2005 Rankings Report
Headquarters Cities With Momentum
The corporate headquarters of the future will be located in a greater variety of cities than ever.
Ranking cities (and their greater metropolitan surrounding areas) for their ability to attract headquarters is something we wanted to take a novel approach to this year. A typical way to determine which cities are best would be to simply count the number of headquarters in each city and call it a day. That’s fine if all you want to know is who has the most headquarters, but we wanted to capture some sense of the momentum that cities experience as they grow—where is the balance of power shifting?
A different approach would be to measure the number of headquarters gained over a set period of time, either as an absolute number or as a percentage increase. It’s not a bad start, but it still favors larger cities without showing trends as clearly, since large cities would naturally gain the most headquarters. Our solution is to look at three factors: population, the number of existing headquarters, and the change in headquarters. We weighed each equally, but with the following caveats.
- Change in headquarters is made up of two equal subfactors: change in the absolute number of headquarters, and percentage change in the number of headquarters.
- High population counts against a high rank.
The best data available (and the data we used) comes from the Federal Reserve Bank of Chicago, in a 2002 study by Thomas Klier and William Testa published in Economic Perspectives. The authors carefully measured headquarters and the way the numbers shifted from 1990 to 2000 across U.S. Metropolitan Statistical Areas (MSAs). The standard for being entered into our ranking is being one of the 50 largest MSAs by population. All headquarters measured were those of publicly traded companies that have 2,500 or more employees worldwide.
What we’ve uncovered are the top 20 MSAs for growth and momentum in headquarters, where each MSA is rewarded for having a high number of headquarters and strong headquarters growth relative to its population. As you’ll see, the Southeast dominates, with a decent showing by the Midwest and the Southwest. While the traditional coastal locations are by no means suffering (the San Francisco area is actually doing quite well, though keep in mind this data doesn’t account for most of the tech bubble-burst), the best values for the 21st Century may lie in cities once considered appropriate only for smaller or regional companies.
Nashville, TN comes out on top. For an MSA with only about 1.3 million people, it has done remarkably well attracting corporate headquarters. It went from having nine headquarters meeting our qualifications in 1990 to 25 in 2000. Of the top 25 largest employers in Nashville, 14 are national, state, or world headquarters for their companies.
Some of Nashville’s headquarters include those of HCA, Bridgestone/ Firestone, Dollar General, and caterpillar Financial. Part of their success is a result of Nashville making corporate headquarters one of five industry targets, and going after these targets aggressively. (The other targets are automotive, warehousing/distribution, manufacturing, and technology.) The city offers sales tax credits of 5.5% of building materials, equipment, and machinery for headquarters that cost more than $20 million to construct.
