When a new businesses forms one of the first things it needs is space. That means, with all other things being equal, there is an important connection between the rise of startups and a market’s leasing activity. But of course all things do not remain equal, and we wanted to see if there was indeed a connection between entrepreneurship and leasing activity.
Startups are on the rise
Startup activity rose in 2016, continuing the climb in 2015 according to this year’s Kauffman Index. And that growth was much needed—just two years ago startup activity was at its lowest point in the last twenty years. Today it’s close to the peak achieved before the Great Recession.
The driving force behind much of this growth is the rise in opportunity entrepreneurship and an uptick in the rate of new women entrepreneurs. Some of the key areas hosting this growth include the usual suspects: California, Colorado, and Texas, joined by lesser known havens in Florida and Nevada. The five metro areas with the highest startup activity in the US are Austin, Miami, Los Angeles, San Francisco, and Las Vegas.
Yet despite much of the positive news concerning startups and their growth over the last two years, long-term trends are more concerning—from 2006 to 2013 startup density in the nation’s largest 40 metro areas decreased by 24%, revealing startup activity remains below historical norms.