Leading Locations for 2014 Resources
For this year’s Leading Locations study, Area Development analyzed economic and work force data for 379 metropolitan statistical areas (MSAs) — both for 2012–2013 and, in some categories, stretching as far back as 2008, the depths of the recession. The goal was to identify which cities across America are emerging as front-runners in this new era of economic development possibilities — and why.
The top MSAs in the list demonstrate that a variety of strong individual drivers, or a combination of many factors, can move a city’s attractiveness as a business site into the foreground. Chief among those drivers for 2014 are the renaissance in domestic manufacturing, the gusher of economic blessings flowing from the fracking revolution in U.S. oil and gas fields, and the spread of America’s high-technology dominance to sparkling new urban epicenters even as the birthplaces of this advantage retain their sheen.
But for most cities, the advantages of the moment aren’t enough alone to sustain long-term success as a site-location beacon. They also must respond effectively to the many factors that affect local and regional economic performance, as well as proactively create healthy business climates for the long run, and invest in that future The locations that best create and sustain such multilevel support not only are best at landing new companies but also excel at supporting local companies and helping them hone their competitiveness with rivals at home and abroad.
Included below, is an interactive table that will allow you to view the rankings of all 379 MSAs. The report includes an overall ranking that is based on 21 economic indicators. Area Development also created category rankings that are based on sub-groups of indicators from the 21 used for the overall results (refer to the methodology to learn more). Readers can use filters to easily segment MSAs by region, population size, and state, or use the search field to locate specific MSAs. The expanded version of the chart displays how each city ranks in every one of the 21 indicators used in the study.
Note: Area Development’s research desk compiled the statistics for this report. Locations were ranked according to the methodology explained herein. Location profiles/articles were researched and written by Dale D. Buss, Staff Editor.
San Jose - Sunnyvale - Santa Clara, CA
Population: 1,836,911
Overall Rank: 1
- Highly skilled workers make SAJ an appealing investment location for consumer services.
- Deep linkages with venture capital and angel investors and research institutions throughout the Bay Area.
Strengths
- SAJ attracts more high-profile tech meetings, and their attendees, away from San Francisco.
- More insourcing of manufacturing enables SAJ to keep and attract new tech production.
Upside
They are fed by science and engineering graduates of some of America’s top tech schools, including the University of California-Berkeley, and financed by a 39 percent share of all venture-capital investments across the nation in 2013. Increasingly, immigration is a factor as well: There was a 52 percent increase in foreign immigration last year over 2012.
In Silicon Valley, patent registrations rose by 11 percent in 2012 over the year before, while jobs grew by more than 3 percent over the prior year; total population grew by 1.3 percent, and median household income began to increase last year after a four-year decline.
Increasingly, non-technology players are taking up residence in Silicon Valley as well, ranging from Ford to Nestle. They’re counting on the nation’s most proven crucible for innovation and top-flight digital-era talent to help their own businesses take the next great leap forward.
San Francisco - San Mateo - Redwood, CA
Population: 1,776,095
Overall Rank: 7
- Well-educated and skilled workforce supports robust income gains.
- Increasing cluster of Internet and other tech service companies and workers fosters office market growth
Strengths
- Domestic and Asian demand for Internet and mobile services fuels growth among tech firms.
- National housing recovery kick-starts mortgage and other real estate finance output.
Upside
Continued growth in San Francisco comes in a variety of ways. It’s a major tourism destination, of course, and it has an underappreciated role in global trade, with more than 75 international consulates and 22 foreign-trade offices. San Francisco is home to more than 1,890 technology firms, including digital standouts such as Lucasfilm and Sega of America. The Bay Area’s 41 colleges and universities provide the talent to feed their demands, and about 54 percent of adults have a college or graduate degree.
Key to the area’s continued growth is its continual development of new economic engines. Now more than 130 biotech companies are located in the city, many of them at Mission Bay, which has become a hub of this increasingly important vertical. The biotech and clean-tech enclave alone has birthed nearly 100 early-stage companies.
Denver - Aurora - Broomfield, CO
Population: 2,543,482
Overall Rank: 8
- High industrial diversity shields the metro area from employment volatility.
- Sturdy housing market.
- Strong population growth.
Strengths
- Lockheed expansion and aerospace contracts lift employment and related manufacturing output more than expected.
Upside
And, no joke — while the economic benefits of Colorado’s marijuana legalization are only beginning, they’ll become an apparent contributor to growth in the Denver area over time. For now, Denver and its environs are coming out of the Great Recession with stronger job growth than originally thought. Last year, the state’s jobs grew by 3.5 percent, revised from an initial estimate of 2.6 percent. That reflected growth in every job sector in the state and continued into 2014.
Software is at the heart of this boom. Growing small tech companies, many in the heart of Denver, have collectively added enough jobs lately to offset some layoffs at large tech firms. Pharmaceuticals are chipping in as well, such as Broomfield’s Accera.
Mid-Size Cities (Population 160,000-600,000)
Fargo, ND-MN
Population: 208,777
Overall Rank: 3T
- Diverse but stable economy with well educated population.
- Relatively low business and living costs with high housing affordability.
- Spillover from the state’s historic oil boom.
Strengths
- Slow national recovery maintains healthy levels of in-migration.
- NDSU Research Park initiative facilitates spillover growth in high tech.
- Ag prices rebound to historically high levels, boosting farm incomes.
Upside
The fossil-fuel boom has made Fargo one of the best places in America to find a job and make money. Forbes ranked the area No. 2 in its best small places for business and careers last August, for instance. And Fargo placed No. 5 in the Milken Institute Best Performing Cities Index in 2014.
This economic vibrancy came on top of an infrastructure that already included world-class education and research and productive employees. And Fargo is younger than most outsiders assume: It was ranked in the top college towns and cities with populations below 250,000 in 2012–2013 by the American Institute for Economic Research.
In fact, there’s also a mini tech boom in and around Fargo that is in the midst of creating a predicted 8,000 jobs including 1,000 alone at Microsoft. All of this activity, in turn, is stimulating the traditional backbones of the Fargo economy, including manufacturing, agriculture, and services.
Provo-Orem, UT
Population: 526,810
Overall Rank: 6
- Large, dynamic high-tech industry.
- Stable employment and research spillovers from Brigham Young University.
- Strong population growth and high educational attainment.
- Low business costs.
Strengths
- Faster household formation causes increased housing demand, which leads to higher prices and increased construction.
- Demand for locally produced flash memory chips strengthens.
- Low costs and high educational attainment attract new companies.
Upside
A recent report from the Milken Institute ranked Provo-Orem as No. 2 in its list of the Top 25 Best-Performing Large Cities for Business, basing its conclusion on growth in jobs, income, and technology output. That was up five spots from the previous ranking. Provo-Orem also ranked No. 2 in 2013 on the Forbes ranking of “Best Mid-size Cities for Jobs.” And last June, Forbes also listed Provo as No. 1 “Best Place for Business and Careers.”
The area has been topping so many charts lately because of the strong flow of new college graduates it is producing, especially from huge Brigham Young University, and because of a thriving tech sector. Local successes such as Novell, Nu Skin and Ancestry.com are expanding. Google’s selection of Provo-Orem as just the third city for installation of its new high-speed fiberoptic service will add more momentum to tech growth.
Sioux Falls, SD
Population: 228,261
Overall Rank: 11
- Business costs among the lowest in the U.S.
- Diverse industrial base.
- Regional hub for education and health services.
Strengths
- Low business costs draw new corporate operations to the area.
- Pipeline infrastructure and drilling-related development spurs job growth in the region.
Upside
The city boasts low costs for doing business, a dependable and well-trained work force, and a minimum of red tape — things that companies are looking for. At the same time, Sioux Falls boasts a satisfying quality of life and is on the rise as a retirement haven. Forbes has recognized both aspects of the area’s character by ranking Sioux Falls No. 1 on its list of Best Small Places for Business and Careers for nine of the last 10 years.
Sioux Falls has proven a growth base for firms in the financial services, medical, and renewable-energy industries because of its collective expertise in manufacturing, research, and back-office operations, as well as its business-friendliness. About 80 percent of new jobs there are created by existing businesses. TCF Financial, Terex Bid-Well, Adams Thermal Systems, Integra Plastics, and Twin City Fan & Blower have all expanded their footprints in Sioux Falls recently, each citing a favorable tax climate.
Small Cities (Population < 160,000)
Columbus, IN
Population: 76,794
Overall Rank: 2
- Strong manufacturing base with exposure to global markets.
- Stable housing market with low foreclosure activity.
- High affordability for residents and businesses.
Strengths
- Rising educational attainment attracts business investment.
- Sturdy job market induces more residents to relocate to the metro area.
- Small foreclosure inventory pushes house prices up faster than anticipated.
Upside
Columbus surged by 13 spots to rank No. 2 in the Milken Institute list of “Best-Performing Small Cities” in 2013, driven by the community’s top-10 finishes in job growth, wage growth and high-tech GDP growth.
The city has been thriving lately in large part because of the success of its biggest employer, Cummins, which keeps expanding its output of diesel engines for various sizes of trucks. In fact, Columbus has more mechanical engineers per worker than any other U.S. metro. It also hosts R&D centers for other major global auto suppliers, such as Faurecia. A Japan-based fastener manufacturer, Sunright, last year announced its third expansion in the Columbus area.
Columbus has genuine quality-of-life chops as well, ranking high for its retirement affordability, first-rate park system, innovative architecture, and location less than an hour from Indianapolis.
Midland, TX
Population: 136,872
Overall Rank: 3
- High energy prices support the economy.
- Employment in the oil industry drives up average earnings.
- Housing market avoided the downturn experienced nationally.
Strengths
- Oil prices rise more than expected, spurring greater extraction.
- Downtown redevelopment diversifies economy.
Upside
The city posted among the top 10 percentage increases in Gross Metropolitan Product last year for the fourth year in a row. Between November 2009 and November 2013, the number of nonfarm jobs in the metro area increased by 25 percent versus just 5.5 percent for the nation as a whole. Its population burgeoned by 4.6 percent in just a year, also topping the country. Personal income per capita grew by 25 percent between 2009 and 2011 as the drilling boom drove other job growth as well.
The flip side for Midland, like neighboring Odessa, has been simply coping with the prodigious growth of the last few years. Average monthly asking-rent prices climbed from less than $600 before the boom hit in 2007 to $1,110 by mid-2013, according to Reis real-estate researchers. And rising home prices are squeezing would-be buyers out of the market.
Count Bismarck’s blessings from the appearance of thousands of new oil wells in North Dakota over the last decade. Only half the size of Fargo, N.D., the capital city also is absorbing the economic benefits of job and income growth brought by the fracking revolution.
Bismarck, ND
Population: 108,779
Overall Rank: 5
- Significant energy resources in surrounding areas.
- Stable core employment base in government and healthcare.
- Very low cost of doing business.
Strengths
- Improved in-migration from the oil boom adds needed depth to the labor force.
- Pipeline infrastructure is updated faster than expected, lowering spread on oil prices.
Upside
In May, the state launched “Find the Good Life in North Dakota,” a campaign to fill approximately 25,000 job openings for skilled workers. “We need a workforce that we can rely on into the future,” a state official said.
The retail and healthcare hub also ranked No. 4 on the most recent Forbes list of “Best Small Places for Business & Career,” which cited niceties such as arts and recreation opportunities in Bismarck, influenced by the presence of state government.
The “Strengths” and “Upside” bullet points for each of the nine profiled MSAs was taken from Moody’s Analytics U.S. Précis® Metro reports, which offer concise analysis and data on the current and expected economic conditions for all U.S. metropolitan areas. Each three-page report covers an individual metro area and includes a five-year forecast from Moody's Analytics' simultaneous econometric model, which is updated monthly.
Forecasts of key indicators that drive metro area economies include Gross Metro Product (GMP), industry diversity, employment, personal income, population, housing activity, migration flows, and personal bankruptcies. Moody's Analytics' exclusive indicators — including cost of doing business, cost of living, risk-adjusted return, and short- and long-term employment growth — allow for quick and easy comparisons across metro areas.
