Top 10 Industries Driving Growth in Texas
As the second most populated state in the nation, it makes sense that Texas would also be a heavy hitter behind the continued expansion of American industries. According to a 2017 study, the Lone Star State ranked second, just under California, for the volume of new business formations. And within the state’s borders, Texas’ largest city, Houston, has been home base for the largest number of new business formations in the state.
By looking at new business formations in Texas throughout the 2018 year so far, we can determine which industries are currently driving the most business growth in the state.
Over the past decade, the construction industry has seen the fastest growth of any other industry in Texas. According to Investopedia, construction workers make up 6% of the nonfarm workforce in the state. The driving force behind this continued and substantial growth is the steady increase in population. Recent studies show that multi-family dwellings and commercial buildings continue to be the primary construction projects.
2) Real Estate
The real estate industry in Texas has been expanding since 2008 and is seeing its share of growth for the same reason as the construction industry—increased population. The havoc wrought on the Houston area by Hurricane Harvey led to a substantial shortage in building supplies in 2018 and is another contributing factor in the escalation of new multi-family dwellings; however, the demand for single-family homes and commercial construction in the Houston and Gulf Coast area also remain strong and are slowly raising the percentage of new businesses in real estate.
When other industries experience a boon, the transportation industry also benefits. The most significant factor in the expansion of the transportation industry in Texas is the progressive development of other industries. As the proverbial gateway to South America and the southern U.S. coast, Texas is a thriving hub for the transportation industry.
Aside from the constant expansion of Texas highways, another major transportation project underway in the state in 2018 is a 240-mile bullet train between Dallas and Houston. Texas Central Partners, the private company behind the project, predict 5 million riders annually by the year 2025.
The Texas retail industry has experienced major growth, specifically in its occupancy rate. Steady population and job growth in Texas’ four major retail markets (Houston, Austin, San Antonio, and Dallas/Fort Worth) has led to a percentage climb for new retail businesses opening in the past few years. Additionally, expanded highway construction around Houston is opening new areas for both the retail and food service industries.
The consulting industry in Texas has steadily continued to grow over the past few years, more so than most other industries in the state. In fact, studies have indicated a positive trend in new businesses formed in 2017. The boost is mainly due to the consulting industry’s broad diversity, with a particular focus on cybersecurity.
The entertainment industry in Texas is taking off, particularly in the area of film. And more specifically in film, the hot commodity is animation; Austin is home to one of the top animation companies in the U.S., as well as three smaller studios that employ more than 200 animators collectively. Because major animation projects require hosts of workers/animators in lieu of actors, the industry’s focus on animation translates to business expansion to accommodate the jobs coming from Hollywood.
The professional services industry is booming in Texas. The U.S. is home to over 40% of the global industry and Texas ranks the highest in the nation with more than a tenth of its nonfarm workforce employed in the professional services industry. This number is expected to increase substantially, with projections showing a growth rate of 26% through 2026. This substantial growth is mainly attributed to the influx of new residents into the Lone Star State; as other industries grow as a result of the increased population, the need for professional services (legal, accounting, engineering, etc.) also expands.
The rate of new businesses formations in the technology industry may seem slow across the country, but Texas recently took the lead in new tech business formations in 2016—more than 36,000 new tech businesses can be found in the state, according to CompTIA. Texas also leads the pack in new telecommunication companies formed. Roughly 5% of the state’s workforce is employed in the technology industry. The positive turn of the state’s economy may be one of the contributing factors behind the industry’s growth spurt over the past few years.
9) Health Care
As the second fasting growing industry in the U.S. with more than $140 billion per capita, it’s not surprising that the healthcare industry is also growing by leaps and bounds in Texas. The rate of new healthcare jobs in Texas over the past decade has grown by over 40%, and that number will only continue to climb. In Houston, the ratio of new medical jobs created is 1 in 7.
10) Food Service
The food service industry makes up almost 50% of new business formations in the country and is one of the leading industries for new business formations in Texas. Reports show more than 45,000 eating establishments in Texas generating over $54 billion in annual sales. As the population continues to expand, other industries are affected and the food service industry (from sit-down restaurants to fast food establishments) is near the top of the list.
SwyftFilings.com analyzed new business formations in Texas between January 1, 2018 and May 21, 2018 to determine which industries saw the largest volume of new businesses in the state.