Greater Boston is the 10th most expensive market for companies looking to relocate their corporate headquarters with strong appeal for Canadian businesses that want to set up shop in the United States, but a growing competitive threat from cheaper Midwestern cities that are luring established U.S. companies, according to a new report.
“Companies are reassessing their headquarters with a focus on reducing costs,” said John Boyd Jr., principal of The Boyd Company Inc.
“For Boston, the competition historically has been Connecticut and New York, but there really is this sense of companies wanting to be in the middle of the country more than ever before.”
With more than $47 million in annual operating costs for a 100,000-square-foot headquarters employing 500 workers, New York is the most expensive market studied by Boyd, whose Princeton, N.J.-based firm advises companies that are looking to relocate.
The eight other markets more expensive than the Hub were all in California’s Silicon Valley and Los Angeles areas as well as New York suburban markets.
“That’s good news for Boston, but there is another message of increasing competition from other markets in the Midwest,” said Boyd, referring to Indianapolis, the cheapest market out of the 50 studied.
“Relocating is the next frontier of corporate re-engineering, restructuring and rebranding,” Boyd said.
“Companies want to portray themselves as fiscally responsible. Indianapolis is the kind of new market that is on the radar screen for companies.”
Greater Boston Chamber of Commerce President and CEO Paul Guzzi said he’s not overly concerned about the ranking.
“This is one case where I’m delighted that we’re not Number 1,” Guzzi told the Herald.
“Cost is important when companies are looking at where to grow, but the real driver is talent, and that’s something that we have in abundance due to our universities.”
Boyd said there is growing pressure for companies to relocate their headquarters and move operations if it can save money.
But he said Bay State taxes are a still a major concern for businesses looking to relocate.
“Corporate income taxes are always a consideration, but the bigger issues are personal income taxes and high property tax rates, which make it difficult to recruit a workforce,” Boyd said. “Holding the line on taxes is important to keep Massachusetts competitive.”
He praised the Bay State as one of the only states to offer headquarter-specific tax credits, which he said “are critical.”
According to Boyd, the Bay State’s best hope for luring corporate headquarters could come from north of the border.