Business-Friendly Cities Open to Migration Top Growth List

Business-Friendly Cities Open to Migration Top Growth List
August 1, 2011

What cities are best positioned to grow and prosper in the coming decade?

 

To determine the next boom towns in the United States, with the help of Mark Schill at the Praxis Strategy Group, we took the 52 largest metro areas in the country (those with populations exceeding 1 million) and ranked them based on various data indicating past, present, and future vitality.

 

We started with job growth, not only looking at performance over the past decade but also focusing on growth in the past two years, to account for the possible long-term effects of the Great Recession. That accounted for roughly one-third of the score. The other two-thirds were made up of a broad range of demographic factors, all weighted equally. These included rates of family formation (percentage growth in children 5-17), growth in educated migration, population growth and, finally, a broad measurement of attractiveness to immigrants—as places to settle, make money, and start businesses.

 

Migrants Critical to Future

We focused on these demographic factors because college-educated migrants (who also tend to be under 30), new families, and immigrants will be critical in shaping the future. Areas that are rapidly losing young families and have low rates of migration among educated migrants are the American equivalents of rapidly aging countries like Japan; those with more sprightly demographics are akin to up and coming countries such as Vietnam.

 

Many of our top performers are not surprising. No. 1 Austin, Texas, and No. 2 Raleigh, North Carolina, have it all demographically: high rates of immigration and migration of educated workers and healthy increases in population and number of children. They are also economic superstars, with job-creation records among the best in the nation.

 

Perhaps less expected is the No. 3 ranking for Nashville, Tenn. The country music capital, with its low housing prices and pro-business environment, has experienced rapid growth in educated migrants, where it ranks an impressive fourth in terms of percentage growth. New ethnic groups, such as Latinos and Asians, have doubled in size over the past decade.

 

Two advantages Nashville and other rising Southern cities like No. 8 Charlotte, North Carolina, possess are a mild climate and smaller scale. Even with population growth, they do not suffer the persistent transportation bottlenecks that strangle the older growth hubs. At the same time, these cities are building the infrastructure—roads, cultural institutions, and airports—critical to future growth.

 

Texas Boom Towns

Of course, Texas metropolitan areas feature prominently on our list of future boom towns, including No. 4 San Antonio, No. 5 Houston, and No. 7 Dallas, which over the past years boasted the biggest jump in new jobs, over 83,000. Aided by relatively low housing prices and buoyant economies, these Lone Star cities have become major hubs for jobs and families.

 

And there’s more growth to come. With its strategically located airport, Dallas is emerging as the ideal place for corporate relocations. And Houston, with its burgeoning port and dominance of the world energy business, seems destined to become ever more influential in the coming decade.

 

The three other regions in our top 10 represent radically different kinds of places. The Washington, DC, area (No. 6) sprawls from the District of Columbia through parts of Virginia, Maryland, and West Virginia. Its great competitive advantage lies in proximity to the federal government, which has helped it enjoy an almost shockingly “good recession,” with continuing job growth, including in high-wage science- and technology-related fields, and an improving real estate market.

 

Our other two top ten areas, No. 9 Phoenix, Arizona, and No. 10 Orlando, Florida, have not done well in the recession, but both still have more jobs now than in 2000. Their demographics remain surprisingly robust. Despite some anti-immigrant agitation by local politicians, immigrants still seem to be flocking to both of these states. Known better as retirement havens, their ranks of children and families have surged over the past decade. Warm weather, pro-business environments and, most critically, a large supply of affordable housing should allow these regions to grow, if not in the overheated fashion of the past, at rates both steadier and more sustainable.

 

Dimmer Prospects in LA, Chicago

Sadly, several of the nation’s premier economic regions sit toward the bottom of the list, notably former boom town Los Angeles (No. 47). Los Angeles’ once huge and vibrant industrial sector has shrunk rapidly, in large part the consequence of ever-tightening regulatory burdens. Its once magnetic appeal to educated migrants faded, and families are fleeing from persistently high housing prices, poor educational choices, and weak employment opportunities. Los Angeles lost more than 180,000 children 5 to 17, the largest such drop in the nation.

 

Many of L.A.’s traditional rivals—such as Chicago (tied at No. 47), New York City (No. 35), and San Francisco (No. 42)—also did poorly on our prospective list. To be sure, they will continue to reap the benefits of existing resources—financial institutions, universities, and the presence of leading companies—but their future prospects will be limited by their generally sluggish job creation and aging demographics.

 

People create economies, and they tend to vote with their feet when they choose to locate their families and businesses. This will prove more decisive in shaping future growth than the hip imagery and big-city-oriented PR flackery that dominate media coverage of America’s changing regions.

 

Joel Kotkin (JKotkin@JoelKotkin.com) is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University. This article first appeared at Forbes.com. Used with permission.