(The Center Square) – Southern states swept the top ranking for having the best business climate in the U.S. according to the latest annual Site Selection magazine survey.
Texas and North Carolina were the two states with two cities ranking in the top 10 for corporate headquarter relocations. Dallas ranked first, Austin ranked sixth. Charlotte ranked second; Raleigh ranked fifth.
The biggest upset in the ranking was Texas dropping from its long-held top spot in the ranking. Texas for years has ranked first for having the best business climate. This year, that changed, with Georgia taking the top spot.
Georgia was followed by North Carolina and South Carolina closing out the top three. Texas tied with Tennessee for the fourth spot. Virginia, Alabama, Mississippi and outliers Ohio and Indiana rounded out the top 10 states having the best business climate.
The majority of the top cities for business headquarter relocations were also in the south, according to the survey. Dallas ranked first, followed by Charlotte, Atlanta, Nashville, Raleigh, Austin, Chicago, Richmond, Memphis, Phoenix and San Diego.
Dallas receiving the top ranking “should come as no surprise,” Dallas Mayor Eric Johnson said. “Dallas has been on an economic winning streak in recent years and shows no signs of slowing down heading into 2025. Texas has rightly earned its reputation as the ideal state to do business, and this recognition reinforces Dallas as the best city not just in Texas, but in the entire nation for businesses.”
Site selectors “tend to favor Southern states,” the magazine said, because their business climates have the best “workforce, state and local tax policy, and cost of living.” They also have the best incentives offered by states, quality of life and worker training programs, according to the survey.
South Carolina-based Global Location Strategies principal and vice president Tess Fay said, “The South has a logistics and infrastructure advantage that has always made them attractive for projects like those that GLS work. Coupled with a relatively low-cost environment and relatively favorable business policies, they continue to be top of mind for many of our clients.” Key differentiators also include economic development infrastructure and inventory availability, she said.
This year, 36 site selectors participated in the survey, which covered issues ranging from “business climates to how they value access to innovation hubs and the importance of power availability.”
Site selectors said California and New Jersey have the worst business climates; South Carolina, Ohio and Michigan have the best manufacturing workforce.
The top five southern states “accounted for roughly 60% of all our state-specific client inquiries and related location research,” John Boyd Jr., principal of The Boyd Company Inc., a national site consulting firm with offices in Florida and New Jersey, said.
“The South wins the business climate race because of things like the demographic shift to the South, investments into site readiness, workforce training programs, the availability of incentives, lower costs and lower taxes, sound tax and fiscal policies, and positive labor-management relations,” Boyd added. “Having seasoned economic development professionals at the state and local levels and at major utility companies doing a superior job servicing consultant inquiries and promoting these states.”
He also said that South Carolina ranking first for having the best manufacturing workforce was because of its “top-notch workforce training program – readySC – that works hand-in-glove with the state’s network of technical colleges, as well as its outstanding labor-management relations climate.”
Atlanta-based Garner Economics LLC president Jay Garner said the legislatures of the top five ranked southern states “have worked tirelessly for years to be business friendly. Many rank favorably in the Tax Foundation’s annual tax competitiveness index.”
California and New Jersey have the worst business climate because of their high tax policies, he added.
When asked to name the biggest workforce challenges over the next decade, site selectors listed labor shortages, affordable housing, upskilling, childcare and lack of soft skills.