Atlanta, Tampa Rank Least-Expensive Large U.S. Cities for Business

Low labor and tax costs make San Juan, Puerto Rico the least-costly place to do business among 24 U.S. and affiliated cities with populations exceeding 1.5 million, according to a study by KPMG LLP, the audit, tax and advisory firm. San Jose, Calif., and New York were the most expensive places to do business among large U.S. cities.

In the continental United States, Atlanta and Tampa, Fla., emerged the most cost-competitive locations behind San Juan, closely ranked second and third, respectively, in the large-cities category. Other large cities with business costs below the U.S. average index of 100 were Phoenix, Indianapolis and Columbus, Ohio.

"Selecting the best site for a business operation requires balanced consideration of many factors, including business costs, business environment, personnel costs, and quality of life issues," said Larry Cusack, national partner in charge of KPMG's Strategic Relocation and Expansion Services practice. "This study offers a comprehensive guide for comparing business costs in the United States and contains essential information for any company seeking a cost advantage in locating a business operation."

The overall Competitive Alternatives study measured business-operating costs in 98 cities throughout 11 countries. Location-sensitive cost components such as labor, facility, transportation, utility and financing costs, as well as income taxes, were considered. The full text of the 2004 study is available online.

Cost indexes for the 24 large cities studied follows. The benchmark cost index (U.S. = 100) is defined as the average of nine representative U.S. cities.

COMPETITIVE ALTERNATIVES STUDY

U.S. Cities with population of more than 1.5 million)

City Rank and Cost Index

  1. San Juan, Puerto Rico, 93.0
  2. Atlanta, 99.2
  3. Tampa, 99.3
  4. Phoenix, 99.4
  5. Indianapolis, 99.6
  6. Columbus, 99.8
  7. Northern Virginia (Metro DC), 101.3
  8. St. Louis, 102.0
  9. Milwaukee, 102.1 (tie)
  10. Philadelphia, 102.1 (tie)
  11. Las Vegas, 102.2
  12. Portland, 102.5
  13. Dallas-Ft. Worth, 102.8
  14. Chicago, 103.5
  15. Boston, 103.8
  16. Minneapolis, 104.1
  17. Newark, 104.3
  18. Houston, 104.7
  19. Riverside-San Bernardino, 104.8
  20. San Diego, 105.1
  21. Seattle, 105.6 (tie)
  22. Detroit, 105.6 (tie)
  23. New York City, 109.8
  24. San Jose, 110.9

Cost index figures were created by measuring the combined impact of 27 cost components that are most likely to vary by location. More than 1,000 individual business scenarios were examined, analyzing more than 30,000 items of data. For comparison purposes, the national average was assigned a cost index of 100.0.

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