Manchester has moved up four places from last year's ranking to 12th position as the most favourable city in Europe to do business, according to Cushman & Wakefield European City Monitor survey.
The property consultants said the annual survey, now in its 21st year, is based on interviews with board directors and senior management in charge of location for the 500 largest companies in Europe.
The survey includes an overall ranking of which European city is considered by the business community to be "best for business" and the "best city in which to locate a business today".
In addition to this, 36 cities are ranked against criteria such as quality of life, access to markets, availability and quality of staff, cost of office space, telecommunications and transport links.
Tony Bray, partner and head of Cushman & Wakefield's Manchester office, said: "As companies continue to consolidate and restructure their operations, they are finding that being in the most efficient location can have an overriding impact on the immediate success of their business in achieving its business objectives. As such, companies continue to overwhelmingly favour those cities that principally provide easy access to markets, transport infrastructure and qualified staff, factors which Manchester has seen significant improvements."
"Whilst we should be proud of how Manchester has responded to the recent financial crisis and it continues to attract significant inward investment, it is important that we do not become complacent. Despite Manchester being perceived to be the second highest in terms of availability of office space, with no new developments currently in the pipeline and the existing stock being absorbed this perception could soon change which may impact on the attractiveness of the city so we must work hard to continue to attract new businesses to the region."
Tim Newns, deputy chief executive of inward investment agency Midas, added: "Manchester has performed particularly well this year against fierce international competition, achieving its highest ever ranking and firmly cementing its position as a leading European business destination. Over the last 12 months, we have worked hard to achieve record results for the city securing significant inward investment for the region. We now need to build on this success; Manchester needs to continue to be ambitious if it is to retain its perception as the UK's 'second' city, particularly as public funding to support new infrastructure will be limited. Manchester's reputation as a sustainable city will prove to be fundamental in attracting future investment."
The survey showed London is still the leading city in which to do business, while Paris remains in second place and Frankfurt in third, with the gap between second and third place closing slightly. Brussels regains fourth place from Barcelona, while Amsterdam moved back up the rankings to sixth place.
Birmingham, which is now in 18th position, was previously ahead of Manchester.