Houston Business Journal - April 23, 2007

Inc. ranking shows Houston has good business sense

By Christine Hall

 

ouston has cracked the Top 20 on Inc. magazine's annual ranking of the hottest large cities for business.

The Bayou City, along with Sugar Land and Baytown, ranked No. 17 on the list, moving up from No. 31 in 2006. The only other Texas city to figure among the Top 20 large cities for business -- cities with an employment base of 450,000 or more --was Austin-Round Rock at No. 16. Last year, it was in 26th place. Las Vegas-Paradise, Nev. held onto the No. 1 spot.

When city size is factored out the Houston area rose more than 70 places to an overall rank of 120 out of a total of 393 areas reported, from 193 in 2006. Growth in non-farm occupations between 2005 and 2006 was 2.8 percent, while growth between 2001 and 2006 was 5.6 percent.

"Houston is hitting on all cylinders," said Joel Kotkin, contributing editor for Inc. magazine. "Not only are manufacturing and energy hot growth areas, there is also a cost advantage on housing, which is a big factor as housing growth in the suburbs, as well as inside Loop 610, is pulsing."

The magazine's May issue reported that Texas boasted the most big movers on its annual "Business Boomtowns" survey. Dallas was the biggest mover, soaring 18 spots to No. 25, while Houston climbed 14 places. Austin-Round Rock was the state's top city, shooting 10 spots to No. 16.

The magazine also reported that Houston has escaped the difficulties of many other large cities, including weak job growth attributed to high taxes, business overheads and housing costs.

It found that despite a robust economy and strong gains on Wall Street, many of the nation's largest urban areas continue to lag, such as New York City, ranked No. 266; Los Angeles at No. 283; Chicago at No. 295; San Francisco at No. 317; Boston at No. 335; and Philadelphia at No. 392.

The report said strong growth in Texas was attributed to relatively low business costs, a rebounding technology sector and a thriving energy sector which is attracting a new cadre of highly paid professionals to increasingly sophisticated high-tech businesses.

Kotkin said that while cities such as Austin are experiencing rapid job growth, like many other cities the cost of living is prohibitive for many people.

"Many cities such as New York and Los Angeles can't generate the job growth because people can't afford to live there," he said. "Houston, on the other hand, is in a good place, and has surfaced as a good place for young, educated people. It's an exciting place to be and, in terms of diversity, it is coming into its own."

Though the magazine reported that Houston maintains a strong presence in business services, transportation and utilities, Kotkin said would like the see the city address some of its fall-backs, such as education and dependency on foreign oil.

"Houston has a long-term strategic problem. We would like to see Houston become a leader in renewable energy and less dependent on Middle East oil and gas," he said. "We would also like to see more energy research and a focus on the domestic side."

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