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2023's Leading Metro Locations: Hotspots of Economic Growth

The leading metro areas are those poised for long-term growth and are often hubs of high-tech industry, where workers may benefit from an affordable cost of living.

Q4 2023
Editor's Note:The research for this report was conducted and compiled by Patrick Clapp of Chmura Analytics and the Area Development Research Desk. What’s the best indicator that a city or metropolitan area is healthy from an economic perspective? There are plenty of factors and indicators to examine, but arguably the best general measure of health can be boiled down to one magic word: growth.

Indeed, if you’re not growing, you’re likely falling behind. It’s a safe bet that the metropolitan areas that fare the best on Area Development’s latest listing of Leading Metro Locations are very much on the upswing and are poised to keep moving in a positive direction.

Area Development partnered with Virginia-based Chmura Economics & Analytics in crunching the numbers and compiling the data shared in the accompanying report and charts. As observed by Patrick Clapp, senior economic consultant, it was vital to gather data as fresh as possible, “especially with the importance of the pandemic and how that disrupted literally every indicator.”

At the same time, a long-term perspective is critical for determining if an area is enjoying a sustainable upward trend that’s more than just a blip, says Chris Chmura, Ph.D., the firm’s founder and CEO. “It’s important to see that a region is growing over time,” she notes.

That’s especially the case these days, when the headlines are filled with news of gigantic projects resulting from such initiatives as the CHIPS and Science Act and the Infrastructure Investment and Jobs Act. Granted, those headlines are happy news, but a recent gleeful development does not a trend make.

“We want to see the staying power of a region,” Chmura says, “sort of like the tortoise and the hare. We want to see consistent growth over time. If it’s just last 12 months, you may have a company that’s moved in, an expansion, a one-time effect.”

“Long-term growth is important to highlight,” Clapp concurs, “as opposed to most recent growth.”

That’s why the Leading Metro Locations study measures data over a five-year timeframe. As Chmura observes, five years ago it was well before COVID-19 turned the world upside-down. Three years ago was right in the midst of that upheaval. And current-day metrics have largely moved on from their pandemic interruptions, at least in the healthiest locations. The areas that fared the best in this ranking are generally the ones whose metrics show them in a significantly better place today than they were before the COVID pandemic, even if they took an understandable dip in the middle.

Overall Rank

Indicators Used
How cities and regions compare with one another depends a lot on the specific indicators tracked and how they are weighted. To learn the full details of the methodology of this particular examination, check the accompanying explanatory sidebar.

Generally speaking, though, some of the important factors include the local gross domestic product and how it’s trending, unemployment rates, what kinds of jobs are growing, how well the needs of employers are matching with what the labor market has to offer, and the activity in such hot sectors as high-tech manufacturing and R&D, and other occupations linked to science, technology, engineering, and math (STEM).

There’s good reason to pay close attention to high-tech industries when gauging the relative strength of a metropolitan area — that is where much of the economic activity can be found and where much of the future is headed. The Milken Institute also studies the economic strength and health of cities and metro areas, and in its latest report, it notes that “high tech and the digital economy played a key role in the country’s recovery from the pandemic.”

Prime Workforce

Even in the midst of the pandemic downturn, the high-tech sector grew significantly between 2020 and 2021, far above the national average. Milken notes that such outsized growth continues a trend dating back years before the pandemic.

As Clapp observes, in some indicators, there’s a lot of variation from one region to another. The STEM workforce and advanced manufacturing, for example, might be significantly stronger in some places, while languishing in other metro areas. Other indicators have less variation across the board — unemployment, for example, is pretty low all over the place right now.

Clapp also notes that overall strength is a product of all of the factors combined — rather than totally cleaning up in just one category, it’s preferable to be in a decent place on all of them. “Salt Lake City didn’t actually rank the highest for any specific indicator, but on average had the best ranking,” he notes.

Southwest and Southeast Lead
Just behind Salt Lake City on the Leading Metro Locations list is the Olympia area of Washington. Those who follow economic development news won’t be surprised to see a lot of high-level representation from the Southwest to the Southeast, as well as Mountain States. More than a quarter of the top 20 metros are in Florida, in fact, with additional entries in Alabama, Arkansas, Colorado, Georgia, Montana, Tennessee, Texas, and Utah.

What doesn’t show up as much near the top are locations in California, nor those in the Northeast. That doesn’t necessarily surprise the researchers, though, given that workforce migration trends can reflect such factors as housing costs.

Some workers, Chmura suggests, could be picking up roots and moving to more affordable areas that happen to have job growth in hot sectors such as technology. Indeed, the highest-placing California location, El Centro, happens to be one part of the state where the cost of living is not all that out of line with the rest of America, unlike other large California metros where costs are high. Clapp concurs that with regard to economic development and location decisions, “We’ve definitely been hearing in our conversations that housing is really moving up the list in terms of importance.”

Economic Strength

Other National Rankings
Similar regional trends seem to hold with other national rankings of metro areas. The Milken Institute’s previously referred to Best-Performing Cities report, for example, puts Provo, Utah, at the top of Tier 1 large cities, followed by the Austin area of Texas, Raleigh in North Carolina, the always harmonious Nashville, and the Boise metro area in Idaho. None of that organization’s highly ranked Tier 1 cities are in California or the Northeast, or even the Midwest. Milken’s 2023 report notes that the attractive high-tech sector continues to be a big force in large cities but adds that “many top-performing small cities experienced accelerated high-tech growth over the last five years.”

Another study of the relative strengths of metro areas is regularly conducted by the Brookings Institution. Its Metro Monitor has a bit different methodology, tracking not just economic growth but also a variety of factors related to prosperity, overall inclusion, racial inclusion, and geographic inclusion.

The Brookings overall growth index shows similarly noteworthy strength in the Southeast, especially Florida, as well as Texas, although it does give high growth marks to a number of California cities, too. When it comes to racial inclusion, Michigan metro areas perform quite well, Texas not bad at all, but Florida and California not as strongly. Salt Lake City and Nashville are among the metro areas with impressive results in all of the Brookings overall measures.

Though various studies of metro area strength will always vary from one year to another, and from one ranking to another, it remains true that cities are where it’s at when it comes to growth and prosperity. As Milken notes, “U.S. metropolitan areas are proving their resilience in the face of the economic turmoil created by the pandemic. Despite changing domestic migration patterns, cities remain the main centers of economic activity.”

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