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2019 Texas Industry Growth Report
On a national level, Texas plays an invaluable role in U.S. industry. As the second-largest state in terms of both population and surface area, the state is home to massive corporations and successful small businesses alike. In a 2019 study, Texas ranked second for the largest total volume of new business formations in 2019 compared to other U.S. states.
In our 2019 Texas Industry Growth Report, we’re taking a closer look at which industries are driving growth in Texas. Utilizing Swyft’s industry formation data, we’ve identified the top 10 industries driving year-over-year growth for new businesses opened. See how this year’s rankings stack up against our 2018 report, and in which Texas cities business owners are opening up shop.
Top 10 Industries That Drove Growth in Texas in 2019
The rate of growth for the Texas accommodations industry was 4x the national average in 2019. Hotels are popping up left and right in Texas’ major cities, and the Austin and Dallas metropolitan areas are at the epicenter of this growth.
Why is Texas so popular for visitors? Texas is the second-most populous state and home to a culturally diverse food and entertainment scene. Outside of those traveling to visit family, friends, or attractions, many people also visit Texas for work. For this reason, we expect the accommodations market in Texas to stay strong in the years to come.
The warehousing industry saw a 142.9% increase in businesses registered year-over-year in Texas compared to the 26.4% year-over-year growth nationally. Texas is an ideal location to open a warehousing business for two reasons.
One, Texas has the room. Texas is just behind Alaska in total land area, boasting an impressive 268,597 mi2 (or 695,662 km2). Aside from the vast acreage of undeveloped land throughout the state, Texas’ sprawling cities have more vacant lots than most other urban areas. And these lots are the perfect places for new warehouses.
That brings us to reason two, there is demand. With the rise of online shopping and the increased demand for fast shipping, more businesses are opening warehouses in densely populated urban areas to satisfy consumer needs.
The Texas financial industry takes rank number three in business growth rate, seeing a 106% increase year-over-year compared to 34% yearly growth, nationally.
Why is Texas’ financial sector booming?
According to a study by the Texas Governor’s Office of Economic Development, the Texas financial services industry is more specialized in sales financing, real estate lending, and consumer finance than the U.S. as a whole. Whereas other states, such as New York, are more dependent on investment activities, the Texas financial industry is less reliant on Wall Street. This is why over 30,000 financial services businesses call Texas home.
4. Food Service
The Texas food service industry saw another year of significant growth. Up from position 10 in 2018, the food service industry takes fourth place in this year’s Texas industry report with a 98.8% increase in new businesses opened year-over-year.
If you’ve considered opening a restaurant or other food service business, Texas may be the perfect place for your HQ. Thanks to the large population and tourist appeal, Texas is home to over 75,000 food service businesses. These businesses employ 620,00+ people and rake in over $750 billion in sales.
If anyone’s ever told you that retail is dead, they’ve clearly never been to Texas. The Texas retail market accounts for over 8% of the nation’s retail industry. Eight out of the top 100 retail companies are based in Texas and there are over 300,000 retail establishments across the state.
The growing Texas retail industry is driven by the strong economies of the state’s largest cities. Austin is a particularly strong market for retailers, reporting a 95.8% retail space occupancy in 2019.
With the way Texas’ cities are rapidly growing, we expect the retail industry to continually top Texas industry reports.
6. Rental & Leasing
Coming in at number six is the rental and leasing industry. Texas continues to grow in population yearly. In fact, five out of the top 15 fastest growing cities are located in Texas. This population growth coupled with the increase in housing prices equals a strong rental market.
Not only are Texas’ largest cities seeing an increase in rental properties and businesses, but their surrounding suburbs are seeing massive growth as well. Smaller, DFW area cities, such as Frisco, Richardson, and McKinney, are seeing record growth in the number of units and price of rent.
7. Health Care
The healthcare industry is once again topping the charts as one of the fastest-growing industries in the U.S. And the Texas healthcare industry is no exception. According to the University of Texas at Arlington, eight out of the 25 largest employers in Texas are healthcare-related businesses. In fact, researchers estimate that one out of every six residents in San Antonio is employed in the healthcare industry.
The Texas healthcare industry is still growing, too. With new business growth increasing 64.5% year-over-year, the healthcare industry takes seventh place this year compared to ranking ninth in 2018.
The consulting industry takes rank eight in this year’s Texas industry report. While the volume of new consulting business in Texas grew a respectable 63.3% year-over-year, the industry has dropped in the rankings slightly compared to 2018.
As we learned in our 2019 national industry report, consulting business owners reported that while the number of consulting businesses continues to grow, owners are finding it hard to scale their business and obtain key funding.
The construction industry still continues to see strong growth in Texas. At 57.4% growth year-over-year, the Texas construction industry is growing nearly twice as fast as the nation as a whole.
This growth is fueled partially by Texas’ steady economy and the influx of new residents. Additionally, researchers forecast that construction for projects involving roadways and other infrastructure will be in high demand. Texas contains over 300,000 miles of roadways, many of which are aging or were simply not initially designed for the volume of people they currently serve.
The entertainment industry rounds out our list as number ten, growing 45.9% year-over-year. And while the Texas entertainment industry isn’t as well-known as California’s, it’s still home to a wealth of film, animation, and video game production studios.
The SXSW music, film, and interactive festival, hosted annually in Austin, is particularly important to the entertainment industry as a whole. Each year, SXSW brings together hundreds of thousands of attendees from around the world to participate in its buzzworthy screenings, concerts, and panels. The 2020 cancellation of SXSW has already rocked the entertainment world and may affect the industry’s growth both in the state and nationally.
Top Texas Cities for New Business Formations
Thanks to its sheer size, Houston is a great place for businesses. As the fourth-largest city in the U.S., Houston is not only home to millions of potential customers but also some of the largest companies in the nation. Businesses that operate in Houston enjoy a strong local economy and a lower cost of living compared to similarly-sized metropolises.
Similarly to Houston, Dallas enjoys a large population, strong economy, and cost of living. Additionally, the U.S. Chamber of Commerce Foundation found that Dallas is one of the most efficient cities in terms of business regulation. Researchers determined that the city’s efficiency in the ease of starting a business, getting construction permits, registering property, and enforcing contracts make it an ideal place to start a business.
If you’re not from Texas, you may not have heard of Frisco, but Frisco is quickly becoming a hotspot for new businesses. Frisco lies just under 30 minutes from Dallas, making it a great location for new businesses that may not have the capital to operate in such a large city. The Frisco Chamber of Commerce also provides plenty of support for new business owners, helping foster growth and success.
SwyftFilings.com analyzed new business formations in Texas between 2018 and 2019 to determine which industries saw the largest volume of new businesses in the state.