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Real estate development projects play a crucial role in shaping the economic landscape of communities, whether through the construction of new multifamily residential developments, commercial spaces, or mixed-use properties.
When developers propose new projects, they often face the challenge of demonstrating the potential benefits to local municipal planning boards and other entities responsible for granting necessary approvals. A comprehensive economic impact analysis can be a powerful tool in this process, helping to build a compelling case for project approval and garnering public support.
The Benefits of Economic Impact Analysis for Real Estate Development
Developers seeking approval for their projects must be able to share the economic benefits it can bring to a community in a quantifiable way. The results of an economic impact analysis can be presented to municipal planning boards to showcase the direct and indirect economic benefits the community will receive. This information is instrumental in the approval process and in rallying public support by illustrating tangible positive outcomes for the local economy.
For example, consider a new multifamily residential development in a small town. The construction of this project generates immediate economic impacts through local construction spending, which creates jobs and supports local businesses. Beyond construction, the long-term benefits include on-site property management employment, and the spending generated by the new households that occupy the apartments.
Key Data and Assumptions for Effective Economic Impact Analysis
Several key pieces of information and assumptions are required to conduct a robust real estate development economic impact analysis. When completing these analyses, Camoin Associates collects the following data to ensure an accurate and meaningful analysis:
Cost of Construction and Local Spending
What’s Needed: An estimate of the total construction cost and the portion of that spending remaining within the local economy versus out-of-region vendors.
Why It’s Important: Local spending is a direct input into the impact model, and this spending will have the most immediate and significant impact on the local economy.
On-Site Jobs and Payroll
What’s Needed: The number of on-site jobs expected to be created by the development and the projected payroll for these positions.
Why It’s Important: This data is crucial for calculating the economic impact of new employment and earnings on the local economy, illustrating how the project contributes to local job creation and income growth.
Number of New Residential Units
What’s Needed: The total number of residential units being developed.
Why It’s Important: This information helps estimate the number of new households that will move to the area because of the development, representing a net gain in population and economic activity for the community.
Projected Price Points of New Residential Units
What’s Needed: The expected price range of the new residential units.
Why It’s Important: Understanding the financial status of potential new residents helps estimate their spending patterns, which is used to calculate the economic impact of new household spending that the development will bring to the area.
Additional Descriptive Information
What’s Needed: Any other relevant details about the project that provide context and clarify the development’s goals.
Why It’s Important: A thorough understanding of the project allows the data analyst to tailor the economic impact analysis to reflect the unique aspects of the development, ensuring that the analysis accurately represents the project’s potential benefits.
By leveraging accurate data and sound assumptions, real estate developers can clearly show how their projects will contribute to local economic growth, job creation, and increased household spending. This information is often the cornerstone of successful applications for project approvals and can be pivotal in securing the necessary support to move forward with development plans.
At Camoin Associates, we specialize in conducting detailed and customized economic impact analyses for real estate development projects, ensuring that data clearly articulates and supports all potential benefits.
Whether you’re a developer seeking to make your case or a community leader evaluating the impacts of proposed developments, our expertise can help you navigate the complexities of economic impact analysis and achieve your goals. Learn more about our real estate development economic and fiscal impact analysis services.
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