While states remain critical to location decisions, the lure of a bustling metro area can inspire choices CEOs might not have made based on state data alone.
In Chief Executive’s February 2017 CEO Confidence Index, 72 percent of respondents rated metro areas as somewhat or very important to location decisions.
There are more than 50 metro areas in the U.S. with more than 1 million residents, according to the Census Bureau. Among the fastest growing are San Antonio-New Braunfels and Austin-Round Rock in top-ranked Texas. But even in states viewed as less hospitable for business, having a strong talent pool in a specific sector can be a draw for businesses, as with finance in New York and technology for California.
In fact, a Brookings Institution analysis ranked two California cities among the top 10 best-performing metro areas in the country, with San Jose taking the top spot. Los Angeles County also remains a powerhouse. And the recent IPO of Snap has been hailed as a game changer that could spur further tech growth in “Silicon Beach.”
You have a lot of creative collisions, where these industries overlap, that drive new industries, new business concepts and growth.
Lawren Markle, director of public relations for the Los Angeles County Economic Development Corporation, says large metro areas offer scale, talent infrastructure industrial companies crave.
“You have a lot of creative collisions, where these industries overlap, that drive new industries, new business concepts and growth,” he said.
Maryland ranked 41st on the list but that hasn’t stopped Under Armour CEO Kevin Plank from reaffirming his commitment to Baltimore with a $5 billion urban development project and new headquarters at Port Covington.
And while Massachusetts came in at No. 45, GE is just one of many companies choosing to flee a less urban locale for Boston. Software company Acquia, sneaker manufacturer Converse and marketing firms like Racepoint and Allen & Gerritson all chose to relocate from more sedate settings to the Boston area in recent years.
At the same time, the pricey real estate and congestion in top metro areas drive some CEOs to seek smaller cities. While Arkansas ranked 23rd overall in the rankings, Northwest Arkansas was recognized as one of the top 25 growing metro areas in the country by population. Bentonville, home to the headquarters of Walmart, has seen increased investment in recent years from supply and tech companies.