When New York-based research firm Ipreo was looking to expand into a new office, the company searched nation-wide for the perfect location. “The primary goal was access to talent,” says O’Hara Macken, an EVP and managing director, “and the [Research] Triangle was our top choice in the U.S.” Ipreo, which provides data, software, and intelligence to the capital markets and public companies, opened an outpost in Raleigh, N.C. last year. It moved 70 employees from New York and Bethseda, Md., hired 80 locals, and plans to hire 100 more.
Raleigh, N. C. is growing at a healthy clip–fast enough to land the No. 2 spot on our annual list of America’s Fastest-Growing Cities. At the nearby Research Triangle Park, more than 170 companies have outposts, including IBM, GlaxoSmithKline, Syngenta, Credit Suisse, and Cisco. The wider area is also home to several major universities: North Carolina State University is in Raleigh, while Duke University is situated in nearby Durham, and the University of North Carolina at Chapel Hill. The combination of universities and job opportunities has made for a highly educated population: nearly 50% of people ages 25 to 65 have a college degree. These draws keep many grads in the local area, says Harvey Schmitt, chief executive of the Greater Raleigh Chamber of Commerce. “We’ve got great quality of life. You’ve got the university system, great health care, a decent climate year-round, and affordable cost-of-living.”
Those factors, plus a relatively low cost of doing business (FORBES ranks N.C. 4th on its list of Best States for Business) are attracting more companies to the area. MetLife recently opened a 1,300-employee IT campus in Cary, a western suburb, and software company Citrix is opening a campus in Raleigh’s downtown later this year. Raleigh is also a hub of smart grid activity, and the president recently announced a $140 million grant to create an advanced manufacturing institute to NC State. Raleigh’s jobs grew at a rate of 2.44% year-over-year while the population jumped an estimated 2.15% in 2013. Even faster population growth is expected in 2014. All of this was enough to push Raleigh up two spots from its slot last year, to rank No. 2.
Behind the numbers:
To cull our list, we began with the 100 most populous Metropolitan Statistical Areas (MSAs) in the U.S., geographic areas designated by the U.S. Office of Management and Budget that include cities and their surrounding suburbs. We rated these places based on six metrics. Using data from Moody’s Analytics, we assessed the estimated rates of population growth for 2013 and 2014, year-over-year job growth for 2013, and the rate of gross metro product growth—a.k.a. the economic growth rate–for 2013. We also considered federal unemployment data and median salaries for local college-educated workers, courtesy of Payscale.com. The result is a list of the 20 fastest-growing metro areas in America in terms of population and economy.
Two states–Florida and Texas–each boast four cities on our Fastest-Growing Cities List this year, with three of the Texas cities ranking in the top 10: Austin (No. 1), Dallas (No. 4), Houston (No. 10), and San Antonio (No. 20). Strong population growth in 2013 and unemployment under 6% –well under the national rate of 6.7%–helped all four cities make the top 20, although last year the cities did even better, with Austin, Houston, and Dallas sweeping the top three slots. Given its business-friendly regulatory environment, lack of state income tax for corporations or people, and highly educated labor market, it’s perhaps not surprising that Texas continue to grow.
Austin takes the top spot on FORBES’ annual list of America’s Fastest-Growing Cities for the 4th year in a row.With a 2.5% population growth rate (estimated annual) for 2013—the highest of all the geographic regions—and an economy that expanded 5.88% last year, it’s hard for other cities to compete these days. But the area wasn’t always booming. The first tech bust wreaked havoc on the region, which was heavily weighted in software, semiconductors, and dotcoms. In 2004, the Austin Chamber of Commerce launched a proactive effort to recruit businesses from diverse industries, focusing exclusively on California, the Upper Midwest, and the Northeastern states—places where the cost of doing business is at a distinct disadvantage compared to Austin’s. “We’ve had 307 companies move here in the last 9 years,” says Dave Porter, Senior Vice President, Economic Development at the Austin Chamber. “And about 100 of those come from California.”
With the 48,000-student University of Texas churning out engineers and computer scientists, the five-county area has a robust workforce–38% college-educated—to fill up those desks. Half of the adult transplants flowing in possess a college degree, Porter says. In addition to major corporations like Whole Foods and Dell (in Round Rock, part of the greater MSA), Austin now boasts some 4,000 technology companies which represent about 35% of the area’s total payroll. Athena Health is bringing 607 jobs to Austin, and San Francisco-based Dropbox is expanding there. As for keeping its edge, Austin has collected over $40million from the private sector to keep recruitment efforts up. “The competition for jobs is fierce. We can’t let our guard down,” Porter says.
Phoenix also makes the list this year, jumping a whopping five spots to No. 3. “That certainly shouldn’t be a surprise to anybody, because they are among your leading growth states,” says Lee McPheters, a director of the JPMorgan Chase Economic Outlook Center of Arizona State University’s W. P. Carey School of Business. “But they were really hit hard by this most recent recession, which is why things have been bit subdued over the past few years.” Construction industry jobs, which dropped 50% in the state during the downturn, are up 5% year-over-year, McPheters notes. Surprisingly, Phoenix—not New York—is No. 1 in the nation in terms of growth in finance industry jobs, adding 8,300 from December 2012 to 2013, says McPheters, whose research team does its own economic rankings each month based on Bureau of Labor Statistics data. Insurance and health care are also growth engines. Add to that an estimated population growth rate of 1.67% for last year and a projected growth rate of 2.46% in 2014, and Phoenix is expected to be the 4th fastest-growing metro area in terms of population this calendar year.
Dallas, on the other hand, moved down a spot, from No. 3 to No. 4. Considering that most of the country is seeing sluggish population growth, Dallas’ projected rate of 2.08% for 2014 is pretty good, and the local economy’s year-over-year growth rate of 3.57% quite healthy. A strong business climate, low taxes, and the ease of serving both the East and West Coasts are among the metro area’s business attractions. Over the past two years, some 51 companies moved or announced plans to move to the Dallas-Fort Worth area. Among them are Neovia Logistics Services, a logistics company that moved its headquarters from Illinois to the western suburb of Las Colinas, and Kohl’s, which announced plans to open a customer-service center in Dallas. Motorola Mobility also recently opened the first smartphone assembly plant in the United States, hiring 2,000 workers in Fort Worth (part of the greater M.S.A.). Economic strength: the area is a hub for logistics and distribution, technology, and support services like law and accounting firms, yet isn’t dominated by any single industry. “That’s why we entered the recession so much later than everyone else, and we’ll be able to come out of it sooner,” says Duane Dankesreiter, VP of Research for the Dallas Regional Chamber.
Salt Lake ranks No. 5 on the list, as it did last year, thanks to its strong jobs market: its 4% unemployment rate (as of December, seasonally adjusted) is the 2nd-best in the nation. “Utah’s economy has really become much more diverse than a classic western economy focused on extractive natural resources, federal defense—the things we used to be very dependent on,” says Pam Perlich, a senior research economist at the University of Utah who specializes in regional economics and demographics. She points to growth in construction, residential and commercial real estate, and a burgeoning energy sector as lifting the region. Tourism, manufacturing, professional and business services, and information are also help driving the region’s growth. A new light rail system has also been a factor, luring both housing and jobs along its corridor.