in droves: One of the fastest-growing cities in the country, a Commercial Café study reported that Austin draws an average of more than 26,000 residents from other US cities per year. This is likely due, at least in part, to the city’s relatively affordable cost-of-living.
Austin is overall enjoying a healthy economy; unemployment is around 2.8%, a historical low for the Texan city. Additionally, the city’s low taxes make it very business-friendly — a perk that will hopefully serve to curb the effects of the city’s admittedly climbing commercial rent prices (though they’re still a far cry from Silicon Valley and NYC prices!). Yet another perk for businesses? A highly-educated workforce to hire from — a recent WalletHub report found that Austin is the most educated city in Texas, and the 9th most educated city in the country.
If you’re looking to start a business, these 4 cities provide serious advantages — talent, affordability, economic health, industrial diversity, and much more.
Viveka Krishnaswamy is with SquareFoot, a new kind of commercial real estate company that brings together technological innovation and human expertise to solve clients’ needs. For more content on commercial real estate news and on the future of work, check out the SquareFoot blog.