If you're looking to set up shop for your startup, it's a no-brainer that you want to be in a location that will offer your business the best opportunities to find capital and develop networks that will foster growth. And for most entrepreneurs, the top of mind cities are New York and San Francisco, with their proximity to Wall Street and Silicon Valley, respectively.
But with yearly rental costs per square foot up to $15,000 per employee in those cities, you'll likely want to think again, as you may flat out not be able to afford to locate in such places. A new report from PricewaterhouseCoopers hopes to shed light on these real estate trends, and surely offers plenty of takeaways for business owners looking for a home base.
To gather its information, PwC, which compiled the report with the help of the Urban Land Institute, conducted 404 personal interviews. It also gathered survey responses from 1,465 real estate investors, fund managers, developers, property companies, lenders, brokers, advisers, and consultants.
PWC then pulled out details to grade 75 cities using a decimal point scale up to five, for each area's capacity for real estate investment, development and homebuilding. Largely due to cost concerns, it found a significant move away from what it calls the tradtitional "big six" cities, which include Boston, Chicago, Los Angeles, New York, San Francisco, and Washington, D.C.
For 2016, it found a greater interest in second-tier metropolises, particularly because many have become "18-hour cities," due to their ability to provide services nearly round the clock. Unlike 24-hour cities, such as New York, they are able to operate on these extended hours without significantly running up the cost of living and doing business.
Here are this year's top six cities:
The mile-high city is well-positioned, not only as Colorado's capital, but because of its exposure to the tech industry. It's private and public infrastructure investment, as well as the strength of its local economy and access to capital help too.
The low cost of doing business in Georgia's capital and Atlanta's uncanny ability to attract corporations, as well as its relatively sane pace of building, are all pluses.
Investors like Seattle's diverse industry base and the city's strength in technology, advertising, media and information industries.
Real estate investors liked North Carolina's biggest metropolis for its strong job and population growth, as well as its developed urban center. One critique: the concentration of financial services companies in its downtown may not sustain growth in the way tech-centric companies, with their focus on innovation, do.
Respondents favored this city for its diverse job creation, including in service sector jobs, and science-, technology-, engineering- and mathematics-related employment. Austin--which is home to the annual tech innovation conference, South by Southwest--also holds out the promise of growth in advertising, media, and information jobs.
1. Dallas/Fort Worth
Interviewees and respondents favored Dallas because of its strong job growth, business-friendly environment and reasonable cost of doing business.
Says Mitch Roschelle, partner and real estate advisory leader of PWC, about the top second-tier cities: "Survey respondents told us that there are two key drivers that enable small business success: lower cost of doing business and access to skilled talent."