Business News - Local News

From the May 28, 2004 print edition

Study: Atlanta cheaper than most cities

City ranks 32nd out of 50 in analysis of business costs

At a time when companies are placing a premium on cost-cutting, it's cheaper to run a large office in metro Atlanta than in most major American cities, according to a new study by a location consultant.

The relatively low cost of doing business here will continue to help this region land new corporate offices, according to a study by The Boyd Co., a Princeton, N.J.-based consulting firm.

The firm ranked 50 metro areas for the annual cost of operating a 350-employee outfit in 50,000 square feet of class A office space. Expenses of nonmanagerial labor, electricity, office rent and corporate travel were among the factors the firm considered.

At $18.8 million a year, Atlanta was less expensive than 31 of those areas, including New York, Boston, Chicago, Washington, Dallas, Houston, Denver and St. Louis. Savannah was the cheapest city, at $17.3 million a year, and San Francisco was the most expensive, at $22.4 million a year.

"The white-hot issue in corporate board rooms right now is reducing costs," said John H. Boyd, president of the consulting firm, which has helped locate operations for Time Inc., PepsiCo Inc., Hewlett-Packard Co. and The World Bank.

As part of their efforts to reduce costs, companies are increasingly decentralizing their operations and opening offices across the country, looking for cheaper labor and real estate, Boyd said.

"Atlanta shows some compelling savings," he said. Its enormous growth during the past decade also has created a cutting-edge image and a large, relatively inexpensive labor pool, he added.

At $16.2 million, annual labor costs for a 350-employee office here are about $3 million less than those in San Francisco, according to the study.

Newell Rubbermaid Inc. and Rayovac Corp. both moved their headquarters to metro Atlanta in the past year. Other companies that recently moved operations here include Scientific Games Corp., New York Life Insurance Co. and Hagemeyer NV.

Despite Atlanta's strength, it will increasingly feel pressure from even cheaper cities, such as Orlando, Fla., and Charlotte, N.C., Boyd said. It also has to overcome quality-of-life issues related to its traffic congestion, crime and secondary schools, he added.

Several factors

Hans Gant, who runs the Metro Atlanta Chamber of Commerce's economic development arm, said the cost of doing business is one of the top factors for drawing companies here, but it's not the most important.

Locating a strong customer base is the top consideration for most companies, and drawing a talented work force ranks second, Gant said.

This region is strong in both of those areas, Gant said. Metro Atlanta's biggest hurdle is its secondary schools, which often have a poor reputation nationwide, he added.

"A lot of firms have their own location models as to what they deem to be important variables for them," said Richard Metters, an expert in operations management at Emory University's business school.

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2004 American City Business Journals Inc.

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