Messi has informed Barcelona he wants to leave the club and City are one of the favorites to sign the Argentina star.
Former Red Devils captain Rooney thinks Messi would thrive if he moved to either of the Manchester clubs, insisting the 33-year-old is a "different level" even to his former team-mate Cristiano Ronaldo.
However, Rooney thinks Liverpool will effectively have their title defense secured if they manage to sign Bayern Munich midfielder Thiago.
He told talkSPORT: "I think it is City or Liverpool [for the title].
"Chelsea are making a lot of signings, some good signings. Man United have a lot of potential in the players they have got but I still think they are a year away.
"Chelsea, with the new signings, will possibly need a year to get everyone on the same song sheet.
"So, I do think it is between City and Liverpool. And if Liverpool get Thiago from Bayern Munich, I think it is done [the title]. That is a better signing than Messi going to Man City."
On Messi, Rooney said: "I know he's getting older but he's a player who no one has seen before.
"Messi has everything – he can create goals, score goals, dictate the game and is the best player of all time. He's one of the only players I've sat there and watched and been in awe.
"Him and Cristiano Ronaldo have set a standard which I don't think we will ever see again but, for me, Messi is just a different level.
"He could come to the Premier League and be a Player of the Year. One million percent.
"If he surrounds himself with Bruno Fernandes or Kevin De Bruyne, he could win a seventh Ballon d'Or, which would be incredible."