Last month, New York City notched a big milestone in the startup world. For the first time in history, New York County, which encompasses the island of Manhattan, had the highest number of early stage startups in the U.S. Notably, the Big Apple edged out San Francisco, which is typically at the top of the heap in terms of startups. New York’s tech industry has been growing rapidly over the past five years, with the number of tech jobs increasing by 30 percent, according to the New York State Comptroller’s Office. The city’s tech boom has helped in part to offset jobs lost during the pandemic. At the same time, in San Francisco, where the office market is heavily weighted toward the tech industry, tech companies have been shrinking their footprints or relocating altogether.
CityEarly Stage VC Total RoundsTotal Square Feet LeasedGross Average Direct Asking RentsManhattan543 3.85 million$75.17San Francisco4861.16 million$79.05Los Angeles3482.2 million$47.16Downtown Boston307730,000$66.50Austin142693,242$47.89Data sources: Carta, March 31, 2023; CBRE, Q1 2023
To see the correlation between startup activity and the office market, we looked at venture funding as a proxy for startup growth. Figures from Carta show that in March of this year, Manhattan posted 543 early stage venture capital rounds, followed by San Francisco with 486, Los Angeles with 348, Downtown Boston with 307, and Austin with 142. Looking at this year’s first quarter leasing numbers in the same cities shows that the five cities fall in almost the same order as the VC rounds. Manhattan recorded 3.
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