Cincinnati Most Cost-Friendly Business Location Among Large U.S. Cities With Orlando, Tampa Close Behind: KPMG Study

NEW YORK, March 30, 2016 /PRNewswire/ -- Cincinnati is the most cost-friendly city to do business among the 31 largest U.S. metro areas (those with populations of 2 million or more), according to the 2016 Competitive Alternatives study by KPMG LLP, the audit, tax and advisory firm.

Cincinnati's favorable leasing costs and low property taxes contributed to its first place ranking in the study, which compares key cities across a range of costs and other factors related to doing business. The full report is available here.

Orlando, Fla., was the second most cost-competitive location in the large-cities category, followed by Tampa, Fla., Cleveland, San Antonio and Atlanta. Other locations ranked among the top 10 large U.S. cities included Charlotte, N.C., Miami, St. Louis and Kansas City, Mo.

"KPMG's Competitive Alternatives study provides insight into business location costs in cities across the United States and serves as a valuable benchmark for business executives, economic developers and policymakers considering sites for their business operations," said Ulrich Schmidt, a managing director in KPMG's Global Location and Expansion Services practice, which helps companies that are expanding, relocating or consolidating their facilities. "Many factors go into site selection decisions, and a study such as ours helps businesses, city leaders and economic development teams begin to consider investments that should ultimately be good for the community and good for business," he added. 

The 2016 KPMG Competitive Alternatives study measured 26 key cost components in each market, including costs associated with taxes, labor, facilities, transportation and utilities, as they apply to seven different business-to-business service sector operations and 12 different manufacturing sector operations.

Cost Index Results by City
The KPMG study revealed that Cincinnati had a cost index of 94.0, representing business costs 6.0 percent below the U.S. national baseline of 100.0. Contributing factors to the top ranking business locations are as follows:  

• Cincinnati has the lowest property-based taxes and industrial facility lease costs, and second lowest industrial land and salary costs. Ohio tax credits applicable to video game production help reduce the effective tax rate for the digital services sector, which also contributed to Cincinnati's top ranking in the study.

• Orlando, at 94.4, has the second lowest labor costs, coupled with low costs for both salary and statutory plans and benefits. Office lease costs are also an advantage, helping boost Orlando into second place overall.

• With a cost index of 94.6, Tampa has the third lowest total labor costs among the group of large cities, with relatively low costs for both salaries and statutory plans and benefits.

• Despite ranking fifth or higher in all other operating cost categories, Cleveland, at 94.6, has the third lowest industrial lease costs and moderate costs in all other operating cost categories.

• San Antonio, at 94.7, has the lowest wage costs and second lowest statutory and benefit costs, giving it the lowest total labor costs in the group of large U.S. cities. San Antonio also has the lowest costs for natural gas and for industrial building construction. Office lease costs are also relatively low.

• Atlanta, at 95.1, has the lowest transportation costs and ranked second for total utility costs, due to its relatively low costs for both electricity and natural gas. Low industrial land costs also contributed to Atlanta's sixth place ranking overall.

• Charlotte, at 95.2, has the lowest industrial land costs with competitive costs for electricity, industrial construction and property-based taxes.

• Miami ranked eighth among the large U.S. cities for overall business costs, with an index of 95.4. Moderate labor costs represent Miami's primary advantage, while ranking eighth for salary and wage costs, and fifth for statutory and benefit costs and total labor.

• St. Louis, placing ninth overall with a cost index of 96.1, has the lowest electricity and the second lowest industrial lease costs. St. Louis also has the lowest effective corporate income tax rate, assisted by Missouri's withholding tax rebate for new job creation and the state's move to "location of benefit" sourcing for income from services.

• Like St. Louis, Kansas City, at 96.2, also benefited from the Missouri state tax items listed above, and was second among the large U.S. cities for its effective corporate income tax rate. Low industrial land costs also contributed to Kansas City's 10^th place overall ranking.

In contrast to the most cost-friendly cities, San Francisco and New York represent the most expensive large U.S. cities in which to do business, with cost indexes of 104.5 and 104.7, respectively. Despite many cost disadvantages, San Francisco has below-average costs for natural gas and property-based taxes. New York City has the second lowest transportation costs among the 31 large U.S. cities. New York City's effective corporate income tax rate is also relatively low, ranking sixth among the larger cities studied and benefiting from substantial state and city tax reforms enacted in the last two years.

Cost indexes for the 31 large U.S. cities follow. The baseline cost index (U.S. = 100.0) is defined as the average business costs in the four largest U.S. metropolitan areas: New York, Los Angeles, Chicago and Dallas-Fort Worth.

KPMG's 2016 COMPETITIVE ALTERNATIVES STUDY
(U.S. Cities with population more than 2 million)

These results are part of KPMG's global 2016 Competitive Alternatives study, which measured business operating costs in more than 100 cities in 10 countries. The complete 2016 global study is available online at www.competitivealternatives.com.

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 174,000 professionals, including more than 9,000 partners in 155 countries.

SOURCE KPMG LLP

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