The Bay Area, despite its entrepreneurial reputation, is less hospitable to new companies than its other major rivals in California, Los Angeles and San Diego, primarily due to this region's high cost of living and relatively expensive housing prices, a study released Thursday shows.
"Taken as a whole, the Bay Area's economy is productive, highly innovative, and a competitive presence in the national and global economies," according to the report, which was commissioned by the Bay Area Council.
The strengths of the region are reflected in household income and other factors, the report stated. The region has increasingly specialized in high-value industries such as professional, scientific and technical services, along with information services and products.
"This not only supports new company formation locally, but also helps attract innovative young companies from elsewhere in the country and around the world to locate here," the report stated.
Despite these successes, though, disguise underlying challenges that make the Bay Area less competitive than it could be.
Although home prices have fallen due to the recession, housing in the Bay Area remains more expensive than most of the country, including other major regions of California.
That has raised the cost of living in the Bay Area, and makes it more expensive for businesses to operate.
"The high cost of doing business in the Bay Area is another source of weakness," according to the report. "This is evidenced in a slower rate of new business formation in the region than elsewhere in the state."
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