John L Grim, SpaceFinders CRE
Competitive Advantage: Relocating or Expanding Your Company to Georgia Can Boost Your Bottom Line
SpaceFinders Atlanta
10/31/2017
Considering a corporate relocation or business expansion in metro Atlanta or greater Georgia? If you haven’t, maybe you should.
With favorable taxes, a highly skilled workforce, reasonable corporate office leasing rates and land costs, and direct access to global markets through the world’s busiest airport and its deepwater ports, it’s no wonder that Site Selection magazine has picked Georgia as the best state for business for a fifth consecutive year. The state consistently earns similar accolades from site consultants and industry groups.
Already home to Fortune 500 and Fortune 1000 companies including The Home Depot, UPS, Mohawk Industries, Mitsubishi, and Global Payments Inc., Georgia continues to attract companies looking to take advantage of the favorable business climate and low cost to do business in the market. Burgeoning industries such as virtual reality and film production to infrastructure-dependent transportation and logistics companies are all jumping on the bandwagon.
With the business community collectively holding its breath, Atlanta is rumored to be on the short list for Amazon's second corporate home, Amazon HQ2, which is expected to bring with it $5 billion in investment and 50,000 high-paying jobs. Amazon received "238 proposals from cities and regions in 54 states, provinces, districts, and territories across North America" according to its website. Amazon is expected to announce the winning city in 2018.
Georgia's Pro-Business Tax Structure
Setting Georgia apart from the pack is their pro-business corporate tax structure that includes a low 6% corporate income tax rate and a single-factor apportionment whose formula treats a company’s gross receipt sales in Georgia as the only relevant factor in determining the portion of the company’s income subject to that tax rate. The resulting savings over time can be game-changing. Plus, Georgia does not use a “throw back rule” so sales of goods or services to out-of-state customers are not taxed as income.
Further, there are several tax incentive programs that can add savings to the already low cost of doing business in the state, for those who qualify. These range from adding certain types and net quantities of jobs to locating a business in special zones.
Human Resources: Your Biggest Investment
While favorable taxes are a draw for businesses looking to expand or relocate to the state, Georgia’s crown jewel may be its strong development engine for human capital. Renowned institutions such as Georgia Institute of Technology, Emory University, and Savannah College of Art and Design (SCAD) are turning out talent, fueling technology startups and venture capital, and producing a base of young, skilled workers ready to shine in an assortment of industries.
A warm climate, affordable cost of living and abundant opportunities in a region seeing historic population growth, further stocks the labor pool with high-quality workers.
Global Gateway: Georgia’s Transportation Infrastructure
If Georgia’s educational institutions are indeed its crown jewel, then its world-class infrastructure is economic gold. Hartsfield-Jackson Atlanta International Airport (ATL) offers non-stop service to nearly 150 domestic and 70 international destinations, including major commercial centers throughout the world. Its proximity to Atlanta and even middle Georgia cities such as Macon and Columbus provide global access for companies who depend on efficient transportation of commodities or shuttling of employees domestically and beyond.
Another strong economic engine for the state are the deepwater ports in Savannah and Brunswick, along with inland barge operations in Columbus and Bainbridge, which creates vital links to domestic and international markets.
The Port of Savannah is the largest single container terminal in North America which boosts over 3 million feet of warehouse space within 30 miles of the port and 9,700 feet of contiguous berth space. Deepening of the channel is underway and is expected to complete as early as 2020, furthering business opportunities. Immediate access to major interstates and railroads enables speed-to-market of goods in and out of the port.
The Port of Brunswick specializes in non-containerized freight and claims to be the East Coast port of choice for roll-on/roll-off and agricultural products. They rank number one for new auto imports in the U.S., with over 500 acres owned or leased by the auto industry. They provide 1,750 feet of deepwater berthing with 355,000 feet of covered storage adjacent to the berth, and are also linked to strategic rail lines and major highways.
Buying Power: Competitive Corporate Office Lease Rates
In the commercial office market, the comparatively low lease rates for office space is another competitive advantage, especially in Atlanta which is emerging as a true big city, but without the overinflated costs associated with larger metropolises. The average monthly rent per square foot of office space in Atlanta is $1.74 (2015). Contrast that to Dallas at $1.92 and San Francisco at $5.43 and you can quickly surmise the advantage.
Here’s a comparison of annual costs to rent office space, per employee* in various U.S. markets:
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New York: $14,800
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San Francisco: $13,032
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Chicago: $7,000
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Los Angeles: $6,702
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Dallas: $4,618
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Atlanta: $4,194
*Based on 200 sq. ft. allocation per employee. Source: The Square Foot
This price differential can go a long way in keeping your operational expenses in check.
Ready to Consider a Corporate Move or Expansion to Georgia?
As Georgia’s rise as an economic powerhouse continues to gain traction, many companies are weighing whether a move or expansion to the state is fiscally and logistically advantageous for their organization. Those who deem it worth further due diligence should partner with a qualified tenant rep serving Georgia who has the market knowledge and resources to perform comprehensive locational analysis to find office space or land to lease or purchase that meets their business objectives, and can negotiate a competitive rate. Importantly, they should ensure the tenant rep possess the skillset to explore tax and other value-add incentives that may be available for their business -- which could significantly offset startup or expansion costs.
A knowledgeable tenant rep will work with agencies to obtain tax credits through various state programs including the Georgia Job Tax Credit, geographic credits such as Opportunity Zones (OZ) and Companies in Less Developed Census Tracts (LDCT), the Port Tax Credit Bonus and more, and should help their client navigate those waters.
Case study: By obtaining incentives through the state of Georgia, a Fortune 500 client recently saved $1MM over a 5 period of years, which effectively paid for their rent.
Business resources are also available through the Georgia Department of Economic Development for companies of all sizes.
Georgia is not only a favorable place to do business, it is a great place to live. In addition to the temperate weather and low cost of living, its world-class amenities such as museums and state-of-the-art sports stadiums, an abundance of natural resources ranging from mountains to beaches all make the region a draw. From its small towns to the big city, there is truly something for everyone.
Sources
Fortune.com: Why Atlanta Is the Early Favorite to Land Amazon's Second Headquarters
Site Selection Magazine: Smart Money
Atlanta Business Chronicle: “CNBC names Georgia No. 2 best state for business for 2017”
Hartsfield-Jackson Atlanta International Airport website
Georgia Ports Authority website
Market Watch: “Here’s how much your company pays to rent office space