San Antonio's favorable economic climate is enticing new opportunities for entrepreneurship and growth, and now the city is being hailed as the second-best U.S. city for starting a new business.

The recognition comes in CommercialCafe's recent "Best Cities for Startups" report, published December 10. The study analyzed large U.S. cities across two population categories – cities with more than 1 million residents and cities with populations between 500,000 and 1 million residents. The report analyzed relevant metrics such as office or coworking costs, Kickstarter funding success, startup density, and survival rates, among others.

Across the biggest U.S. cities with over a million residents, Phoenix, Arizona, was the sole city that outranked San Antonio on the list of the best places to start a new business.

The study found San Antonio has a major cost advantage over most other large U.S. cities.

"For instance, [San Antonio] ranked first for both labor costs — with median earnings just below $43,000 per year — and regional price parity (RPP), while also having some of the lowest rates for renting office and coworking spaces," the report said.

Renting an office space in San Antonio is the third-cheapest nationally, the report added. The average asking price for a 1,000-square-foot workspace (for five employees) added up to $27,260 annually. For startups that want greater flexibility for their workers, the annual cost for a coworking space for the same number of employees in San Antonio came out to $10,500, which is the second-most affordable rate in the U.S.

These financial factors have proved beneficial to the city's startup survival rates, as the report discovered that two-thirds of new businesses are still running "up to five years after their initial establishment."

Freelancers are another vital resource for new businesses that may need "specialized services" for a fixed amount of time, and San Antonio's freelance workforce has grown 12.6 percent from 2019-2023. The report found there were 47,441 freelancers working in San Antonio in 2023, compared to 24,381 in 2019.

"Generally, cities in the South and Southwest have experienced strong growth during the surveyed period, in contrast to California cities like Los Angeles and San Diego, where the share of freelancers and gig workers has either stagnated or slightly declined," the report said.

Other Texas cities with attractive economic environments for startups
CommercialCafe also revealed that Texas as a whole is one of the strongest states for starting a new business. Other than San Antonio, Dallas (No. 3), Fort Worth (No. 4), and Houston (No. 7) were all recognized among the top 10 best places to start a business in the category of U.S. cities with more than a million residents.

Austin topped a separate ranking of best cities to start a business with 500,000 to 1 million residents.

"Specifically, the Texas capital was the frontrunner for indicators that looked at the overall share of startups within the local economy, as well as growth rates in five years (2019 to 2023)," the report said. "On top of that, Austin also topped the rankings for its percentage of college-educated residents and its consulting firms, which provide vital support for burgeoning enterprises."

The top 10 best cities to start a new business are:

• No. 1 – Phoenix, Arizona
• No. 2 – San Antonio, Texas
• No. 3 – Dallas, Texas
• No. 4 – Fort Worth, Texas
• No. 5 – Jacksonville, Florida
• No. 6 – San Diego, California
• No. 7 – Houston, Texas
• No. 8 – Philadelphia, Pennsylvania
• No. 9 – Chicago, Illinois
• No. 10 – Los Angeles, California