Location Competitiveness Drives Small Metro Growth

Location Competitiveness Reshapes Market Preferences

A new study from Area Development and Chmura Economics & Analytics shows that major metros no longer dominate location competitiveness. Smaller markets are now outpacing large cities in labor quality, adaptability, and operating costs. This shift is creating fresh opportunities for investors and site selectors, per Globe St.

The study’s composite rankings emphasize workforce and economic strength. These rankings signal a realignment away from traditional gateway markets where size once led. Smaller metros with agile workforces and room to grow are now top choices for corporate expansion and capital deployment.

Regional Trends Highlight Workforce Advantage

The Mountain and Southwest Census divisions once again lead the US in location competitiveness. Their edge comes from affordable living, steady migration, and high workforce participation.

Texas leads the pack with 68 ranked regions. Utah, Georgia, and Indiana also stand out due to investments in workforce development and logistics infrastructure.

These regions show indirect signs of migration through higher labor force participation and rising wages. Unlike major metros, which show similar performance levels, smaller markets display a broader range of outcomes. This variability points to distinct risk and reward profiles for investors exploring these areas.

Workforce Quality Defines Smaller Markets

Laramie (WY), Vernal (UT), and Helena (MT) are top performers in workforce quality. These smaller metros thrive due to strong STEM employment, rising wages, and training investments.

The study highlights that workforce strength doesn’t scale directly with population. Well-prepared small metros can outperform much larger ones.

Larger markets like Las Vegas, Indianapolis, and Laredo also stand out. Each is shifting away from traditional economic drivers and toward logistics and diversification. These moves better align them with current labor needs and industrial trends. Richmond’s recent recognition among renters further reflects how mid-sized metros are gaining traction by balancing affordability, livability, and economic resilience.

Major Metros Reach Performance Equilibrium

Among major metros, growth has plateaued as infrastructure and population reach saturation. Competitiveness now depends more on process efficiency, innovation, and talent rather than continued expansion.

Site selectors are broadening their search criteria with data-driven tools, aiming for value investments in smaller metros with unique combinations of skills, infrastructure, and power availability—qualities once overlooked outside top-tier cities.

Expanding Opportunity in Middle and Small Markets

Medium and small metros continue to gain traction in industrial development thanks to lower costs and more nimble permitting. Standouts include Laredo, Brownsville, and McAllen, all leveraging their positions within the US-Mexico trade corridor.

Smaller metros such as Hobbs, New Mexico, and LaGrange, Georgia, demonstrate how targeted investments in infrastructure and education underpin local competitiveness, while accessible labor and connectivity make them increasingly attractive options for companies seeking efficiency and affordability.

What’s Next for Investors

As location competitiveness continues to evolve, investors and corporate site selectors are encouraged to look beyond population size alone. Smaller metros offer differentiated opportunities, with risk and reward often mispriced in these now-dynamic markets. Expect increased capital flows—and job growth—into markets that combine skilled labor, policy alignment, and growth-ready infrastructure.