New York City remains one of the most expensive places in the country to start and operate a business, but several of its core operating costs have grown more slowly than in competing metropolitan areas over the past decade. That is the central finding of a new report from the Office of the New York State Comptroller, which analyzed wages, commercial rents, utilities, taxes, and regulatory burdens across the city and 13 peer metros from 2015 to 2025. The report attributes the moderated growth partly to the city’s already-elevated cost baseline and partly to rapid population-driven cost increases in Sun Belt and West Coast markets that have narrowed the gap.
Key Takeaways
- The average private-sector salary in New York City was $129,030 in 2025, a 44.7% nominal increase from 2015, but only 6.5% after adjusting for inflation, compared to 10.1% nationally.
- Manhattan office rents averaged $73.19 per square foot in Q4 2025, the highest in the country, but grew just 2.2% over 10 years while the national average rose 36.3%.
- The city generated $1.4 trillion in GDP in 2024, the highest of any U.S. city, and hosted 43 Fortune 500 headquarters.
- Commercial electricity rates through Con Edison averaged 28.20 cents per kilowatt hour in 2024, more than double the national average of 12.75 cents, representing one of the fastest-growing cost categories.
- The combined corporate tax rate in New York City is 17.44%, the highest nominal rate in the nation, though the effective rate is lower because city corporate taxes are deductible from state corporate taxes.
- Despite high costs, the city requires fewer fees and agency interactions to open a restaurant than any other major city studied, with a total startup cost of $2,882 across 8 required fees.
Wages Grew Faster in Sun Belt and West Coast Markets
The Comptroller’s “Business Costs in New York City” report (Report 7-2027) draws on data from the U.S. Bureau of Labor Statistics, Cushman & Wakefield market reports, and other public datasets to compare cost trends across the 14 largest metro areas by population. On wages, the New York City metro area’s average private-sector salary of $106,110 ranks third nationally behind San Francisco ($150,910) and Boston ($110,070). Within the five boroughs specifically, the average reached $129,030, driven upward by the securities industry’s average salary of $561,770 and the information sector’s $230,900.
However, wage growth in the city has been slower than in most peer regions. The inflation-adjusted increase of 6.5% over the decade trails the national average of 10.1% and is well behind metros that experienced population surges, such as Miami (18.5% real growth), Phoenix (11.8%), and San Francisco (33.8%). The median salary across all occupations in the New York City metro area was $61,430, above the national median of $50,980 but ranking fourth among the 14 largest metros, behind Washington D.C., San Francisco, and Boston.
The moderated wage growth has a dual implication for businesses. Labor costs, which the report identifies as one of the two largest expense categories for virtually every business type, are rising less steeply here than in many competing markets. At the same time, the city’s minimum wage currently stands at $17 per hour, and a bill introduced in the City Council would raise that to $30 per hour by 2030 for large employers and by 2032 for firms with fewer than 500 employees. The Comptroller’s report notes that 46% of jobs in the broader metro area had an average hourly wage below that proposed threshold in 2025.
Office Rents Stagnated While Vacancies More Than Doubled
Manhattan’s commercial office market tells a story of price stability driven by oversupply rather than falling demand. Average asking rents of $73.19 per square foot remain the highest in the country, just above San Mateo County, California ($72.60). But that figure is essentially flat over 10 years, up just 2.2%, while the national average for office space grew 36.3%. Markets like Miami saw rents surge 88.5%, and Atlanta rose 48.4%.
The stagnation reflects the aftermath of the pandemic-era shift to remote and hybrid work. The average office vacancy rate in Manhattan reached 21.1% at the end of 2025, more than double the 8.5% recorded at the end of 2015. Rents dipped from $73.41 per square foot at the end of 2019 to $69.67 by the end of 2021 and have only partially recovered, remaining 0.3% below pre-pandemic levels. Vacancy performance varies by building class: trophy and Class A properties command higher rents and lower availability, while older stock has absorbed the majority of the excess supply.
Retail space in the city averaged $52.45 per square foot, more than twice the national average but not the highest nationally; Honolulu holds that position at $53.11. Retail rents grew 12.9% over the decade, again well below the national average of 35.7%. Industrial space, however, remains a pressure point. The outer boroughs’ average asking rent of $28.07 per square foot is the highest of any major market nationally, driven by limited inventory and demand from e-commerce and third-party logistics operators serving the metro area’s consumer base.
Electricity and Natural Gas Costs Outpace National Growth
Energy costs represent one of the few categories where the city’s cost growth has outpaced the national average. Con Edison’s commercial electricity rates averaged 28.20 cents per kilowatt hour in 2024, up 37% from 2015 and more than double the national commercial average of 12.75 cents. Statewide, New York’s commercial electricity rate of 21.07 cents per kWh ranks seventh nationally.
Natural gas costs have risen even more steeply. Peak-period bills for large commercial buildings increased 88.6% between 2017 and 2025, while off-peak costs for the same category surged 144.8%. These increases have intensified the debate over energy sourcing, grid reliability during peak demand, and the cost implications of transitioning buildings away from fossil fuels under the city’s climate mandates.
Water and sewer costs, by contrast, grew more slowly than competitors. Commercial water and sewer expenses in the city rose 31.6% over the decade, below the national average of 55.2% and well below peers like San Francisco (155.9%), Houston (84.9%), and Los Angeles (81.4%).
Tax Burden Ranks Among the Highest but Effective Rates Are Lower
The city’s combined marginal corporate franchise income tax rate of 17.44% is the highest nominal rate in the nation. That figure reflects the state corporate tax of 7.25%, the city levy of 8.85%, and the MTA surcharge of 1.98% within the Metropolitan Commuter Transportation District. The effective combined rate is lower because city corporate taxes are deductible from state corporate taxes. The Tax Foundation ranked New York State’s corporate rate as 16th-highest nationally, with New Jersey holding the top position.
In fiscal year 2025, the city collected $11.02 billion in business taxes, with corporate tax collections accounting for 67% of that total at $7.4 billion. Corporate tax collections have increased 69.7% since FY 2015. The majority of city businesses, however, are unincorporated and pay a 4% tax on business income, a rate that applies to the roughly 90% of the city’s 295,000 firms that employ fewer than 20 workers.
Regulatory Burden: Fewer Hurdles Than Most Peer Cities
One area where the city outperforms expectations is regulatory startup costs. According to the Institute for Justice’s “Barriers to Business” study of 20 U.S. cities, opening a restaurant in New York City requires 8 fees totaling $2,882, tied with St. Louis for the fewest required fees and well below the 20-city average of 13 fees costing $5,358. Starting a food truck business requires interaction with six city agencies, also tied for the fewest among the cities examined.
Permit processing times vary by business type. The Department of Consumer and Worker Protection averaged 10 days to approve submitted applications in 2025, though tow truck companies required an average of 73 days while electronics stores averaged three days. Building inspections and certificates of occupancy, handled by separate agencies, can add further delays. Both the Governor and the Mayor have released regulatory reform proposals in recent months that aim to reduce processing times and consolidate overlapping requirements across agencies.
FAQs
What are the main findings of the Comptroller’s NYC business costs report?
The report found that while New York City remains one of the most expensive U.S. cities to operate a business, several core costs, including wages, office rents, retail rents, and employee benefits, grew more slowly over the past decade than in many competing metropolitan areas. Energy costs and certain taxes, however, continued to grow faster than national averages.
How do NYC office rents compare to other cities?
Manhattan office rents averaged $73.19 per square foot in Q4 2025, the highest in the country. However, that figure grew only 2.2% over 10 years, far below the national average increase of 36.3%, largely because post-pandemic vacancy rates more than doubled to 21.1%.
What is the combined corporate tax rate in New York City?
The combined marginal rate is 17.44%, reflecting a 7.25% state rate, 8.85% city rate, and 1.98% MTA surcharge. The effective rate is lower because city corporate taxes are deductible from state corporate taxes.
Is it expensive to start a business in New York City compared to other cities?
Despite its reputation, opening a restaurant in New York City requires fewer fees (8) and lower total startup costs ($2,882) than the 20-city average studied by the Institute for Justice, which averaged 13 fees at $5,358. The city also requires fewer agency interactions than most peers for food-related businesses.
