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Real estate contributes to local economies in three connected ways: development and building operations support jobs and business activity; the location of new homes affects the cost of roads and utilities; and occupied property adds to the tax base that helps fund public services. The size and direction of the effect depend on the property, place, time period and method used to measure it. An estimate of economic activity associated with real estate is not proof that every project creates an equivalent net gain or pays for all the public costs it requires.
How real estate supports jobs and economic activity
Real estate contributes at different stages. Planning and construction generate spending and temporary work; once a building is occupied, its operation and the activity of businesses and residents can support ongoing employment and income. Those phases should be kept distinct: a modeled count of jobs supported is not necessarily a count of new permanent jobs.
Construction and building operations
The Commercial Real Estate Development Association’s Research Foundation (CREDA) estimated that U.S. commercial-building development and operations in 2025 involved $1.4 trillion in direct expenditures and supported $3.5 trillion in GDP, $1.3 trillion in personal earnings and 20.4 million jobs. These are modeled contributions combining new commercial-building development with operations of existing commercial buildings—not a finding that real estate alone caused all of that output or that every job was newly created. CREDA’s January 2026 edition draws on government and industry data, including Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, Dodge Construction Network and NCREIF datasets. Read CREDA’s 2026 U.S. report.
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The Urban Institute examined 45 Oklahoma multifamily developments supported by the Low-Income Housing Tax Credit (LIHTC), completed from 2019 through 2023. The projects comprised 2,667 units and $295 million in combined federal and state tax-credit equity. Using IMPLAN for construction and 10 years of operations, along with local assessor and tax-rate data, the study estimated 4,043 construction job-years, nearly $814 million in construction output, and more than $186 million in potential output over 10 years of operations. It also estimated that tax revenue could exceed $126 million across construction and operations. These estimates are in 2024 dollars and apply to this sample, place and method; a job-year represents one year of employment, not necessarily one person holding a permanent job. See the Urban Institute’s Oklahoma analysis.
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Why impact estimates are not all comparable
Some studies count direct activity, while others also estimate indirect effects through suppliers and induced effects when workers spend income. A national commercial-property estimate, an Oklahoma affordable-housing sample and a local forecast answer different questions. Their numbers should not be treated as interchangeable multipliers or as a universal measure of net growth.
How development location changes infrastructure costs
New housing can use roads and utility connections that already exist, or require extensions and added capacity. A 2026 Pew Charitable Trusts report on modeling by the World Resources Institute and ECOnorthwest compared housing near existing jobs, stores and transit with housing at the urban fringe across 10 states: Arizona, Florida, Maryland, Minnesota, Montana, New Hampshire, North Carolina, Pennsylvania, Texas and Washington.
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| Modeled measure | Near existing jobs, stores and transit | Urban fringe comparison |
|---|---|---|
| Upfront infrastructure cost per home | About $21,000 lower on average across the 10 modeled states than at the edge | Higher on average by about $21,000 per home |
| Average annual infrastructure maintenance cost | 50% lower than for fringe homes | Higher than established-area homes in the model |
| Property-tax revenue per acre | 13% higher on average | Lower on average than established areas |
| Modeled infrastructure payback period | Nine years on average | 13 years on average |
These are modeled averages, not guaranteed savings for an individual development. The report connects the difference to compact land use and greater use of existing road and utility networks. Density and housing form also differ between places, and the model does not account for differences in who funds infrastructure—private, local, state or federal sources. Read Pew’s report on housing location and infrastructure costs.
How property development affects local public finance
Developed and occupied property can contribute to local public revenues through property taxes. Those revenues are one way local governments finance services and infrastructure, but the fiscal balance depends on local tax rules, the development’s assessed value, public-service demands and who pays construction and upkeep costs.
The National League of Cities’ 2026 Municipal Infrastructure Conditions report says property taxes account for 60% of municipal tax revenue and are relied on by nearly 90% of cities. It also identifies funding availability, staff capacity, strategic plans and elected officials’ priorities as factors in municipal capital decisions, and notes the value of federal grants for transportation and water projects. The national figures do not establish that every development generates enough local revenue to cover its public costs; outcomes vary by jurisdiction. See the National League of Cities report.
What international sector estimates can—and cannot—show
For the United Kingdom, the Royal Institution of Chartered Surveyors (RICS) estimated in 2022 that commercial real estate contributed 3.3% of UK gross value added (GVA), 2.5% of tax revenues and 3.5% of the workforce through direct, indirect and induced activity. These are UK-wide sector estimates, not a current forecast for a particular town, project or property type. Read the RICS report summary.
Separately, UK government research examined new office, manufacturing and warehousing properties through eight case studies and econometric analysis of employment, turnover, wages and productivity. Its published summary does not report effect sizes, so it does not support a numerical claim about how much an individual development increases local employment or productivity. See the UK government study.
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How to assess a real-estate project’s local contribution
A useful assessment separates the project’s activity from its net effect on the community. Ask what is being counted, where and over what period, then compare expected economic activity and tax revenue with infrastructure and service demands.
Quick Recap
- Identify the scope: distinguish construction from ongoing operations, and specify property type, geography and time horizon.
- Check what “jobs” means: determine whether the estimate counts job-years, jobs supported, direct employment, or direct plus indirect and induced activity.
- Compare location-related costs: consider upfront road and utility extensions, recurring maintenance and replacement, and the use of existing infrastructure.
- Evaluate local revenues and responsibilities: examine property-tax rules and assessed values alongside the costs of services and infrastructure, including the funding sources involved.
- Keep estimates in their lane: a modeled national contribution, a state-specific affordable-housing study and a local project forecast are not direct substitutes for one another.
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