Andrew H. Shapiro, Managing Director, Biggins Lacy Shapiro & Company (Spring 2011)
Which Cities Should You Consider?
Corporate headquarters have historically congregated in large, tier-one metros such as New York, Chicago, and Los Angeles, or in traditional business centers like Cleveland or Pittsburgh. Yet one of the most striking location dynamics of the last 20 years has been the shift of corporate headquarters to new metros (especially the Sunbelt cities of Atlanta and Dallas) as they close the business infrastructure gap with traditional headquarters locations. All of these areas typically have superior air access, full business support services, strong managerial and executive labor markets, a modern communications infrastructure, and the quality of life assets that executives typically demand.
Second-tier metropolitan areas, including regional market centers such as Charlotte, Phoenix, and Denver, are becoming more popular, particularly at the divisional level. These cities often feature clusters of locally-grown and dominant companies (although Charlotte's big banks now have a national presence), and they have become regional magnets for talent, making them a good fit for some types of corporate or divisional headquarters.
Some third-tier communities offer specific performance factors that create niche environments for particular headquarters. These include cities such as Austin and Raleigh - university communities, R&D centers, and state capitols that feature an attractive quality of life and revolve around a relatively narrow economic cluster (life sciences in Raleigh and software and technology in Austin).
Location Evaluation and Selection
With all of these choices, how does a company find its optimal headquarters location? The classic decision-making model translates a company's objectives into quantifiable headquarters location criteria that compare alternate destinations with the ultimate goal of selecting the most balanced location. Assuming that headquarters relocation will improve performance, the location screening should focus on quantifiable, geographically-variable performance factors - not necessarily cost metrics - unless locating a divisional or regional headquarters. These factors can be grouped based on overall project objectives and might look like this:
Measures of Access and Connectivity
The best proxies for connectivity are usually airport status and flight offerings, including
• Proximity to a major hub airport
• Number of non-stop flights to key destinations
• Ability to perform one-day "turnaround"
Global headquarters can almost never afford to be far from a major hub. The number of available non-stop flights usually correlates with hub status, according to the Federal Aviation Administration (FAA).