When Prasant Pallikandi wanted to open the U.S. branch of his brand communication firm in Boston, his first step was sizing up the competition. The results were disheartening: for every 15 companies Pallikandi identified to target as potential clients, he counted one established branding firm he’d have to edge out. “It was a little overwhelming to say the least,” he says. “Being a startup and having to compete with these guys—I was like, how am I going to do that?”

He looked for a city that would give him better odds. When he crunched the numbers, Houston, with its booming energy sector, medical tech firms, and on-fire economy, came out on top. So two years ago, 26-year-old Pallikandi and his wife, Badiana, relocated to Houston, where they now helm the U.S. arm of Ganancia360, the Indian communications firm Pallikandi joined six years ago. So far Ganancia360 has worked with Houston-based energy companies, a handful of tech startups, and one cloud-based technology firm; Pallikandi is now trying hard to crack into med technology next. He has no regrets about trading cities. “There was so much more room to grow,” he says.

Thanks in large part to the boom in horizontal drilling and fracking, which has helped the Houston metro area add a whopping 667,800 new jobs since 2005, the energy city is an economic powerhouse: its 4.5% year-over-year job growth rate is the nation’s fastest. Jobs at major corporations like ConocoPhillips and Halliburton help boost the median annual pay for college-educated workers to $71,900, fourth among America’s 100 largest metro areas. Add to that an economy that grew at a 3.52% clip last year alone, and Houston lands the No. 1 spot on Forbes’ annual list of America’s Fastest-Growing Cities.

To compile this year’s list, we started with America’s 100 most populous Metropolitan Statistical Areas (cities and their surrounding suburbs, as defined by the U.S. Office of Management and Budget), ranking these places on six metrics. Using data from Moody’s Analytics, we considered estimated population growth for 2014 and 2015, year-over-year job growth for 2014, and 2014 gross metro product growth (in other words, the metro area’s economic growth rate). We also considered federal unemployment data. Finally, we factored in median annual pay for college-educated workers in each area, using data from Payscale.com. The result is a list of the 20 fastest-growing metro areas in America in terms of local population and economy.

Texas has the Top 3 Cities, and 5 in the Top 10

Texas placed five cites on the list, the most of any state: after Houston, the top 3 of our list is rounded out by Austin and Dallas, followed by Fort Worth (No. 8) and San Antonio (No. 10), to give Texas half the cities in the top 10, propelled by strong population growth and unemployment levels under 5%.

Given that Texas’ oil output has more than doubled in the past three years, it’s not surprising that Houston, the center of the energy boom, tops this year’s list of America’s Fastest-Growing Cities. The metro area is expected to add 63,000 jobs in 2015, according to the Greater Houston Partnership. Since 2009 the area has welcomed some 1,500 corporate relocations or expansions—and that’s just counting those that created 50 or more jobs, leased 20,000 or more square feet of office space, or invested $1 million or more in capital improvements. Among the most recent: Valero Energy’s $805.9 million investment in new oil processing capacity at its Houston ship channel location (12 new jobs), FMC Technologies’ $316 million new campus (680 new jobs), and Mattress Firm’s $28 million expansion at its current facility (250 new jobs).

Notably, the oil and gas industry has outsourced many non-industry-specific jobs, like mailroom services and IT, points out Patrick Jankowski, senior vice president, research, at the Greater Houston Partnership. “So what you have in the oil and gas industry is a tight core of people who are highly specialized in finding oil & gas and producing it,” Jankowski says. The median salary for oil and gas extraction positions in the greater Houston metro area is a whopping $200,000 per year, according to the most recent Census data.

In the past four years, greater Houston grew by half a million people—half from moves, half from births. Population growth means housing demand, and realtors sold more than 425,000 homes in the last five years, amounting to a home-closing rate of one every six minutes, according to the Greater Houston Partnership. What’s more, jobs boost construction, which is why last year Houston topped our list of Building Boom Towns: metro areas with the most new construction.

What’s behind the boom, besides the obvious oil explosion? Exports. Between 2009 and 2013, the value of Houston’s exports grew 74.5%. More than 3,000 companies in greater Houston do business internationally, by Jankowski’s count, from oilfield services giant Schlumberger to Universe Technical Translation. The metro area is now the nation’s top exporter, ahead of New York, Los Angeles, Seattle and Detroit. That said, exports of plastics, chemicals and industrial machinery were flat or down in 2014. And the falling price of oil is expected to slow the pace of Houston’s growth markedly this year—another city may well take the top spot in terms of growth in 2016. Still, Houston’s economy is expected to chug along with the rest of the U.S. “When oil prices are low, Houston’s economy grows. When oil prices are high, Houston’s economy booms,” Jankowski says.

After Texas, the Golden State has the next greatest number of metro areas on the list, with three: San Francisco (No. 7), San Diego (No. 16), and San Jose (No. 17). The tech boom has elevated median pay for college-educated workers in Silicon Valley, aka the San Jose-Sunnyvale-Santa Clara metro area, to $100,000, the highest of America’s 100 largest metro areas. Greater San Francisco places second among with a median pay of $81,700. Tech giants like Twitter in San Francisco, Facebook in Palo Alto, and Google in Mountain View pump out plenty of high-paying jobs, as do the area’s plentiful startups. But the Bay Area is not only tech. “Since 2011, San Francisco has grown by 76,000 jobs. The lion’s share are in technology and health care,” says Bob Linscheid, president and CEO of the San Francisco Chamber of Commerce. “Both of those industries obviously pay higher than the average wage.”

Venture capital investment in San Francisco companies is at an all-time high, topping VC investment in Silicon Valley companies for the first time ever, says Linscheid. Underscoring the trend, Silicon Valley companies are putting outposts north: Google and Oracle both have satellite outposts. “More companies are investing in San Francisco because it’s hard to get their employees to come down to the Silicon Valley. We don’t want to live there,” says Linscheid.

While both San Francisco and Silicon Valley are adding jobs at a healthy clip (3.52% and 3.83% growth in 2014, respectively), population growth has been slower (0.52% for San Francisco; 0.93% in San Jose) and both are projected to continue on that pace in 2015. There may be two reasons for that slow growth, says Cynthia Kroll, chief economist at the Oakland-based Association of Bay Area Governments. One, she says, is that some of the population is moving out of job hubs and into further out into the East Bay, the South Bay, and California’s Central Valley in search of cheaper housing. “Another is that unemployment has come down a lot, which means that people who are hired are not necessarily new people in the area,” Kroll says.

Seattle jumps up six slots this year to fifth place. From 2013 to 2014, King County added 56,000 jobs to the area’s base of about 1.5 million. Greater Seattle is host to a number of big companies: Boeing, Microsoft, Costco, Starbucks and Amazon. Recently, Facebook announced an expansion in the area, while Google currently has some 1,600 employees in the region and has announced plans to expand; Elon Musk last week announced plans for a new SpaceX outpost in Seattle (with the goal of establishing a human colony on Mars).Its $72,000 median pay for workers with college degrees is the 3rd highest for metros across the nation, while a year-over-year jobs growth of 3.56% places it ninth among all the metros we considered.

The area also boasts research facilities, at both the University of Washington and the U.S. Department of Energy’s Richland-based Pacific Northwest National Laboratory. Add to that the just-announced partnership between the University of Washington and Boeing, and it’s not surprising that the Seattle region has one of the most highly educated populations in the country: 53% of residents have bachelor’s degree. “We don’t have many incentives in the toolbox by way of economic development,” says Suzanne Dale Estey, president and CEO of the Economic Development Council of Seattle and King County. “It’s about the type of community that employees want to live in. And companies want to be near that talent.”

Check out Forbes full list of America’s 20 Fastest-Growing Cities here.

Original article America's Fastest-Growing Cities 2015 by Erin Carlyle

Published by Forbes Magazine on 1/27/2015 @ 9:00AM