Is your business in the right city? If not, it could be costing you big.
As tenant reps, we have seen how our corporate clients can dramatically cut costs by moving to a business-friendly city.
So, if you are tired of your city’s expensive overhead, this article is for you.
We’ve compared taxes, living costs, and office rent metrics to determine what cities are the best to operate businesses and why. The top cities for corporate success are:
1. Jacksonville, FL
Businesses across the country are picking up and moving to the sunbelt. It’s no secret why.
Its low prices, warm weather, and favorable business conditions have caused over 300 financial services firms to move to the state.
Quickly gaining the reputation of “The Wall Street of the South,” Florida is a burgeoning hotspot for the nation’s business and industrial sectors.
Jacksonville, in particular, is extremely attractive to organizations looking to cut their overhead costs.
Let’s get a better idea of why by looking at some stats…
Taxes
Jacksonville and Florida, in general, boast low taxes across the board.
- The City of Jacksonville has a 0% sales tax rate
- Jacksonville’s county has a 1.5% sales tax rate
- The state of Florida has a 5.5% corporate income tax rate
- Florida has a 0% income tax rate for the top bracket of earners
Cost of Living
The cost of living metric tracks the affordability of different cities throughout the country by tracking the rates of typical goods and services.
The national average is 100. Jacksonville’s cost of living is ranked at 94, making it under the national average and highly affordable.
(Cost of Living where National Average is 100)
Office Rent
Businesses looking to save have even more reason to move to Jacksonville. You can occupy Class A office space at extremely low rates.
While one square foot of commercial space in New York is $80, one square foot in Jacksonville is only $27!
Let’s look at what that means for savings over a five-year term if you have 100,000 square feet.
2. Houston, TX
Businesses are not just moving to Florida. There is a grander push to cities and states along the Sun-belt, with Texas being a focal point.
Massive organizations like Tesla and Hewlett Packard made headlines by relocating to Texas. Its business-friendly reputation has gained a lot of traction in response to these moves.
Houston, Texas, is currently one of the most popular cities for business relocations. This is because it offers a competitive working environment at a low cost.
These favorable conditions are why 23 of the Fortune 500 companies have found a home in Houston. Let’s break down why.
Taxes
The low tax rates across the board make Houston extremely conducive to success in business.
- The City of Houston has a 1% sales tax
- Houston’s county has a 0% sales tax
- The state of Texas has a 0% corporate income tax rate
- Texas has a 0% income tax rate for the top bracket of earners
These statistics are even more impressive when you consider the rates of business-unfriendly cities. For example, New York city taxes its top bracket of earners at nearly 15%! Corporate income tax there is over 6%.
Relocating to Houston would slash extraneous tax costs.
Cost of Living
Houston’s cost of living is just shy of the national average at 94. As a result, consumers will have more of an ability to spend freely.
Areas of low living costs allow people and businesses more financial freedom. In addition, since fewer funds are required to live comfortably, there is a greater purchasing power.
Office Rent
Houston office rent is exceptionally cost-effective. You can get one square foot of Class A office space for $34.
This is a critical reason why businesses are moving to Houston. You can occupy the same type of building that you could get in New York or San Francisco, except you will be paying far less.
Let’s see how much you could save in rent costs over five years by moving your business from NYC to Houston.
3. Memphis, TN
Memphis, Tennessee, is one of America’s most affordable cities. Accordingly, it is highly appealing to businesses looking to save.
Popular companies like FedEx and AutoZone take advantage of the city’s low cost by being based in Memphis.
The city is a hub for transportation, logistics, and manufacturing. If your services lie within these specialties, it would be wise to consider moving to this cost-effective area.
Let’s look more at Memphis’ statistics to understand better why it is so great for financial growth.
Taxes
- The city of Memphis has a 0% tax rate
- Memphis’ county has a 2.25% tax rate
- The state of Tennessee has a 6.5% corporate income tax rate
- Tennessee has a 0% income tax rate for the top bracket of earners
Cost of Living
While some tax rates are slightly higher in Memphis than in Texas or Florida, the general cost of living is much lower.
Memphis is one of the most affordable cities in the country, with a cost of living score of 76. This is far under the national rate of 100.
As a result, people and businesses are flocking to this region to take advantage of the low costs.
The cheap cost of living touches on every part of life. Rent, gas, and other general costs will be significantly reduced if you operate a business in Memphis.
The average wage of workers reflects this reasonable living cost rate. Businesses can save significantly in payroll overhead costs by running a business in Memphis. This is especially true when you consider that payroll is the typical largest expense companies are responsible for.
Office Rent
Businesses can also benefit from lower office rental rates. For example, one square foot of Class A office space is about $23.
It goes without saying how cheap this metric is. So let’s look at how much you really could stand to save, in rent alone, if you relocate from New York to Memphis.
4. Las Vegas, NV
Las Vegas is one of the most tax-friendly cities in the country. As a result, it is incredibly enticing for companies looking to avoid heavy tax expenses.
Las Vegas is also a more convenient relocation point for West Coast or Californian organizations that are tired of their region’s excessive costs. You can benefit from similar tax rates to Texas without the cross-country move.
It also boasts a largely international business community.
In addition, the businesses located in Las Vegas benefit from the 24/7 lifestyle. Consumers are generally more active, stimulating their local economy.
Let’s further break down why Las Vegas is so business-friendly.
Taxes
Nevada is easy on its people with its tax rates. There is no business income tax, personal income tax, franchise tax, or gift tax.
Let’s look at some other metrics.
- The city of Las Vegas has a 0% sales tax rate
- Las Vegas’ county has a 3.8% sales tax rate
- The state of Nevada has a 0% corporate income tax rate
- Nevada has a 0% income tax rate on the top bracket of earners
Cost of Living
The cost to live in Las Vegas is slightly over the national average at 112. While this may initially seem to be a burden, putting it into perspective with the most expensive regions reveals that it is not severe.
The cost of living metric in San Francisco is 269! This is over two and a half more expensive than the national average.
In general, living and working in Las Vegas is extremely affordable.
Office Rent
Commercial rent in Las Vegas is highly affordable. One square foot for Class A office space is about $31.6.
Let’s compare this to New York again to see how much you stand to save in rent alone by moving from a business- unfriendly area to Las Vegas.
Should I Move to a Business-Friendly City?
Well- the answer is up to you. The critical thing to know is that you have reasonable alternatives to business-unfriendly cities and states.
If you do want to consider relocating to a city better for business, tenant reps can help you in this process. As real estate experts, their market intelligence will help you make informed decisions for your CRE portfolio.
For some, it may mean moving to a business-friendly city. For others, it means remaining in their city, renegotiating the terms of their existing lease, or just cutting the amount of space they have.
No matter what the real estate need, tenant reps can help by solely protecting your interests.
Want to read more about whether you should consider relocating? Check out this article!
Wondering where to begin?
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