Top Cities to Consider a Retail Expansion in 2023 and Beyond
Whether you’re a DTC brand looking to set up your first flagship or an established brand exploring expansion options, the right location matters nearly as much as the products you sell or the space you create.
As we discussed in an earlier blog, success doesn’t come from simply setting up shop in Times Square or on the Magnificent Mile. Not only are these locations expensive, they might not reflect your market. Especially for DTC brands opening their first few stores, it’s better to find an affordable space with a built-in customer base.
But that’s not all. In fact, a recent study from the nonprofit, nonpartisan Milken Institute, the hot spots of the retail past might be faltering in the post-pandemic era. People have moved. Tech hotspots have popped up. And from policy decisions and politics to economics and changing industries, the definition of a good location has changed.
And retailers should take note. Not only are the cities highlighted by the Milken Institute going to provide an increasingly affluent customer base, they will do so in much more affordable areas.
What Makes a Good Location?
What makes a good location? According to the Milken Institute, a think tank focused on accelerating progress on the path to a meaningful life, top cities combine affordability with mobility. Housing is affordable; jobs are plentiful and wage growth is high.
This according to the organization’s Best-Performing Cities Index, a tier list of best small and large cities in America based on 12 indicators of economic performance and opportunity. The Index, published annually since 1999, reflects cities’ effectiveness at leveraging their resources to promote economic growth and provide their residents with access to the essential services and infrastructure needed for success.
These indicators, broken down into three categories—labor market performance, high-tech impact, and access to economic opportunities—highlight the cities growing fast or poised for growth in the near future.
- Labor Market Performance: How do cities stack up on job, wage, and salary growth in the past one to five years?
- High-Tech Impact: Which areas bring high-tech companies and the GDP impact they bring?
- Access to Economic Opportunity: Are cities affordable and do they provide access to information through stable broadband?
Though not specifically focused on retailers, top tier cities on the list are host to an increasing number of people with disposable income. And with lower housing costs, the residents of these cities can afford to splurge.
2023’s Top Tier Cities—According to the Milken Institute
Using data from 2021, the first year of relative normalcy since the pandemic, The Milken Institute evaluated each of US Office of Management & Budget’s 403 metropolitan statistical areas on the criteria mentioned above.
Tier 1 Large Cities
From high growth spaces to cities returning to normal, expect some big things out of the South and West. Led by an area considered the next big tech hub, the top ten cities include some names you’d expect, and some you might not.
Provo-Orem, Utah
For the third year in a row, Provo-Orem, Utah retains the title of best performing city.
Among the reasons this city on the Silicon Slopes continues its reign? One- and five-year job growth of 7.3% and 22.5%, respectively. Paired with a 63.8% growth in wages between 2016 and 2021, and Provo continues to be a hotspot. Other large cities are catching up—but Provo remains home to the number one spot in 2023.
Austin-Round Rock, Texas
Another tech hub, Austin-Round Rock climbed to second place in the rankings last year and held it once again. Consistent growth in jobs and wages over the past year and half decade have kept this area on the rise.
Like many of the top cities on this list, Austin benefited from accelerated pandemic recovery, though the report notes that the city’s tourism and hospitality industry hasn’t fully recovered.
Retailers may find Austin the perfect blend of weird and corporate—even if housing prices might hamper spending.
Raleigh, North Carolina
A city that has spent the past decade ascending the rankings, Raleigh made a significant jump this year from 13 to 3. With strong job and wage growth, the city rebounded from a dip in 2021’s rankings.
12 major companies in the high-tech sector places the area at seventh in this category. And despite no top-ten rankings in other categories, the city is consistent. Five-year, one-year, and short-term job growth remain highly rated.
And thanks to the concentration of top-tier universities, continued growth should be sustainable, despite a relative increase in housing costs.
Nashville-Davidson-Murfreesboro-Franklin, Tennessee
A logistics hub. A tech hub. And one of the most well-known hotspots for business growth. It’s Nashville.
The biggest gainer on the list of top large cities, the Nashville area jumped 21 ranks in this year’s report to number 4. And this was a result of the city’s job growth both inside and out of the tech sector. Like Raleigh, the city saw a strong recovery following the pandemic, with 5.9% job growth between October 2021 and 2022.
Known for both its nightlife and consistent growth, the city offers opportunity for both retailers and hospitality brands, like East Nashville’s FieldHouse Jones, an eclectic boutique hotel in a fast-growing neighborhood.
Boise City, Idaho
A city that has benefited immensely from California’s losses, the Boise area might not be the most tech-driven area on the list. But job and wage growth is hard to match. Between 2016 and 2021, job growth has risen by 20% alongside a 54.3% growth in wages. And despite significant housing demand, the area continues to thrive.
For retailers seeking a broad range of backgrounds, Boise connects rural and urban residents in ways that few others can—bringing together an interesting demographic to target.
Dallas-Plano-Irving, Texas
It’s Austin without the quirks. Boasting a diverse economy, this metropolitan area had possibly the best recovery of any city with a 6.9% growth in jobs between 2021 and 2022. And this growth wasn’t a result of one specific industry. 15,000 new manufacturing jobs, 22,100 health and education jobs. And a massive 32,000 jobs in leisure & hospitality gained back or added in 2021-22.
Pair this significant growth with business- and consumer-friendly tax policies, and the Dallas area makes for an exciting opportunity for retailers—like our friends at Away Travel, who opened their Dallas flagship in the late 2010s.
Wilmington, North Carolina
An up-and-coming coastal community, Wilmington has made big strides in the past two years. Competitive growth across the board has resulted in a 14-rank increase this year after a 16-rank increase in the year prior.
Once a hotspot for tourism, the area has diversified in the past few years by placing a new emphasis on professional services and education. Between 2011 and 2021, the education and health sector grew 85.2% in terms of real GDP, followed closely by professional services at 73.5%.
Phoenix-Mesa-Scottsdale, Arizona
It’s no longer simply a retirement community. The Valley of the Sun might have dropped a few ranks in the past year, but remains among the best metropolitan areas for job and wage growth over the past half decade. Driven in part by a balanced economy, the city saw decent recovery following the pandemic.
That said, tech jobs are becoming an increasingly important part of the area’s economy. Software publishing has grown 108.1 percent in the past five years.
Jobs in pharmaceutical manufacturing and information services have tripled between 2016 and 2021. Finance, professional, and business services remain important. And with a reasonable amount of affordable housing, the area could remain a competitive environment for years to come.
Fayetteville-Springdale-Rogers, Arkansas/Missouri
If you’re trying to work with the biggest retailer in the world, you’re going to need an office around here. It doesn’t hurt that the metropolitan statistical area happens to have some of the most affordable housing options of any city on the list.
13th in five-year job growth and 21st in wage growth between 2016-21, the main standout criteria on the list is affordability—6th over five years and 2nd among large cities in 2021.
For retailers in the outdoor space—or who are looking to build connections with a certain retailer—a store in the area could be extremely viable. As a top mountain biking destination, our friends at Moosejaw just opened a retail space in nearby Bentonville with our help.
Palm Bay-Melbourne-Titusville, Florida
A tech hub in the heart of the best performing state during the pandemic, the Palm Bay area in Brevard County, Florida was once a significant aerospace and defense hub, but recently gained traction in the high-tech world. A blend of job growth and high-tech growth, the area is home to eight high-tech companies and ranked fifth in job growth between 2016 and 2021.
Reasonably affordable, the space coast presents an interesting option for retailers thanks to its blend of tourism, tech, and aerospace industries—though the area will need to compete with other Florida locales for tech business.
Create an Unforgettable Experience
Whether you open in an up-and-coming space or an iconic location, it’s important to create an unforgettable experience. From our clients on Times Square to our new friends in upcoming locations, Morgan Li is proud to help designers, brands, and architects leave a lasting impression.
Metal or wood, custom pieces or national rollouts, big box or DTC retailer on the rise, we have the skill and scale to get the job done. Ready to see how we can help? Drop us a line.
