The study by Approved Business Finance looked at factors including commercial property prices, education levels, and internet coverage across the UK’s 60 largest cities.
Oxford came out on top, with commercial space costing an average of £36 per square foot, making it one of the most affordable options in the UK.
The city also benefits from a highly educated population, with many Oxford University graduates choosing to stay in the area.
The research also found Oxford has relatively few business closures, indicating a strong local economy, the researchers said.
Mark Kozo, commercial director of Approved Finance Group, said: “Starting a business in 2025 will be incredibly daunting, with inflation still a major concern for business owners and commercial property prices at historic highs.
“The cities we’ve identified, such as Oxford and Bristol, offer great potential for growth, but business owners must always consider their specific needs and resources before making a decision.”
Bristol came second in the rankings, with commercial spaces costing an average of £57 per square foot and almost 90 per cent of businesses in the city being supplied with high-speed internet.
Edinburgh completed the top three, while Nottingham, Cardiff, Aberdeen, Norwich, Glasgow, Leeds, and Manchester also featured in the top 10.