Study: Hampton Roads is a cheap place for a corporate HQ

Cheap labor and construction costs have made Hampton Roads an attractive location for corporate headquarters, according to a recently released report.

The study compared 50 metropolitan areas across the country that already are home to at least one major corporation. Of those, Hampton Roads ranked as the third-lowest in annual operating expenses for a headquarters, according to The Boyd Co. Inc., the Princeton, N.J.-based site-selection consulting firm that compiled the report.

The company compared markets looking at both labor costs for operating a headquarters with 325 employees and the cost of maintaining a 70,000-square-foot, top-of-the-line building.

"Labor tends to dominate the equation, and Virginia is a right-to-work state, unlike Maryland, Pennsylvania," said John Boyd Jr., head of The Boyd Co. "The labor climate favors management over labor. That tends to calm that inflationary wage pressure."

Sioux Falls, S.D., and Little Rock, Ark., are the only two cities on Boyd's list that cost less than Hampton Roads. Richmond also made it, as the ninth-least-expensive metro area.

The majority of the most costly cities in the study were in the Northeast and California.

In the coming years, Boyd predicts that more companies in those areas will relocate to lower-cost areas such as Hampton Roads.

"Right now, the next frontier of corporate cost-cutting is the main headquarters," Boyd said. "They've already streamlined their warehouses. If there's anything that's interesting here, it's the trend toward small markets. That's where we project them heading."

Compared with New York City, ranked as the most expensive city in which to operate, firms in Hampton Roads pay about 23 percent less in labor costs and about 75 percent less in real estate expenses, the report said.

The report also looked at costs for both air travel and local transportation. While air travel costs out of Hampton Roads were only slightly lower than New York's, local transportation costs were about half as expensive, the report found.

"This is a reinforcement of some of the points we make to companies all the time," said Warren Harris, Virginia Beach's economic development director. "The reason any company is having discussions with a community is to increase their bottom line. A large part of that is their labor costs, or their overhead."

The Hampton Roads Economic Development Alliance has seen increased interest from firms throughout the Northeast, said Darryl Gosnell, the alliance's president and chief executive.

The Hampton Roads region is attractive to companies because it offers both low costs and many of the lifestyle amenities of larger metro areas, Gosnell said.

"You've got to have a location that offers the kind of lifestyle attractive to your top executives and the talent you're trying to recruit," he said. "You might find a whole lot lower labor costs somewhere in North Dakota. But recruitment might be a challenge."

Josh Brown, (757) 446-2318, josh.brown@pilotonline.com