From Recreational Apparel to Weed, Here Are Our Best Cities for Niche Industries
Our annual Best Cities feature explores the hot spots for specific business categories.
Opinions expressed by Entrepreneur contributors are their own.
Historically, niche industries developed in certain cities due to access to raw materials (Pittsburgh and steel), distribution (any major port), climate (Hollywood sunshine and movies), educational institutions (Stanford and tech) or cheap labor (Alabama and cars).
Today, some of those same forces are in place, but several new ones have risen up to influence where and why certain business categories have clustered--and thrived--in specific cities. Politics, parent companies and revolutionary new laws, such as the legalization of marijuana in Colorado and Washington, are developing new economies from scratch. The result is a diverse collection of cities with specialties that no other location can match.
Beer and Spirits
Fort Collins, Colo.
Median household income: $53,359
Median home price: $244,900
College graduates: 52.3%
Fort Collins is home to one of the five largest craft breweries in the U.S. (New Belgium) and a bundle of competitors, not to mention two distilleries. But what makes it our top pick? Start with two laws: Colorado is one of 33 states to allow self-distribution of alcohol (read: tasting rooms), and it's the only state to restrict liquor sellers to one physical location. That means no chain liquor stores or supermarkets can sell anything stronger than mass-produced 3.2 ABV beer and wine, which results in a wide variety of local brews and spirits as independent liquor stores seek to differentiate their offerings from those of the guy around the corner.
Sealing the deal is Fort Collins' low-cost power and high-quality water. Commercial electricity rates here are among the lowest in the U.S., and the municipal water supply won the 10-Year Directors Award from the Partnership for Safe Water in 2010, and has been recognized every year since.
Did you know? Fort Collins contains 12 of Colorado's 165 craft breweries but produces more than 70 percent of the state's craft beer by volume.
Median household income: $44,111
Median home price: $139,400
College graduates: 26.5%
Louisville's at the heart of a state that's 54 percent farmland and, even more important for packaged foods, less than a day's drive from roughly 70 percent of the U.S. population. To reach everyone else, the city is home to an international airport and the UPS worldwide air hub, Worldport, which processes an average of 1.6 million packages per day. In short, wide distribution is no problem in Louisville.
There's a deep pool of resources within city limits that make it possible for startups that want to launch and develop consistent products without having to kit out test kitchens or factories. Among them are Flavorcraft, which specializes in services ranging from initial formulations to co-packaging; Custom Food Solutions, which develops custom products and concepts; and Blendex, a blending company for dry ingredients.
Did you know? Louisville's food-industry prowess extends to franchise restaurants as well. The city is home to the headquarters of Yum Brands (KFC, Taco Bell, Pizza Hut) and Papa John's.
New York City
Population: 8.4 million
Median household income: $51,865
Median home price: $501,500
College graduates: 34%
A robust support network of food-related incubators supplying low fractional rents and expert advice on everything from packaging to permits makes the Big Apple the best place to start such specialty businesses as Little Duck Organics kids' snacks and Black + Blanco, a baker of Moroccan shortbread cookies. These incubators allow newly hatched food companies to overcome an acute lack of access to commercial kitchen space, according to Louise Kramer of the Specialty Food Association. "Finding a kitchen is the key moment to scaling up," she says.
New York has a handful of such facilities, ranging from general food-business programs to those focused on immigrant entrepreneurs or organic goods. Sweetening the deal is the city's economic development office and its dedicated loan program, the NYC Food Manufacturers Growth Fund, plus accelerators such as Fare Trade NYC and AccelFoods that offer private investment along with mentoring.
Did you know? The world's largest produce market by revenue is Hunt's Point in the Bronx, with $2.4 billion a year and daily deliveries from 55 countries and 49 states.
Population: 2.62 million (includes Miami-Dade County)
Median household income: $43,464
Median home price: $221,900
College graduates: 26.3%
Miami's population is pegged to grow at least 6 percent by 2018, and tourism numbers have increased every year for the last four. (Some 14.2 million tourists spent at least one night in the city last year, and all had to eat somewhere.) Those figures alone should make any restaurateur's mouth water, but it's the locals' love of dining out that seals the deal.
According to a 2013 Zagat Guides study, residents eat dinner out 2.7 times each week vs. the national average of 2.3--and they're slightly ahead on the lunch numbers, too (2.2 vs. 2.1 nationally). And when they go out, they spend an average of $43.82 on dinner, vs. the national average of $40.53.
Those attractive stats have one of the kings of upscale dining concepts, chef Tom Colicchio of Craft steakhouse fame, trying out his yet-to-be-named farm-to-table restaurant at the 1 Hotel & Homes South Beach instead of in New York, where he built his reputation.
Need seconds? Miami took this year's top spot on the Growth 40 list of the best markets for expansion compiled by the NPD Group and QSR magazine, which covers quick-service and fast-casual restaurants.
Did you know? Though known for its Cuban residents, Miami-Dade also has America's largest populations of Colombians, Hondurans and Peruvians.
Software and Apps
Median household income: $84,922
Median home price: $450,600
College graduates: 27.5%
Let's be honest: When it comes to software development, no place beats Silicon Valley, and the money knows it. The Silicon Valley Index estimates that San Francisco and the cities south of it attract nearly 40 percent of new venture capital dollars nationwide.
The problem is that the Valley also claims one of the highest costs of living in the nation.
That's why our pick for best software launch pad is Newark. Tucked into the southeastern corner of the San Francisco Bay, this industrial town boasts relatively low median home prices, with reasonably direct access to the even cheaper inland suburbs of Pleasanton and Livermore.
Newark's killer app, though, is the Dumbarton Bridge, which links it directly to Palo Alto, the heart of Silicon Valley. And tech companies are catching on; Logitech, Tegile Systems and Smart Modular Technologies all have locations in Newark.
Did you know? Newark has a history as Silicon Valley's factory town; as recently as 2004, Sun Microsystems was manufacturing hardware there.
Median household income: $36,939
Median home price: $153,700
College graduates: 24.2%
For all the hype over the rockets made by Hawthorne, Calif.-based SpaceX or Virgin Galactic's New Mexico-based Spaceport America, conquering the dark night of space is still government work. Traditional defense contractors like Raytheon and Honeywell dominate, and these top-tier companies have all chosen the Tucson area to house major production facilities for rockets, missiles and related technologies.
The College of Optical Sciences at the University of Arizona feeds talent into "Optics Valley," which has an estimated 1,400 jobs and $600 million in total revenue, according to the Arizona Optics Industry Association. Taken together, the contractors and the school provide the tools and services needed for, among other things, flight optical guidance systems, telescopes, telecommunications and control systems.
Did you know? The Kitt Peak National Observatory, southwest of Tucson, is home to the world's most diverse collection of telescopes, with 22 optical and two radio models.
Population: 2.6 million
Median household income: $45,215
Median home price: $562,600
College graduates: 29.8%
Brooklyn, not Manhattan, has become a lucrative building ground for smart hardware design and production. A key driver has been multiyear initiatives by mayors Michael Bloomberg and Bill de Blasio to build partnerships between public-private bodies such as the New York City Economic Development Corporation and area universities, including NYU, Columbia and City College. NYU's School of Engineering alone claims that its business incubator accounts for $251.2 million in total area economic impact, 900 new jobs and north of $60 million in total capital raised.
A new generation of startups is using those funds to set up shop in Brooklyn hot spots, such as the Navy Yard, home to New Lab and design shop Pensa, and the Gowanus Canal, where circuit-board maker ReFactory is based. The poster child for the city's hardware ascendency is desktop 3-D printer manufacturer MakerBot, purchased last year by Stratasys for $403 million.
If this keeps up, "Designed in Brooklyn" will soon carry as much cachet as "Made in the U.S.A."
Did you know? In 2002, Brooklyn's 127-year-old Pratt Institute of Design launched its Design Incubator for Sustainable Innovation to focus on, among other things, clean tech and social entrepreneurship.
Madison County, Ky.
Median household income: $42,020
Median home price: $143,000
College graduates: 26.7%
With only 190 people per square mile, Madison County and its county seat, Richmond (population 32,550), hardly looks like ground zero for America's resurgent automotive manufacturing sector. But thanks to its central location, Madison County sits within a day's drive of giant plants operated by General Motors, Toyota, Ford and parts manufacturer Denso.
IndustryWeek, the manufacturing trade bible, estimates that Kentucky has more than 440 automotive-related companies employing more than 68,000 people. The attraction, beyond location, is the state's low-cost labor and solid work ethic, lucrative tax breaks and local business incubators that match companies to area resources.
Did you know? In Bowling Green, car geeks can test their engineering chops and cars at Beaver Tuesday Night Street Drags at the Beech Bend Raceway, one of the oldest tracks in the country.
Recycling and Clean Tech
Orange County, Calif.
Population: 3.1 million
Median household income: $75,566
Median home price: $537,600
College graduates: 36.6%
It's easy being green: Laguna Beach, Calif.
Orange County is dedicated to preserving its natural wonders, including picturesque beaches and the Bolsa Chica Ecological Reserve. Meanwhile, its median household income--roughly 50 percent higher than the national average--gives it the resources to support a growing recycling and clean-tech economy. Want more proof? The county reportedly supports more than 18,000 jobs connected to going green. Next10, a local think tank focused on green innovation in California, puts the county in the top five statewide for green venture capital, third highest for overall expansion in the clean economy, and notes that Orange County recycling and waste jobs in the core clean economy grew faster than the state as a whole.
Did you know? Orange County is the state's fastest at adopting plug-in hybrid vehicles.
Median household income: $51,238
Median home price: $288,300
College graduates: 43.1%
Portland is the juggernaut of the athletic and outdoor industry, with footwear wholesaling alone 25 times more concentrated in the city than anywhere else in the U.S., according to consulting firm Impresa. That translates to more than 14,000 workers, mostly clustered at Adidas' North American headquarters; Columbia Sportswear, a local mainstay since 1938; and Nike, with some 8,000 employees in nearby Beaverton. Orbiting around these three stars are more than 3,200 contract workers and more than 300 other businesses providing everything from product design and marketing to logistics and distribution.
"This place is a magnet for people in the industry," says Joe Cortright, president and economist at Impresa, "and a lot of them then go on to start up their own businesses, identifying some small niche market that is too small to interest one of the big majors." Since 2001, more than 281 companies have spun off from Portland's big three, according to Cortright's research and data from the Oregon Employment Department.
Did you know? Portland's public parks make up 37,000 acres, and that includes the world's smallest city park, Mill Ends, which is just 24 inches wide.
Median household income: $38,243
Median home price: $214,800
College graduates: 28.3%
Providence takes this title thanks to the Rhode Island School of Design (RISD), which has turned out stars such as glass designer Dale Chihuly and industrial designer Stuart Karten. Statewide, there are more than 1,300 design firms ranging from Pawtucket's Design Studio 180, which creates glass, metal, wood and ceramic surfaces for residential and commercial properties, to whimsical housewares company Fred & Friends, whose Mr. Tea tea strainer has been featured on the Today show. Also here: companies that provide the services those designers need, such as rapid-prototyping shops and brand-development consultants. And the city's business and education communities are intent on offering programs--from design-related accelerators like Betaspring to co-working spaces like the Founders League, and even co-living spaces--to help creative startups flourish.
It doesn't hurt that Providence is an easy trip to both Boston and NYC. In fact, Betaspring chief of staff Melissa Withers calls the area "one of the most resource-dense design corridors in the world--a powder keg of opportunity."
She adds, "We have a really dense network of creatives, designers, advanced manufacturers and people who understand the global supply chain. We have more creative energy than you can explain through regular macroeconomic trends."
Did you know? Housewares designers can draw inspiration from the culinary arts museum at Providence's Johnson & Wales University, which charts the history of food-preparation tools, utensils and dish settings from ancient Rome to the present.
New York City
Population: 8.4 million
Median household income: $51,865
Median home price: $501,500
College graduates: 34%
The garment trade has been an integral component of New York's economy for more than a century and still makes up 31 percent of the city's manufacturing jobs and 5.7 percent of the total work force. All the people and resources a designer needs to take a collection from sketchbook straight on through to production are within a subway ride.
The city is home to roughly 900 fashion companies, including iconic houses such as Ralph Lauren and Donna Karan; smaller "it" brands like Novis and Whit; and e-commerce upstarts that have quickly found fame on the national stage, like Bonobos and Rent the Runway. A constantly refreshed talent pool comes from graduates of some of the world's top fashion schools, including Otis Parsons, the Fashion Institute of Technology and Pratt Institute. Meanwhile, incubators like the Council of Fashion Designers of America's Fashion Incubator and Manufacture New York are always on the hunt for the next big thing.
Did you know? The Costume Institute at The Metropolitan Museum of Art houses more than 35,000 ever-revolving pieces of haute couture and iconic fashion designs.
Salt Lake City
Population: 1.08 million (county)
Median household income: $59,626
Median home price: $237,500
College graduates: 30.8%
The residents along the Wasatch Front strongly support local businesses geared toward consumers taking charge of their health, operating in such sectors as fitness equipment (Icon Fitness); recreation (outdoor-gear manufacturer Black Diamond and e-tail behemoth Backcountry.com); and exercise regimens (Gym Jones, the workout behind the chiseled physiques in the 300 movie series). But it's dietary supplements and natural remedies that get the most love: According to trade group United Natural Products Alliance, Utah's supplement business has been growing at an average rate of 11 percent per year for the last 20 years, to the point where it now generates more than $7.2 billion in revenue.
Companies ranging from Nu Skin to Nature's Way and Alvita Herbal Teas enjoy protection from costly government regulation thanks to Utah's seven-term U.S. Senator Orrin Hatch. It's a symbiotic relationship that stretches back beyond 1994's Dietary Supplement Health and Education Act and has made it possible for small businesses to enter the market for herbal remedies without needing to spend years and millions of dollars on trials for FDA approval.
Did you know? Thanks to the intersection of interstate highways I-15 and I-80, Salt Lake City is within a day's drive of the West Coast and the entire Rocky Mountain region.
Population: 1.2 million (Allegheny County)
Median household income: $50,664
Median home price: $120,300
College graduates: 35.1%
A 2012 report by the Allegheny Conference counted nearly 188,000 healthcare workers in the Pittsburgh metro area. Although there's some crowding in traditional areas--the city has 44 hospitals--there's room for innovation. Pittsburgh's company roster ranges from startups like Accel Diagnostics (developing an at-home blood-sample test for congestive heart failure) to mainstays such as Aethon, which manufactures robotic and software products for hospitals, and device-maker ClearCount Medical Solutions.
At least one local investment firm, Pittsburgh Life Sciences Greenhouse, a partnership between the state and local universities, specializes in bolstering healthcare-related business; it has invested $20 million in 75 companies since 2002 and offers office space and support through an incubator on the south side of town.
Did you know? A 2014 Kaiser Health News report listed Pittsburgh as one of the "10 Least Expensive Insurance Markets" in the country.
Median household income: $49,091
Median home price: $246,300
College graduates: 42.2%
While 22 states and the District of Columbia have legalized the sale of medical marijuana, only Colorado and Washington have OK'd cannabis for recreational use. The Denver metro area's 88 (and counting) retail pot outlets already tower over the 21 currently approved for Seattle. But Colorado's "green rush"--expected to generate about $600 million in the next fiscal year--is a regulatory quagmire for anyone looking to sell weed: Licenses go only to residents with proof of two years' residency, and banks will not loan or accept funds related to the business.
Opportunities abound, however, in the ancillary businesses supporting the industry (think Levi Strauss selling dungarees to miners during California's gold rush). Growing facilities need architects, engineers, pest companies and HVAC and lighting experts to maximize yields. Pot tourists coming to town have sparked a mini-industry of "420-friendly" hotels, homes and rooms for smokers to rent. (Public use is banned.) Even lawyers and business consultants are harvesting a bumper crop of new business. Take Rachel Gillette, a local lawyer who gave up tax law for pot-related issues. "I get calls from people every day who want to start marijuana businesses," she says.
Did you know? Denver International Airport is the fifth busiest in North America and 18th busiest in the world.