Atlanta was the second most cost-competitive location in the large-cities category, followed by Tampa and Dallas Fort-Worth, ranking third and fourth, respectively.  Other large locations with business costs below the U.S. average were Baltimore and Houston. The most expensive places to do business in the large cities category were San Jose, Calif., and New York.

The accounting firm's 2008 Competitive Alternatives study measured 27 significant cost components that are most likely to vary by location, including labor, taxes, real estate and utilities, as they apply to 17 industries, over a 10-year planning horizon. Data on a variety of non-cost competitive factors was also compared. The study enables companies to perform a "quick scan" of jurisdictions to determine which can offer a cost-competitive business environment.

"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 Strategic Relocation and Expansion Services practice. "This study offers a comprehensive guide for comparing business costs in the United States and contains valuable information for any company seeking a cost advantage in locating a business operation."

According to the study, San Juan had a cost index of 89.1, representing business costs 10.9 percent below the U.S. national average of 100.0. San Juan was followed by Atlanta at 96.9 and Tampa and Dallas Fort-Worth, both at 97.3.

Atlanta's ranking was driven primarily by a favorable effective corporate tax rate as well as a very competitive position among many other cost factors, including labor and industrial land. Tampa benefited from very competitive labor costs (by continental U.S. standards) and moderately low facility costs, while Dallas Fort-Worth was helped by very low costs in natural gas and industrial construction. In fact, Dallas-Fort Worth's natural gas costs were lowest of any U.S. city/location in the study.

Of particular note, the cost-competitiveness of Atlanta and Tampa, along with seven mid-sized and small city locations in the study, contributed to the Southeast's position as the lowest cost region in the United States. 

Baltimore, with a cost index of 98.9, ranked fifth among large U.S. and affiliated cities and profited mostly from low property taxes. Houston ranked sixth with a cost index of 99.4 and, similar to Dallas-Fort Worth, also benefited from low natural gas and industrial construction costs.  Wilmington, Del., and Northern Virginia (Metro D.C.) ranked seventh and eighth, with cost indexes of 100.6 and 101.0, respectively, both slightly above the U.S. average.  Wilmington benefited from low property taxes while Northern Virginia was helped by low electric and employee benefit costs.                                                                              

At the other end of the spectrum, high costs of operating a business in San Jose and New York reflect the high labor costs of San Jose's technology-based economy and New York's position as the most populous city in the United States. Labor and facility costs are among the most significant location-sensitive cost components, according to the KPMG analysis, and New York and San Jose have very high costs in both of these areas.

The overall Competitive Alternatives study measured business-operating costs in 136 cities throughout 10 countries. The full text of the 2008 study is available online at www.CompetitiveAlternatives.com.