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2016 Top States for Doing Business Commentary: Top-Performing States Place Significant Emphasis on Economic Development

The top-performing states continually compete against one another to attract business and challenge each other to maintain or improve capabilities.

Q3 2016
Area Development’s annual Top States for Doing Business rankings provide a useful backdrop to inform corporate location decisions, especially given the complex and highly competitive nature of states’ economic development efforts. Beyond the survey results, it is essential to evaluate potential locations based on a company’s unique requirements and objectives. By conducting in-depth comparative location analysis that includes differentiation at the sub-state level, companies will be better positioned to make meaningful site selection decisions, maximize profit, and achieve overall success.

Besides some re-ordering of the rankings — Ohio dropped out of the top 10 and was replaced by Mississippi — the southern, mostly southeastern, states continue to dominate the top-10 positions in Area Development’s 2016 rankings.

These results are not surprising because they are based on consultants’ perceptions and experiences, which do not change dramatically each year, and because the top-performing states generally place significant emphasis on economic development. Each top-10 state exhibits significant strengths that companies and consultants value: workforce development competency; low overall operating costs; favorable transportation infrastructure; lower union presence (all are right-to-work); strong state and local economic development agencies; and competitive incentive programs. These states continually compete against one another to attract business and challenge each other to maintain or improve capabilities. While I agree with the overall results, I was surprised to see California in 13th place on the list. For select industries and operations, California is the right place to locate. Several of its cities are tremendous job generators. However, it is difficult to understand its rating for overall business attractiveness over Kentucky, Arizona, Arkansas, Oklahoma, or Iowa. Roughly 70 percent of the points California received are in one category: access to capital. For established companies, this factor is weighted rather lightly in a location search.

A State on the Rise with a Future in the Top 10?
Nevada’s ranking rose 16 positions this year, landing at 12th place from 28th in 2015. While Delaware jumped from 48th to 28th (tied with Idaho) on the list, Nevada is the only state in the top 20 to move up more than nine positions. Nevada’s rise seems warranted given its substantial, high-profile project announcements by Faraday Future, Tesla, and Hyperloop One. Based on Cushman & Wakefield’s experience in Nevada while supporting Faraday Future’s location search, it may soon achieve a top-10 ranking given its close proximity to California, cost structure and incentives competitiveness, effectiveness of its state economic development organization, and improved workforce development.

States Falling Farthest
Illinois and Pennsylvania fell further in the rankings than all other states. Pennsylvania fell 21 positions and tied seven other states for the fewest points tallied, and Illinois dropped 17 positions to land at number 30. What do these two states have in common that could have influenced their precipitous drop? Perhaps it is the protracted, challenging process their new governors faced transitioning into office and passing annual budgets. While these developments do generate business-attractiveness concern, both states possess marquee cities and can be the right fit for certain facilities. Pennsylvania, for example, contains excellent locations for distribution-center clients to reach customers in the eastern U.S.

TOP STATES FOR DOING BUSINESS 2016

  1. 1.Georgia
  2. 2.South Carolina
  3. 3.Texas
  4. 4.Tennessee
  5. 5.Louisiana
  6. 6.Alabama
  7. 7.Florida
  8. 8.Indiana
  9. 9.North Carolina
  10. 10.Mississippi
  11. 11.Ohio
  12. 12.Nevada
  13. 13.California
  14. 14.Kentucky
  15. 15.Arizona
  16. 16.Arkansas
  17. 17.Oklahoma
  18. 18.Michigan
  19. 19.New York
  20. 20.South Dakota

Individual Categories

Overall Cost of Doing Business

  1. 1.Texas
  2. 2.South Carolina
  3. 3.Tennessee
  4. 4.Florida
  5. 5.Georgia
  6. 6.Alabama
  7. 6.tNorth Carolina
  8. 8.Mississippi
  9. 9.Oklahoma
  10. 10.Indiana

Corporate Tax Environment

  1. 1.Florida
  2. 2.Texas
  3. 2.tNevada
  4. 4.South Dakota
  5. 5.Wyoming
  6. 6.Georgia
  7. 6.tAlabama
  8. 6.tIndiana
  9. 9.Tennessee
  10. 10.South Carolina
  11. 10.tMississippi
  12. 10.tUtah

Business Incentives Programs

  1. 1.South Carolina
  2. 2.Louisiana
  3. 3.Georgia
  4. 4.Tennessee
  5. 5.Texas
  6. 6.Alabama
  7. 7.New Jersey
  8. 8.Mississippi
  9. 9.Florida
  10. 9.tIndiana

Access to Capital & Project Funding

  1. 1.Texas
  2. 2.California
  3. 3.New York
  4. 4.Georgia
  5. 5.Florida
  6. 6.Tennessee
  7. 7.North Carolina
  8. 8.Colorado
  9. 8.tMassachusetts
  10. 10.Ohio
  11. 10.tIllinois

Competitive Labor Environment

  1. 1.Texas
  2. 2.Georgia
  3. 3.North Carolina
  4. 4.South Carolina
  5. 5.Alabama
  6. 6.Tennessee
  7. 7.Florida
  8. 7.tMississippi
  9. 9.Idaho
  10. 9.tUtah

Leading Work Force Development Programs

  1. 1.Georgia
  2. 2.Louisiana
  3. 3.South Carolina
  4. 4.Tennessee
  5. 5.Alabama
  6. 6.Florida
  7. 7.North Carolina
  8. 8.Indiana
  9. 8.tMichigan
  10. 8.tCalifornia

Cooperative & ResponsiveState Government

  1. 1.Georgia
  2. 2.South Carolina
  3. 3.Louisiana
  4. 4.Tennessee
  5. 4.tFlorida
  6. 6.Ohio
  7. 7.Indiana
  8. 8.Mississippi
  9. 8.tAlabama
  10. 10.North Carolina

Favorable Regulatory Environment

  1. 1.Texas
  2. 2.Georgia
  3. 3.South Carolina
  4. 4.Tennessee
  5. 5.Louisiana
  6. 6.Alabama
  7. 7.Florida
  8. 8.Indiana
  9. 9.Arizona
  10. 10.Mississippi

Speed of Permitting

  1. 1.South Carolina
  2. 2.Georgia
  3. 3.Alabama
  4. 4.Tennessee
  5. 5.Texas
  6. 6.Indiana
  7. 7.Louisiana
  8. 8.Mississippi
  9. 9.Florida
  10. 10.Kentucky

Most Improved Economic Development Policies

  1. 1.Indiana
  2. 1.tOhio
  3. 3.South Carolina
  4. 4.Georgia
  5. 5.Michigan
  6. 6.Alabama
  7. 7.Tennessee
  8. 8.New Mexico
  9. 9.North Carolina
  10. 9.tArizona
Full Rankings and Results
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