The Pros and Cons of Locating Your Business in Tennessee

June 15, 2022 Don Catalano Don Catalano

Are you tired of the expensive cost of living of traditional business hubs like NYC and San Francisco? Well, you wouldn’t be the only one.  


In recent years, organizations and individuals alike have realized that they no longer have to be located in these areas to be productive and connected. Instead, they are finding more freedom, savings, and success moving away from business-unfriendly cities to regions that encourage corporate growth. So, if you want to join them... where should you go?  


Tennessee is a premier business-friendly location that offers numerous benefits to those that call the state home. Its extremely low living cost and robust business environment make it an excellent spot for corporations looking for a geographic change.  




How do we know this? As tenant reps, we protect the interests of our corporate client's commercial real estate portfolios. A significant part of this pursuit is knowing where the best locations are for businesses that provide low overhead costs, favorable regulations, and affordable real estate. We have seen just how much our corporate clients could stand to save by moving to Tennessee. 


But is a Tennessee location suitable for everyone? Well, no. Like any other state or city, Tennessee is associated with pros and cons. So to better prepare you to make informed decisions for your CRE, we will outline everything you should know about being located in Tennessee. Then, by learning its benefits and drawbacks, you can decide whether it is right for you.  


Pros of Tennessee 

Cons of Tennessee

Pros of Being Located in Tennessee  

As discussed, Tennessee is a premier location for businesses looking to slash their overhead expenses. So let’s take a closer look at the pros of being in this state.  



Robust Business Environment   

Tennessee is a right-to-work state whose culture is starkly pro-business. It supports its people and businesses through investments in infrastructure, education, workforce development, and global business relations. 


As a result, it has been an appealing spot for corporate relocations. In recent years, many companies have opened headquarters in Tennessee. Household names like Mitsubishi, FedEx, and Oracle invested in Tennessee’s business-friendly reputation.


These financial and geographic commitments prove that the corporate migration is not a fad.


Corporate relocations have only served to further strengthen Tennessee’s state economy. These corporate transplants (among others) have brought with them thousands of new job opportunities to the cities in which they moved.  


In addition, Tennessee offers multiple options for prime cities for business, including 

  • Nashville 
  • Memphis  
  • Chattanooga  
  • Knoxville  

This means you have the power to decide the culture you want to create for your organization. No matter which metro area you lean-to, you are ensured that living and business costs remain stable and affordable.  


Transportation and Logistics Hub  

Tennessee boasts an extremely strong transportation presence. This is due in part to its optimal geography. For example, if you are located in Knoxville, three-fourths of the U.S. population is within a singular day’s drive. Why else would FedEx invest $1 billion in a Tennessee expansion?  


memphis business


The state can be reached by highway, air, rail, and barge travel. This premier geography is also responsible, in part, for Tennessee’s booming tourism industry.  


It is also a developed technology hub, home to the city with the world’s fastest broadband connections, Chattanooga.  


Low Living Cost  

Perhaps the most desirable feature of doing business in Tennessee is its low prices. Tennessee has one of the country's most affordable cost of living metrics. When the national average is 100, Tennessee’s is 89. 

As a result, the power of the dollar is stronger, and consumers are empowered to stimulate their local economies freely.  


In fact, multiple Tennessee cities are associated with living costs below the national average. Outside of this state, it is rare to find such financial consistency coupled with an enriched corporate sector.  


tennessee cost of living 2-png

Low Taxes  

Tennessee’s low living costs are in part fueled by its favorable tax laws:  

  • 6.5 % Corporate Income Tax  
  • No Personal Income Tax  
  • No Estate/ Inheritance Tax  

According to the Tax Foundation, it also boasts the lowest state and local taxes per capita. As a result, businesses will have less financial red tape to cut through.  


Affordable Office Rent 

The low living cost in Tennessee makes everything else in the state generally more affordable, including office rent. As a result, rates for Class A commercial offices are shockingly low compared to business-unfriendly cities like NYC and San Francisco.  


Class A Office Rent TN


Across the state, real estate remains exceptionally inexpensive. Even the CRE in the most popular metros has low price tags:  

Nashville - $34 Per Sq. Ft.

Memphis - $23 Per Sq. Ft.

Knoxville - $20 Per Sq. Ft.

Chattanooga - $20Per Sq. Ft. 


To fully understand how much Tennessee real estate can save you, though, let’s compare what five years in Memphis would cost you compared to NYC.  




While Tennessee provides great assets for businesses, it isn't perfect. Let's look closer at the reasons you may want to reconsider moving to Tennessee. 


Environmental Adjustments  

Like with any move, there will be a period of adaptation. For some, the extremely humid weather of Tennessee can come as a shock. Similarly, the summers are notorious for brutal heat and severe thunderstorms.  


memphis storm


This weather can be quite an adjustment for those hailing specifically from the Northeast.  


Sitting in the lower Midwest, there are also threats of severe weather and natural disasters. Unfortunately, Tennessee is in a prime location for both hurricanes and tornados. This could be a serious concern for businesses and their commercial real estate properties.    


Other Prominent Business-Friendly Options  

Tennessee’s corporate income tax rate of 6.5% is considered middle-of-the-road compared to other states. While this is cheaper than in states like New York or New Jersey, it is still not the most affordable. Numerous other business-friendly states do not apply any corporate income tax whatsoever. So, if cutting your corporate income tax is the main driving factor behind a relocation, other states are better suited for you.  



Texas, Wyoming, Nevada, etc are all associated with a 0% corporate income tax rate. In addition, eight more states have a top corporate income tax rate of 5% or below.  


Again, if corporate income tax reduction is your primary concern, Tennessee may not be the optimal location for your commercial real estate.  


Similarly, Tennessee is often overlooked in favor of other business-friendly states. Most prominent commercial relocations have been to more popular locations like Texas and Florida. It seems that Tennessee has not yet necessarily found its niche as a corporate haven.  


Is a Tennessee Relocation Right For You  

As you know, Tennessee is associated with both pros and cons. It all depends on the features your business wants to prioritize in its commercial real estate.  


If Tennessee is right for you, you can work with a tenant rep. As real estate experts, they know the steps required to skillfully launch a corporate relocation. Even if Tennessee is not your optimal location, a tenant rep can still assist you with your commercial real estate concerns. They can help you with everything from making the decision to relocate, renegotiating the terms of your existing lease, or improving your space utilization.  


Check out this article if you want to learn more about working with a tenant rep.  


If you are already convinced, schedule a meeting with one today! 

Contact a Rep Today



Related Articles