Top 25 Cities for Doing Business in America

Tweet

Inc. measured current-year employment growth in more than 250 regions (as defined by the Bureau of Labor Statistics) as well as current trends in the annual average growth over the past three years, and compared employment expansion in the first half versus the second half of the last decade. Job growth factors account for approximately two-thirds of the final score for each city and the balance among industries accounts for approximately one-third of the final score.

So what kind of places are working best in George Bush's America? They are predominantly suburban and, perhaps most importantly, relatively affordable, particularly in terms of housing prices, cost of living, and business costs. These are places, notes Brookings Institution demographer William Frey, where younger families, including many well-educated people as well as upwardly mobile immigrants and even singles, are now migrating in large numbers.

Perhaps the most predictable bottom line in this current economic expansion is, well, the bottom line. Places kindest to business costs, whether in terms of office rents, taxes, or regulatory environments, seem to be doing best. "When people depend on debt to finance operations, they look at things differently than when it's equity," suggests Andrew Segal, of Boxer Property, a Houston-based real estate investment firm with holdings in several "second tier" cities. "Business now has to look for a more reasonable place. The ugly ducklings are beginning to look better."

Few people in the growth areas, of course, would consider themselves "ugly ducklings," but they certainly tend to have economies that are grayer and less specialized than the '90s hotshots. Total dependence on high tech, once considered a boon, has turned out to be a disaster.

In the mid to late '90s, suggests Leslie Parks, former economic development director for San Jose, inflated stock prices created a false economy that drove up real estate prices and the cost of managerial and technical talent while driving out more middle-class, blue-collar activities from the region. "Economic diversity is a constant challenge here," Parks adds. "A lot of people did not want basic industries. They thought high tech could solve everything."

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."

 PREV  1 | 2 | 3 | 4 | 5 | 6 | 7  NEXT 

Read more:

Sign-up for our Small Business Success Newsletter

Email Address: