The ranking, complied by Business Facilities magazine - a publication aimed at businesses which are considering relocation - put the city ahead of San Antonio, Texas and Albuquerque, New Mexico.
Much of the state's recent investment, according to the Chattanooga Times Free Press, has been made in efforts to lure major auto parts suppliers. Motivated by a series of state tax breaks, a number of major suppliers have signed up to do business in the state, creating 800 additional jobs.
In addition, Volkswagen is also set to begin construction on an assembly plant in the city next year, which could lure even more parts suppliers to the region.
But so far, the trickle-down effect into better housing prices has not yet materialized, the Times Free Press reported last week, although officials think the economic development will help fuel a recovery in the coming months. The Chattanooga Association of Realtors told the paper that while home sales figures are ahead of last year's pace, they are more than 25 percent behind peak levels seen in 2006, despite record low interest rates.
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