Tech cities are now outperforming other global centres, with GDP across the top 30 tech cities forecast to rise by 36% in the next decade, against a rate of 19% across other developed cities. But what is the best city to start a tech business?
To find out, global real estate services provider Savills used 100 different metrics, ranging from the price of a coffee to how long it takes to start a business, to measures what makes a successful tech city.
It then ranked different cities based on business environment, tech environment, city buzz & wellness, talent pool, real estate costs and mobility to determine which has the best environment for the tech sector to thrive.
Here’s the top five:
New York has emerged as the best city to start a tech business in this year’s index, overtaking San Francisco. The city’s business environment, talent pool, lifestyle and transport links make it an idea place to base a tech company.
With giants such as IBM and Verizon, as well as numerous others, all headquartered in the city, the city has a startup ecosystem worth $71bn, and more than 326,000 jobs in tech (as of April 2018).
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As the home of Silicon Valley, it comes as no surprise that San Francisco ranks highly, scoring particularly well in the tech environment.
However, some believe that Silicon Valley’s heyday may be coming to an end, with rocketing house prices causing many new startups to consider other cheaper cities over the birthplace the birthplace of Apple, Facebook, Google and Netflix.
One factor stopping the city from claiming the top spot is the fact that it has the world’s highest co-working costs. With businesses increasingly re-thinking their working environments, the ability to work outside of a traditional office is a key consideration for up-and-coming businesses.
For the first time, Savills has measured ‘mobility’ as part of its Tech Cities ranking. Smart ticketing and integrated across all transport modes means that London’s transport system scores highly. However, pollution and the fact that the tube network is the oldest in the world and therefore needs upgrading has prevented the city from becoming the best city to start a tech business.
Whether Brexit will harm London’s tech business prospects remains to be seen, but for now it is the dominant tech hub in Europe with three times more venture capital (VC) investment in 2018 than Paris.
However, although Nicky Wightman, director of global occupier trends at Savills, believes that London is performing well for now, it may soon have real competition from cities in Asia:
“While London is the best mobility all-rounder, it’s lower than it should be on shared methods of transport, and could take lessons on how to do this better from the Asian cities. Vice versa, Asian and US Tech Cities can learn lessons from London and other European tech hubs on how to improve the quality of urban infrastructure and making their transport networks more sustainable.”
The other European city to make the top five was Amsterdam, with its tech startups scene booming in the last few years. According to The Next Web, in 2018 Dutch startups raised more than €750m in investments.
In 2018 HubSpot also named it the best European tech city to work in due to high salaries and the good quality of life that residents of the city enjoy.
Savills ranked the city highly due to its business environment and mobility, and the city also received recognition for its cycle networks, walkability and lack of air pollution.
Home to world-famous educational institutions as well as establishing itself as a cybersecurity hub, Boston is now competing with the likes of New York and San Francisco to be the best city to start a tech business in the US, scoring highly for its tech environment and recently ranking first on the US Chamber of Commerce list of top startup hubs in the US.
Large companies are also increasing their presence in the city, with Amazon opening new offices in the city in 2021.
Chinese cities are moving up the rankings
Chinese tech cities have risen rapidly through the rankings over the last few years, due in part to having higher share of VC investment than US cities.
Paul Tostevin, associate director in Savills World Research team, and lead researcher on Tech Cities said:
“One of the most interesting trends we’ve noted in the last two years is the rise of China’s Tech Cities. While largely mid-table overall, these cities now account for more VC investment than their US counterparts: the US-city share of the VC investment into our 30 Tech Cities has dropped from a 40% share to 28% since 2012, while Chinese cities have seen their share rise from 11% to 36% over the same period.
“Beijing has by far the greatest VC investment, but our ranking puts Shanghai ahead as a more ‘global’ tech city, however, thanks to an international business environment and better of quality of life for residents.”