Processing Your Payment

Please do not leave this page until complete. This can take a few moments.

Sponsored by: MetroHartford Alliance
September 6, 2023

Independent business cost analysis builds strong case for Hartford

Hartford’s ability to attract desirable businesses may get a significant boost following the release of a new comparative analysis of effective tax and lease costs.

The MetroHartford Alliance engaged with the Hartford office of the tax firm CohnReznick to conduct an independent analysis of major business costs in the Hartford metro area and how they stack up against other markets where the insurance and professional services industries have a strong presence.

The analysis found that Hartford compares far more favorably to its competitors than some other, less comprehensive analyses might suggest. This is particularly true when looking at C-corporations, which is often the preferred business structure for early-stage companies such as Insurtech or fintech firms that are publicly traded or planning to go public.

“Studies based strictly on published tax rates can put Connecticut and the Hartford region in a negative light as far as the cost of doing business,” said Gene Goddard, MetroHartford Alliance (MHA) chief business investment officer, who authored a report based on the analysis. “But they tend to focus on income or property tax rates and don’t analyze the entirety of the taxes that companies actually pay.”

The CohnReznick analysis examined the full spectrum of effective costs and found that, for a hypothetical C-corporation generating $100 million in sales and $20 million in taxable income, total tax and Class A office lease costs in Hartford were lower than in New York, Boston, Chicago, Atlanta, Philadelphia, Providence, Charlotte, Des Moines, Minneapolis, Austin, Dallas/Fort Worth, and other competing markets.

Hartford had the second-lowest total business costs for insurance companies (after Des Moines) among the 15 markets examined, and the lowest costs of all the markets examined for general Class A office users.

Hartford Mayor Luke Bronin said he already knew Hartford compared favorably on business costs to many competing metro areas, but he said the MHA analysis revealed an even greater advantage for Hartford than he had expected.

“These findings make a pretty powerful case for Hartford and the Hartford region as a place where the total cost of doing business is extremely competitive,” Bronin said, adding that the state and region also “punch way above their weight” when it comes to arts, culture, sports and entertainment.

The new MHA analysis gives economic development officials another piece of concrete evidence to help them attract and retain quality employers to the region, said David Griggs, MHA’s president, and CEO.

Griggs said his organization didn’t influence the results in any way; it simply asked CohnReznick for an objective and comprehensive analysis.

“The whole point of this was to dispel the myth of the high-tax, high-cost Northeast,” he said. “This is data. This isn’t hearsay. It isn’t anecdotal.”

The new analysis complements previous work done by MHA to highlight the many cost advantages of living and working in Connecticut and the Hartford metro area. For example, it has found that the average burn rate for startups in Hartford is one-third of those in New York City, and half of those in Boston.

Home prices in the Hartford Region are also much lower than in competing markets such as Manhattan (71% higher), Boston (49% higher) and Austin, Texas (42% higher). In general, MHA found that Hartford compares favorably to its competitors in terms of both business costs and residents’ cost of living.

But the region and state don’t just come out strong on costs. Connecticut also boasts rankings in the top five for health care quality, access and afford- ability, according to U.S. News and World Report. The state ranks No. 1 in college readiness, No. 2 for patent creation, and No. 3 for internet access.

“Our analysis found – for both insurance and non-insurance businesses – that the overall cost of doing business in the Hartford region is lower than many other locations throughout the country,” John Turgeon, a senior client relationship executive of CohnReznick’s affiliated companies, said about the business cost comparison. “Add in a great quality of life, and the Hartford region presents a compelling story for any business, large or small.”

John Guy, executive vice president and director of business banking at Webster Bank, said MHA’s data-driven analysis of effective costs is likely to resonate with businesses.

“I’m a data person,” said Guy, who is also chair of MHA’s board of directors. “I think that any time you can talk to people, especially business people, with data that tells the story or gives them a better basis to make their decision, I think it’s a good thing.”