Atlanta: Leading the Pack
The leading large city on the list, Atlanta, epitomizes the characteristics of economic diversity and affordability. Spread out over 28 counties in north-central Georgia, Atlanta's region includes over 4.5 million people, only 420,000 of whom live in the city itself. It combines the advantages seen in smaller communities with an array of assets--such as top-flight universities, major corporate headquarters, and a world-class airport--usually only found in leading global cities.
This vast archipelago of largely suburban communities also houses a relatively diverse economic structure. Atlanta is not wedded to technology like San Jose, or financial services like New York City and Boston. While the recession pummeled some of Atlanta's key industries--including information technology and construction--the area's well-rounded economy has allowed it to take full advantage of the current, broad-based recovery.
"Atlanta has one of the most diversified economies in the country," points out Mark Vitner, a senior economist who studies the Southeast for Charlotte-based Wachovia. "Whatever the new thing turns out to be, Atlanta will be in the forefront. They are very adaptable."
Affordability, Vitner notes, has been the other pillar of the region's success. Although not cheap by southern standards, Atlanta's cost of living, particularly housing, is much lower than that in places like Boston, New York City, Seattle, or San Francisco. This has made Atlanta an excellent spot to start a business, allowing lower costs and salaries for start-ups.
Atlanta turned out to be a far better choice than San Francisco for the headquarters of the fast-growing, 250-employee Cendian Inc., which opted for the Georgia metropolis over a series of other cities, including the fabled city by the bay. "Affordability killed us with the Bay Area," says CEO Mark Kaiser. "San Francisco is a delightful place to live, but way too expensive."
Atlanta may lack some of the Bay Area's edginess and physical beauty, Kaiser adds, but in addition to reasonable housing prices, it also presents many lifestyle options, including an increasingly lively central city and diverse suburban areas, which allows the firm to compete for talent across a broad spectrum of skills, from top management to technicians. At the same time, Atlanta's airport and long history as an area of logistics expertise, best epitomized by UPS, help the firm in its primary business of providing logistical support for the chemical industry worldwide.
"Atlanta," Kaiser sums up, "gives you a lot for the buck."
Affordability
The theme of affordability was repeated often by many firms located in the cities that ranked high on the list. It helps explain the remarkable performance of places like No. 4 (large) San Antonio and No. 26 (medium) McAllen, Texas, all of central Florida, and much of inland California. "San Antonio is a very good sell for families," says Keith Frederick, founder of SecureInfo, a San Antonio computer security firm with 145 employees. "You can get a new three-bedroom starter house here with a two-car garage for $60,000. And it's actually a super environment for operational experience. This is one of the few places I can get the kind of talent I need."
Indeed, Inc.'s data shows many fast-growing cities, such as No. 5 (small) Sioux Falls, S.D., No. 15 (small) Fargo, N.D., and No. 8 (large) Jacksonville, Fla., also saw rapid expansion of financial and business-professional service industries, which require a work force with a high level of education. In contrast, many of the traditional hotbeds for these professional industries (e.g., Boston, New York City, San Jose) have suffered either negative or slow growth during the past few years.
These trends were particularly notable in Florida, the state that more than any other dominates our list. A remarkable six of the top 25 cities on the large list, including No. 5 West Palm Beach, No. 7 Fort Lauderdale, No. 8 Jacksonville, No. 11 Orlando, No. 14 Tampa-St. Petersburg, and No. 22 Miami, are from the Sunshine State.
Florida, suggests Donald DiFrisco, executive vice president of Palm Beach Gardens-based Cross Match Technologies, has become increasingly attractive to information workers given the rapid housing inflation in places like the Bay Area and Boston. Corporate relocations of the 1980s and 1990s--including companies such as Motorola and Nokia--also have left a repository of talent that can be used by fast-growing, smaller firms.
Sarasota, No. 3 on the medium cities list, has become rich with what Reuben Ben-Aire, CEO of MadahCom, calls "early retirees." Many people in their 50s came to Florida to retire but, for financial reasons or out of boredom, have reentered the work force. "These people have everything you want including experience," says the 60-year-old entrepreneur, who moved his firm from New York City in July 2002 and has since gone from four to 30 employees. "They like being here and they know it costs less. Every dollar they make here is simply worth more."
The Inland Empire
An even more surprising group of top-flight cities can be found in California, whose coastal economy, particularly in the Bay Area, has been struggling since the end of the dot-com craze. Here the biggest entry is No. 2 Riverside-San Bernardino, a region with more than 3 million people east of Los Angeles. In many ways, the region, known as the Inland Empire, is the polar opposite of places like San Jose--its economic drivers are mundane industries such as housing construction, warehousing, and diversified manufacturing.
Yet even here the key high-end growth industries, such as technology, financial and business services, are expanding at strong rates. This, suggests local economist John Husing, is being driven in part by sky-rocketing housing costs on the coast of California. Skilled workers with families are responding by moving. Since 1990, Husing notes, more than 660,000 people have moved into the inland. The bulk of this growth comes from ethnic minorities, predominantly Latinos, whose numbers swelled by 500,000, and Asians. Both groups see the inland as the one place in southern California where their hard work can be rewarded with a middle-class lifestyle. They keep coming. Between 2000 and 2020 the inland is expected to add another 1.5 million people, more than the growth forecast for all but five states. Such growth provides business opportunities to entrepreneurs.
