Benchmarking Analysis

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Sanford Holshouser compared the Town of Cary against six other communities across the U.S. The benchmark communities were determined after interviewing the Research Triangle Regional Partnership, NC Department of Commerce and site selection consultants that have worked economic development projects in Cary. Sanford Holshouser used the experience of these groups to tell us with whom Cary competes for new and expanding business.

Early on in the project timeline, when the consulting team was setting parameters for the benchmarking analysis, cities like San Jose, Boston, Atlanta and Austin came up during discussions as comparisons. After discussing site selection criteria with those in the trenches for Cary, the consulting team learned that companies are first interested in the Research Triangle Region, which competes against major regions like San Jose or Austin. After becoming interested in the Research Triangle Region, companies then narrow the field of search to a Cary, Apex or Louisburg around the region. The same is true for searches in other major metro areas. For example, companies first become interested in the Atlanta region and then narrow the search to Roswell and other communities in the metro area. Based on Sanford Holshouser interviews with the above cited group, the consulting team benchmarked Cary against Roswell, GA; Irving, TX; Fort Collins, CO; Sunnyvale, CA; Huntsville, AL and the Northern Virginia area of Tysons Corner/Falls Church/Vienna/Annandale.

Overview of Benchmarking Cities

The information below is an overview of each of the benchmark cities. The background is offered to show the similarities and differences between these cities and Cary.

Roswell Georgia

Roswell is a suburb of Atlanta, considered the second ring out from Atlanta just past the Buckhead area. The City offers less expensive land and development costs with outstanding livability. Atlanta’s growth has been booming to the north where Roswell is located. Growth has followed the interstate and metro rail systems.

Roswell has a historic downtown along a river. The river is host to festivals and community events. The residential areas of Roswell are well planned with many Planned Unit Developments. The City learned a great deal from the sprawl of Atlanta. Land is less expensive, development costs are lower and residential planning is superb.

City government houses the economic development program as a division of local government. However, the division’s main purpose is planning. All economic development functions relative to traditional business and industry activity are housed in the Greater North Fulton Chamber of Commerce. The shift in economic development responsibilities from the city to the chamber occurred because of the speed of growth in the community. Roswell is a typical suburban bedroom community of Atlanta, much like Cary. Because so much growth occurred in so little time, a political decision was made to place economic development within the city under community development and to focus on planning. The City of Roswell decided to have the Greater North Fulton Chamber handle prospects and client activity, and the City of Roswell would handle planning aspects for economic growth. Roswell wanted to get a grip on its own planning for economic development as the best use of its time and energy.

Irving, Texas

The Las Colinas area of Irving, Texas is a major competitor to the RTP region and Cary. Las Colinas is an unincorporated area within the City of Irving which is near the Dallas/Fort Worth area in Texas. Irving is located within 5 miles of four major interstates. Irving is home to many international companies due, in large part, to international air service at the Dallas/Fort Worth airport. The city has a diverse international population.

The Las Colinas district is made up of 12,000 acres of which only 700 are undeveloped. Las Colinas is a huge mixed development area that was originally driven by major corporate development. ExxonMobile, Kimberly Clark, Commercial Metals and Fluor are headquartered there. In addition, 40 Fortune 500 companies are located in the development. The park, which started as a corporate park, evolved into a smart growth planned development before there was such a term as “smart growth.” The park now has residential, retail, and other mixed uses, and it has based its development on a live/work/play concept.

The Irving-Las Colinas Chamber of Commerce is the economic development agency for the area. The City has two economic development positions; business liaison and business development coordinator. The coordinator is the ombudsman between businesses and the city staff code enforcers, and he/she helps streamline the permitting process. The Chamber of Commerce does all of the marketing, recruitment and the business retention and expansion functions. Targets for Irving’s business recruitment are airport/aviation services, biotechnology industries, high tech manufacturing, financial services, automobile back office operations (call centers for warranties, loans, etc), and high-end mixed use developments.

Fort Collins, Colorado

Fort Collins is a booming area north of Denver along I-25. Fort Collins is the home of Colorado State University. The University is an active player in economic development and a partner with the City of Fort Collins. The University assists with research and business entrepreneurship in the area. The Northern Colorado EDC partners with the City and Colorado State University to manage the 6,500 square-foot Fort Collins Technology Incubator, which operated for six years as a virtual incubator. This area has a center for disease control with biological and medical research facilities.

The City of Fort Collins has had an economic developer on its municipal staff for about four years. The City is now advertising to fill the recently vacated position. In the interim, the Northern Colorado EDC is taking care of Fort Collins’ economic development needs. The Fort Collins economic developer is responsible for product development, business retention and expansion, entrepreneurship and other related matters. The EDC has the primary responsibility of business recruitment and is the primary client servicing agency for Larimer County and Fort Collins. The EDC also manages an extensive internal marketing program to offset anti-growth groups. The internal marketing campaign informs citizens of the economic development organization’s goals and activities. The economic development organizational structure between the City developer and regional development group is similar to the Holly Springs economic development operation in that the Wake Chamber does the marketing and client servicing. The Fort Collins Chamber provides typical chamber services but not direct economic development activities.

Fort Collins targets for business recruitment are biotechnology and life sciences, value added agriculture, health and nutrition, information and technology software, environmentally focused businesses, clean energy clusters, and general research.

Sunnyvale, California

The Bay Area of San Francisco is indeed an extraordinary host of high tech communities that lie along Highway 101. This is approximately a thirty-six mile stretch of highway that begins with South San Francisco to the north and ends to the south in San Jose. Sunnyvale is a vibrant community and is home to Network Appliance and Juniper Networks (Cisco’s biggest competitor) among other major corporations. Netapp, a firm headquartered in Sunnyvale, acquired 500,000 square feet of empty office/lab space from Cisco in RTP last spring. There is a large defense industry presence in Sunnyvale with Moffett Field, a large airfield used by Hughes Aircraft Company for field-testing.

Sunnyvale’s economic development program is a nine county region, referred to as a Silicon Valley.com. This is an organization of communities tied together with the single purpose of retention and expansion of existing companies. A three-county regional organization focuses on existing businesses and a proactive approach to growing additional firms, university “spinouts” and caring for the venture capital crowd that feeds and finances the entrepreneurial spirit so dominant in Silicon Valley. Both organizations exist to promote the Bay Area in terms of livability, business climate, housing costs, transportation, etc. The three-county organization is more interested in localized issues such as transportation, light rail, land use and planning.

Outside of the two regional organizations mentioned above, there is an economic development department located within city government. The chamber is involved with typical chamber responsibilities such as membership, workshops, networking venues, etc. The City of Sunnyvale takes the lead in making certain the message of a pro-business environment is always in the minds of the private sector. One-stop permitting and direct links to the Mayor’s office are all under the purview of economic development, but within a city government framework.

Huntsville, Alabama

The signature development in Huntsville is Cummins Research Park, a former NASA park started in the 1960s. Huntsville has grown up around Cummins Research Park which developed by supplying NASA with land available for the development of missiles and space missions. The labor force has specific skill sets for metal working, avionics and electronics. The park has diversified into other industries. SCI is an electronics parts supplier that, at one time, was the only company to whom IBM outsourced. SCI represents the Cary SAS. SCI executives have been key recruiters for Huntsville. Huntsville does not have a major university like the Cary area, but they have strong technical institutes supporting the new biotechnology cluster. The City has done well with the information technology industry. Recently, there is a new, strong biotechnology effort to establish new clusters.

The Huntsville Chamber of Commerce is very involved in economic development, especially in recruiting retail. Business and industry recruitment is managed by Huntsville Business Development Partners, the area’s economic development organization. There is also a regional organization that manages economic development projects in outlying areas.

Madison is a city next to Huntsville, similar to a Raleigh/Cary. Madison went through a lot of the same growth boom that Cary has been and is going through. There were huge farm holdings transformed into major residential and mixed use developments. Now Madison is re-trenching to form a vision for smarter growth.

Northern Virginia

The areas of Tysons Corner, Vienna, Annandale, McLean, Merrifield, Falls Church and Oakton in Fairfax County, Virginia are adjacent towns in a fast growing area next to Washington, D.C. The population of Fairfax County is about one million. The study area made up of the small towns and unincorporated areas listed above is about 189,000.

Much of this area’s growth and success is tied to the federal government. Maryland and Northern Virginia are a biotechnology hotbed, attracting government jobs through proximity to the National Institutes of Health as well as the plethora of research centers and laboratories in the area. In addition, the technology boom has been fueled by deep venture capital. This area is also home to a diverse group of international companies, particularly Japanese headquartered companies. A Raleigh developer, Craig Davis Properties, which has worked in Cary, has done quite a bit of development in the Northern Virginia area. Like Cary, the area has lots of office park space but little space available exclusively for manufacturing operations. It also has several major hotels and upscale restaurants.

The area has significant employment in software and programming, systems integration and computer and data services. It is working hard to recruit more of these f businesses and improve its opportunities within the biotechnology/biomedical sectors. Part of the local economic development organization’s marketing strategy is highlighting existing support services and training for these types of companies.

The Fairfax County Economic Development Authority (EDA) is a countywide organization that provides all economic development services for the Tysons Corner area and Fairfax County. There is a Vienna/Tysons Corner Chamber of Commerce that provides traditional chamber services but not economic development services.

The primary business recruitment targets for the Fairfax County EDA include information technology, computer and data services, information technology equipment and hardware, software and programming, systems integration, and technology management services. The EDA cited other targets as well-- biotechnology and biomedical, energy and environment, engineering services, research and development services, internet and e-commerce, and telecommunications services.

Benchmarking Data Summary

Sanford Holshouser used the data service of ESRI, a nationally recognized leader in geographic information systems and data compilation, to gather information in the following categories for review for the years 2000, 2005 and 2010: demographic and income profile, housing profile, disposable income profile, retail goods and service expenditures, medical expenditures and recreational expenditures. The benchmarking analysis is broken out by the different report categories. The full ESRI data reports are attached to this study. What follows below is a summary of key findings in each of the study categories.

Demographics and Income Profile

During the 2000 to 2005 period, Cary’s population grew faster than the other cities in the group. Cary’s fast growth is projected to continue during the 2005 to 2010 period with an annual average growth rate of 3.15%. Cary, Fort Collins, Roswell and Irving are projected to exceed the national growth rate of 1.22% per year during 2005 to 2010.

Cary’s 2005 median household income ($82,808) falls in the middle of the study group which ranges widely from $45,021 to $105,741. When examining growth rates, Cary’s household income grew the second slowest from 2000 to 2005 with Huntsville being the slowest.

Projections show that Cary’s annual household income growth rate (3.24%) will continue to grow slower than all but Huntsville’s. However, it is on par with the projected national growth rate of 3.25%.

Age demographics show that Cary is one of the cities with younger working age people (25 - 54). About 50% of Cary’s population is in the younger working age groups of 25 to 54. The only city with a higher percentage of young workers is Sunnyvale. Projections show Cary maintaining the high percentage of younger workers.

Race and ethnic diversity statistics show that Cary is among the least diverse of the populations. Sunnyvale, Northern Virginia, Irving and Huntsville are all more diverse in racial and ethnic make-up.

Business Summary

Sunnyvale has a high percentage of workers in Manufacturing (32.5%), and Huntsville has 19.1% in Manufacturing.

Cary has the highest percentage of workers in the Communications industry.

Cary has the second highest percentage of Retail Trade workers, next to Roswell. Within Retail Trade, the highest percentage works in Eating & Drinking Places in Cary, Roswell and Fort Collins.

Cary has one of the lowest percentages (4.9%) of workers in the Finance, Insurance and Real Estate industry. Only Sunnyvale (2.8%) and Huntsville (4.6%) are lower.

Cary is in the middle of the pack with overall service sector employment. However, Cary is tied with Northern Virginia in the highest percentage of workers in the Other Services category.

Housing Profile

  • Cary has the highest percentage of owner-occupied homes at 67.1 % in 2005. Cary is projected to hold on to the top spot with 66.9% of homes being owner-occupied in 2010.
  • The average value of owner-occupied units across the study group ranged from a low of $150,630 to a high of $737,819 in 2005. Trends show that the average value of an owner-occupied home grew by 4.3% from 2000 to 2005 in Cary and is projected to grow by 4.9% in the period from 2005 to 2010. Compared to the other cities in the benchmarking analysis, Cary’s owner-occupied housing values are projected to grow in the middle of the pack.
  • Cary’s average monthly cost for owner-occupied homes is in the middle range at $1,620 and monthly average renter home cost at $772. The range for the former being $1,019 to $2,160 and the later being $422 to $1,230. When average monthly cost is compared as a percentage of median income, Cary ranks near the least expensive of the cities.
  • When analyzing the average value of owner-occupied homes as a percent of median household income, Cary’s housing market is the second most affordable. Sunnyvale has the highest housing cost, as one would expect given the current California housing market. Irving has the lowest cost with Cary being the second lowest and Huntsville and Roswell tying for third and fourth lowest.

Disposable Income Profile

  • Cary’s average disposable income was in the middle of the pack at $75,406 with a range from $50,674 to $101,907. In the cities of Cary, Sunnyvale, Fort Collins and Roswell, the highest average disposable income level was found in younger households (45-54 age group). In Northern Virginia, Irving and Huntsville, the highest disposable income level was in the 55-64 age group.
  • When disposable income is examined as a percent of median household income, Sunnyvale, Roswell, Cary and Northern Virginia have the lowest percentage of household income that is disposable.

Medical Expenditures

  • Cary citizens spend the lowest percentage of median household income on healthcare. On average, $4,607.29 was spent per household on healthcare in Cary during 2005. Taken as a percentage of median household income, Cary residents spent 5.6% of median household income on healthcare. That is the lowest of the group, ranging from 5.6% in Cary to 7.1% in Huntsville, with a median of 6.3%.

Recreation Expenditures

  • In 2005, Cary residents spent less on recreation as a percentage of median household income than any other city in the study group. The Recreation Expenditures report includes information on Entertainment Fees and Admissions, Toys & Games, Recreational Vehicles and Fees, Sports, Recreation and Exercise Equipment, Photographic Equipment and Supplies and Reading. In each category, Cary residents spent the lowest percentage of median household income.

Financial Expenditures

  • The Financial Expenditures report lists the average checking, savings, US savings bonds and stocks, and bonds and mutual fund accounts of city residents. The lowest financial asset average to median household income ratio is in Irving, followed in order by Fort Collins, Cary, Roswell, Sunnyvale, Huntsville and the Northern Virginia region. Cary residents save, but not as much as four of the comparable cities.

Conclusion

Cary stands up well to these six competitor cities. Using this information to position Cary will help business recruitment and retention efforts. Cary is growing the fastest but has kept costs in check. Housing, healthcare and recreation are all affordable in Cary. Cary is maintaining a younger workforce which is important in attracting fast-paced, high-growth technology companies. It is also important in maintaining quality of life amenities. The only spots where Cary shows weaknesses are the higher percentages of workers in relatively lower paying jobs in Retail Trade and a low personal savings rate. This benchmarking data reveals several strengths to include in Cary’s internal and external marketing message.