Smaller U.S. Markets Take the Lead in Competitiveness, 2025 Rankings Show
A new national analysis from Area Development and Chmura Economics & Analytics is revealing a significant shift in the U.S. competitiveness landscape. The 2025 Leading Metro Locations rankings highlight a growing trend: smaller and mid-size markets are increasingly outpacing major metropolitan areas in key metrics that drive corporate expansion and investment decisions.
The rankings evaluate hundreds of U.S. metropolitan and micropolitan areas through Chmura’s comprehensive, data-driven model, which places equal emphasis on Prime Workforce and Economic Strength. This dual approach offers a balanced view of the factors that companies consider most critical when selecting expansion sites. While large metros continue to serve as vital economic anchors, the analysis shows that momentum and differentiation are increasingly concentrated in smaller and medium-sized markets. These regions often benefit from agile labor forces, lower operating costs, and faster development timelines, making them highly attractive to businesses looking to grow efficiently.
“Scale alone is no longer the decisive factor in competitiveness,” said Chris Chmura, founder and CEO of Chmura Economics & Analytics. “The strongest performing regions are those that align workforce readiness, affordability, and quality of place—not simply population size. Today, smaller markets are demonstrating that they can compete with, and in many cases outperform, traditional large metros.”
Key Findings from the 2025 Rankings
The 2025 rankings reveal several notable patterns:
- Smaller markets display greater performance differentiation.
Unlike large metros, where scores tend to cluster tightly, small and mid-size markets exhibit a wider range of results. This spread highlights opportunities for differentiation and shows that these regions can gain a competitive edge by capitalizing on their unique strengths. - Medium and small metros dominate the top spots.
Many of the highest-ranked markets are found in the Mountain West, Southwest, Midwest, and South Atlantic regions. These areas combine workforce quality with cost efficiency, infrastructure readiness, and favorable business climates, positioning them as prime candidates for corporate expansion. - Workforce quality emerges as a critical differentiator.
In small and medium markets, the prime-age labor force is often highly engaged, with strong participation rates, competitive wage growth, and alignment with advanced industries. These metrics make workforce readiness a decisive factor in attracting new investment and supporting long-term economic growth. - Mega metros remain important, but scale alone is less decisive.
While large cities continue to play a central role in the U.S. economy, their advantages are tempered by higher costs, infrastructure constraints, and slower development timelines. As a result, many companies are increasingly looking beyond traditional large metros for more nimble and cost-effective expansion opportunities. - Updated market classifications better reflect modern site selection trends.
The 2025 rankings introduce new categories—Mega, Large, Medium, and Small—to more accurately reflect how businesses assess potential locations. This nuanced approach recognizes that companies are now weighing factors such as workforce quality, incentive efficiency, and operational speed more heavily than sheer population size.
“Companies are casting a wider net than ever before,” said Andy Greiner, Editor of Area Development. “What the data makes clear is that many small and mid-size markets are no longer competing on aspiration—they’re competing on execution. These markets are delivering measurable economic performance and doing so faster and more efficiently than many traditional large metros.”
Implications for Corporate Decision-Makers
For site selectors, corporate executives, and real estate professionals planning expansions in 2026 and beyond, the 2025 rankings provide a clear message: competitive advantage is increasingly defined by workforce readiness, incentive efficiency, and speed to market—not merely by scale or size.
Markets that can combine tailored incentives, infrastructure readiness, and customized talent pipelines are increasingly closing the gap with—and in some cases surpassing—larger, more established metro areas. For example, manufacturers, logistics operators, and corporate real estate teams are increasingly prioritizing regions where workforce skills can be rapidly deployed, projects can be completed efficiently, and operational costs remain manageable.
The data underscores a broader trend: agility and execution matter more than population alone. Companies that strategically target smaller and mid-size markets can benefit from faster project timelines, lower labor and operational costs, and strong alignment between workforce capabilities and industry needs. This approach allows businesses to reduce risk, optimize growth, and create measurable economic impact in a shorter timeframe.
Ultimately, the 2025 Area Development–Chmura rankings reveal that the U.S. map of competitiveness is evolving. While mega metros will always play an important economic role, smaller and medium-sized markets are emerging as the true engines of growth and innovation, offering opportunities for companies willing to look beyond traditional urban powerhouses.
As executives plan for the next wave of expansions, the findings make one thing clear: success in today’s economy is defined not just by size, but by the ability to execute—quickly, efficiently, and strategically.
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