San Francisco Heads Fortune List of U.S. Business Cities : Survey: The magazine's assessment ranks Singapore No. 1 worldwide. Los Angeles receives no mention.


When it comes to recommending the best U.S. cities for business, Fortune magazine suggests leaving your heart in San Francisco. But the magazine has some Los Angeles supporters feeling heartbroken.

Breathtaking views, a spectacular urban setting and extreme cultural diversity are a few of the attributes that put the San Francisco Bay Area at the top of the magazine's annual list of top 10 cities for business domestically. In its Nov. 13 issue, released Tuesday, Fortune lists the Bay Area, Atlanta and Denver as the top three U.S. cities. Singapore, the Bay Area and London top the list for global cities.

But Los Angeles--struggling to repair its business-friendly image after numerous setbacks--didn't make the cut. And it hasn't been on the list at all since 1989, when the city made it to fourth place.

Some Los Angeles business leaders are convinced the magazine is in error for overlooking a city they say has a great deal to offer.

Ray Remy, president of the Los Angeles Chamber of Commerce, said Los Angeles was left out because of certain misperceptions: "You have a perception that California generally is unfriendly to business . . . [and] you have a perception that Los Angeles has a very bad environmental quality."

Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County, suggested that the name of the magazine should be changed to "Misfortune."

"The best place to locate your headquarters is right in the center of Los Angeles," Kyser said. "You've got high-quality office space that is going at a bargain rate, and it's at the center of a mass-transit system that most people in New York do not know we have."

To compile the list, Fortune teamed up with the Arthur Andersen consulting firm, which sent surveys and questionnaires to corporate executives and economic development corporations around the world.

Executives were asked for two lists: one of the three cities they thought would provide the best environment for business in 2005, and another of the best cities for four major business functions. Of the 327 executives who responded, none put Los Angeles on either list.

The firm also analyzed statistics ranging from unemployment rates to office rents for more than 60 cities.

With the firm's data, Fortune then conducted interviews with corporate executives and economic development experts and came up with a final list of 17 cities.

This year's list focused on cities that best serve companies' changing needs in four major areas: headquarters, back-office operations, research and development and manufacturing.

The ranking "does say that there's a lot of things right in [San Francisco]--the level of cultural acceptance, the quality of life [outside of the cost of living], and also the investment they've placed in higher education and the innovative environment different corporate citizens have created," said Kenneth Kuhl, a consultant with Arthur Andersen who worked with Fortune.

Kuhl said San Francisco's problems were not overlooked: "There's the homelessness problem, the cost of living is very high--those are definitely things they have to deal with if they want to stay where they are. It can't be everything to everybody."

In listing Singapore at the top of the global list, Fortune cites the city's business-friendly government and describes it as "a prime site for product development" that offers an "affordable, worry-free tropical lifestyle."


Best for Business

San Francisco went from No. 8 to No. 1 in Fortune magazine's list of the best cities for business. Rankings were based on research by the magazine and the Arthur Andersen consulting firm, which analyzed data ranging from unemployment rates to transit systems to recreation, for 60 cities. Fortune said it blended that research with its own interviews of executives and economic development experts to concoct the final list. The top-ranked cities for business, as compiled by Fortune magazine:

Top U.S. Cities

1. San Francisco Bay Area

2. Atlanta

3. Denver

4. New York

5. Boston

6. Seattle

7. Austin

8. Dallas-Ft. Worth

9. Houston

10. Phoenix Top Cities Globally

1. Singapore

2. San Francisco Bay Area

3. London

4. New York

5. Frankfurt

6. Hong Kong

7. Atlanta

8. Toronto

9. Paris

10. Tokyo

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