Least Costly Cities for Business: Tampa, Atlanta, Miami Top List

As economic conditions begin to thaw, look for cities that offer the lowest operating costs to be the first beneficiaries of increased business activity. Audit, tax and advisory firm KPMG released its survey of the least expensive U.S. large cities to do business in on Tuesday, with Tampa topping the list on the strength of its moderate office leasing rates, low taxes and competitive labor costs. The list is part of KPMG's overall study which measured business-operating costs in 112 cities throughout 10 countries.

Atlanta, Miami, Baltimore and Dallas-Fort Worth rounded out the top five low-cost cities with populations exceeding 2 million. The miserly metropolises scored well on 26 major cost components, including labor, taxes, real estate and utilities, as applied to 17 industries, over a 10-year planning horizon. The KPMG study identifies jurisdictions that will most likely deliver a cost-competitive business environment for companies that may want to expand or ramp-up operations.

"Selecting the best site for a business operation requires balanced consideration of many factors, including business costs, business environment, personnel costs and quality-of-life issues," said Hartley Powell, national leader for KPMG's Global Location and Expansion Services practice. Powell also noted that there are many intangibles that may help outweigh simple cost considerations when selecting a city to locate operations in. Further, some cities may offer financial incentives to help a company reach the decision to locate there.

Each city on the KPMG listing has specific strengths that make it attractive for business. Atlanta offers advantages in employee benefits, transportation and labor costs as well as a low corporate-tax rate. Miami features low transportation and labor costs, and Baltimore offers low property and sales taxes. The price of natural gas and low office leasing costs helped Dallas-Fort Worth make the list.

The most expensive of the 22 cities ranked were New York and San Francisco, primarily due to their high labor costs.