Commerce Lexington Research Update

In case you weren’t reachable by Commerce Lexington last Thursday or were on vacation, like I was, a new ranking for Lexington was announced by Forbes.com for the Best Places for Business and Careers. Press release excerpt as follows:

Lexington, Kentucky has been named the 9th Best Place for Business and Careers among the 200 largest metro areas by Forbes. The metrics included costs (business and living), job growth (past and projected), income growth, educational attainment and projected economic growth, as well as quality of life issues like crime, cultural and recreational opportunities as well as net migration patterns, and finally the percentage of subprime mortgages handed out over a three-year stretch and the number of highly ranked four-year colleges in the area.

VIEW THE FULL RANKINGS LIST HERE

LEXINGTON’S METRICS PAGE

People love rankings, and we here at Commerce Lexington are no exception. It isn’t every day that Lexington is rated more highly than everyone’s favorite go-to model city, Austin, TX. I’ll admit to just a little bit of pride in that regard. Austin, TX has a lot going for it and a lot of great people and businesses as well that contribute to its reputation. Unfortunately, the grass is often greener on the other side, and those of us in Lexington tend to forget that we have a lot going for us as well – not in the least our fantastic people and businesses.

I know that rankings can be a cause for joy and also skepticism. Lexington has racked up its fair share of rankings in the short time I’ve been Research Director. Some of these rankings are more than a little eyebrow raising (Best Metros to Test New Products anyone?), but in general, what they sometimes lack in statistical rigor, they often make up for in free publicity and chances to reflect positively on how great Lexington truly is.

Speaking of statistical rigor, I’ll formally introduce the research portion of the ranking story. A little history: Lexington was rated the #5 Best Place for Business and Careers by Forbes in 2008. Lexington was also rated the #33 Best Place for Business and Careers by Forbes in 2009. So how does Lexington go from #5 down to #33, back up to #9? Forbes doesn’t publish the recipe to their ranking secret sauce on the website, but they do give us a bit of insight on what makes up the overall ranking:

I’ve highlighted a couple boxes in green because I think they provide the most insight as to what happened from 2008 to 2010. We’ll get to that in a second. First, I noticed that Forbes has been changing their formula slightly, adding two new categories in 2009, Job Growth Projected and Subprime Mortgages. We did well in the Subprime Mortgage category, not well at all in the Job Growth Projected category. Our poor rank in projected job growth (one of the green boxes) and a poorer than average score in the Income Growth category (the other green box) are probably the key factors that dragged our overall rank down in 2009.
Forbes also added a new category in 2010, Economic Growth Projected. We didn’t do as well in this category either, which probably kept us out of the top five. You’ll notice that our income growth and projected job growth rebounded quite nicely, especially the projected job growth. So how does Lexington go from #151 to #32 in the course of a year?

The answer (in my humble opinion) is the “Projected” in Job Growth Projected. To quote a famous economist, “The only function of economic forecasting is to make astrology look respectable.” Our metro region sustained some heavy job losses in a few critical areas in late 2008 and early 2009, most memorably in the automotive supplier industry. I think the uncertainty of the mounting recession along with the uncertainty of the automotive industry made job growth projections more than a bit daunting. As you can tell, however they projected the job growth for our metro region, they took the worst case scenario.

A year later, albeit with high unemployment, Lexington never truly saw the sky fall. In fact, in a lot of instances, we are a metro region that is poised for growth in the recovery phase of the economy due to our diversity of industry, the presence of the University of Kentucky, and our highly educated population (among many other attributes).

It is certainly difficult to predict what next year will bring, but my core belief is that the things that make Lexington great will continue to shine through for years to come, no matter what ranking we get from Forbes or anyone else.

Must have been a good week for sixes. Immediately after it’s #6 ranking among the best mid-size cities to start a small business, Lexington followed up with another #6. This time, it is the #6 best place to raise a family. Children’s Health magazine used a comprehensive statistical analysis to rank cities on more than 30 factors that parents deem vitally important, including crime and safety, education, economics, housing, cultural attractions, and health. The top cities were the ones that best complemented family life.

Pretty easy sell, isn’t it? Great place to start a business, then raise a family.

CNNMoney recently rated the best places to start a small business, and Lexington took the #6 spot in the mid-sized metros.

“Lexington puts a unique spin on 4-H: Horses, health care, high-tech and higher education make up its diversified economy.

Known as the Thoroughbred Capital of the World, Lexington is home to horse farms that handle more than $750 million in horse sales annually. The region is expected to reap another $150 million in economic activity when hundreds of thousands of visitors come to town for the 2010 World Equestrian Games in September 2010. The city’s revitalization efforts have reached warp speed in preparation for the event: New music venues and restaurants are sprouting, along with fresh parks and biking and walking trails.

Even in the absence of major events, Lexington knows how to draw a crowd. Residents throughout the eastern third of Kentucky travel miles to reach its retail stores and three major hospitals, all of which have begun major expansion projects.

The University of Kentucky, Transylvania University and another dozen colleges, universities and technical colleges educate workers for Lexington’s growing tech sector, which includes strong Lexmark, IBM and Hewlett-Packard presences.

Local businesspeople say the municipal government is undergoing a vast restructuring to eliminate redundancies and improve communication, which promises an even more welcoming environment for business owners.”

The article also profiles Commerce Lexington’s 2008 Minority Business of the Year, TCG America, on why they chose Lexington as the place to start their business.

Lexington was recently ranked as one of 10 Best Places To Live The Simple Life by AARP Magazine.

“…residents, who are just as likely to be beer-drinking college basketball fans as julep-swigging Derby lovers, say this is one of those rare southern towns that offers four distinct seasons, and the relaxed graciousness of the Old South. In the heart of bluegrass music country, Lexington also boasts rich African American roots, an impressive history—Mary Todd Lincoln was born here, husband Abe about 80 miles to the southwest—and distilleries that produce some of the world’s best bourbon.”

Now, I know what you are thinking, I don’t really have much in common with your average AARP reader, but let’s take a look at their methodology. They took 324 metro areas across the United States and ranked them on the following categories: housing appreciation (or depreciation) and affordability, the employment picture, education, health, low cost of living, less congestion/traffic, more open space, numbers of farmers’ markets, outdoor amenities, hiking and biking trails, state parks, green values (number of food co-ops, farmer’s markets, and LEED-certified buildings and homes; possibilities for alternative commuting (walk, bike, ride); energy efficiency and renewable-energy policies), alternative energy sources, energy efficiency programs, stress index (divorce, crime, suicide, unemployment, rates of depression, and other social measures), healthy living (the number of fruits, vegetables, and whole grains the average resident consumes, and the number of residents who get regular exercise, from an annual survey by the Centers for Disease Control and Prevention), and percentage who commute by bike or by walking.

I’m nowhere near retirement age, but having Lexington ranked in the top ten of 324 metro areas based on this criteria is something to celebrate.

America’s Best Affordable Places to Retire

Lexington recently added a new distinction courtesy of BusinessWeek. As the #9 Best Affordable Place to Retire in America, Lexington was noted as having “low property taxes and cost of living” as well as “dozens of major companies, the University of Kentucky, and horse farms. It enjoys a diverse economy with a mix of agriculture, government, health care, and education.”

You can find all of Lexington’s best rankings and distinctions HERE.

One of the best things about compiling rankings and accolades for a great place like Lexington is that there are always an abundance to choose from. I recently finished my update to our ever-famous Bluegrass Rankings document and the next day a new ranking gets published.

Lexington is officially (according to Forbes) the #5 college sports town in America.

Though our sporting traditions are certainly legendary, the ranking also takes into account quality of life, public school quality, and crime. The article also mentions the great real estate return on investment as well as the attractiveness of college towns for business, especially among information and start-up companies.

http://www.forbes.com/2009/02/12/college-sports-towns-lifestyle-sports_0212_college_towns.html