Dallas' favorable economic climate is enticing new opportunities for entrepreneurship and growth, and now the city is being hailed as the third-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 and San Antonio, Texas were the only two cities that outranked Dallas on the list of the best places to start a new business. Neighboring Fort Worth ranked just behind Dallas in the No. 4 spot.

The study found the Dallas-Fort Worth metro has several entrepreneurial advantages over most other large U.S. cities.

"Noteworthy performances include ties for second place across the startup density and growth metrics, as well as the share of freelancers," the report said.

About 11 percent of all businesses in Dallas-Fort Worth are startups that have been active for less than a year, the report revealed. These new businesses have a survival rate of nearly 65 percent, meaning that about two-thirds of all startups in the city will still be running up to five years after they were first established.

The study also revealed the rate of new businesses established in Dallas-Fort Worth has grown 19.7 percent over the last five years.

Freelancers are another vital resource for new businesses that may need "specialized services" for a fixed amount of time, and DFW's freelance workforce has grown about 14 percent from 2019-2023. The report found there were 115,990 independent professionals working across North Texas in 2023, compared to 101,820 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.

The Dallas-Fort Worth Metroplex boasts the seventh-cheapest office space rent nationally, the report additionally found. The average asking price for a 1,000-square-foot workspace (for five employees) in the metro added up to $32,401 annually. For startups that want greater flexibility for their workers, the annual cost for a coworking space for the same number of employees in Dallas came out to $13,500, which is the fifth-most affordable rate in the U.S.

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. Houston (No. 7) was also 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