As midsized cities go, the Buffalo Niagara region is a pretty inexpensive place to do

business, a study released Tuesday found.

Thanks to low transportation expenses and competitive labor rates, the Buffalo Niagara

region finished third among 12 U.S. metro areas in a ranking of cities with between 1 million

and 2 million people by accounting firm KPMG.

On a broader scale, the Buffalo Niagara region ranked more in the middle of the pack &#8212

36th out of 75 U.S. and Canadian cities &#8212 in the study that looked at a wide range of

costs, including real estate, taxes, labor and utilities, in a comparison of business costs

for companies in 17 different industries.

&#8220Upstate New York and Western New York are a more competitive location for business

than is often-times assumed,&#8221 said George Tobjy, the managing director for KPMG&#8217s

global location and expansion services practice.

&#8220It&#8217s great news. It&#8217s very encouraging,&#8221 said Paul Pfeiffer, a

spokesman for the Buffalo Niagara Enterprise business development and marketing group.

Pfeiffer noted that the region&#8217s labor force has been a selling point in attracting

companies such as insurance giant GEICO to the area, lured by the productivity, skill level

and ample supply of the local labor force.

The KPMG study found that, while big cities tend to garner more attention and offer access

to a bigger pool of labor, potential customers and suppliers, they also typically come with

higher costs.

&#8220While large cities may be of greater interest for some global investment projects,

smaller regional cities can offer a more attractive investment location for other investment

projects,&#8221 the KPMG report said.

The study used the average cost of doing business in New York City, Los Angeles, Chicago

and Dallas as its baseline cost figure.

The study ranked Buffalo third among mid-sized cities, 3.5 percent cheaper overall than the

four biggest cities, trailing Oklahoma City (4.4 percent cheaper) and Raleigh, N.C. (3.6

percent cheaper). Buffalo fared better than metro areas such as Milwaukee (2.2 percent

cheaper), Las Vegas (0.2 percent cheaper), Nashville (3 percent cheaper) and Salt Lake City,

Utah (2.6 percent cheaper).

The report said labor costs, including wages and benefits, were about 12 percent lower in

the Buffalo Niagara region than the national average. Facility costs also were about 12

percent less, while transportation costs were nearly 7 percent lower.

The one major drawback for the Buffalo Niagara region was its utility costs, which were an

average 29 percent higher than the national average, the study found.

The region also ranked highly for its affordable housing, with the area&#8217s median home

price selling for roughly 2 times the regional median household income, which was

significantly better than the national average of 3.2 times the median household income. The

area also scored highly because it has about 50 percent more doctors per 100,000 people than

the national average, the study found.

While business costs and location issues are important factors when companies compare

potential sites, the incentives offered by governments and economic development agencies can

tip the scales in favor of alternate sites.

&#8220Incentives won&#8217t make a bad location good, only a good location better,&#8221

Tobjy said.

The report included more than a dozen Canadian cities, including the St. Catharines-Niagara

Falls, Ont., metro area, which fared even better than the Buffalo Niagara region. The study

pegged business costs there as being 5.3 percent cheaper than in the biggest U.S. cities.