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To assess a real estate project’s economic impact in your city, estimate what it adds compared with what would happen without it—not merely how much construction it pays for. Define the project, study area, time horizon, affected people and businesses, and a realistic alternative; then assess construction, ongoing operations, city revenues and costs, and material effects on the surrounding area separately.
Start with the decision and the comparison
First state what the analysis is meant to inform: for example, whether to approve a proposal, choose between sites, negotiate public support, or plan services and infrastructure. The answer depends on what is included and what the project is compared with.
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- Describe the proposal: its uses, size, schedule, expected occupancy, and relevant public support or infrastructure.
- Set the boundary: identify the area whose economy and public finances you are measuring, and the residents, workers, businesses, and public bodies affected.
- Choose the period: distinguish the construction schedule from the operating period. State the price basis for monetary estimates, such as nominal dollars or dollars adjusted to a stated year.
- Define the counterfactual: explain what is likely to happen without the proposal, or under a realistic alternative use of the site.
Count activity already taking place at the site in the no-project scenario. If the site currently generates property tax or supports jobs, those effects are not new benefits of the proposal. The IMPLAN Hawthorne case study, for example, accounts for existing-site activity when estimating the project’s net municipal revenue effect.
Separate temporary construction from ongoing operations
Construction spending, jobs, and supplier activity occur during a defined build period. They are not the same as recurring employment, wages, business activity, tax receipts, or public-service demands after the project opens. Report these phases separately and state when each estimate applies.
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Construction
Estimate project spending and employment for the construction period, using a stated geography and method. If an input-output model estimates indirect supplier effects or induced effects from household spending, label them as modeled effects rather than observed outcomes.
Stabilized operations
Estimate ongoing effects once the project reaches the occupancy or operating level assumed in the analysis. State what “stabilized” means in the estimate, if known, and do not imply that the first operating year is representative of every later year. Identify recurring revenues and costs separately from one-time construction or infrastructure items.
Distinguish direct, indirect, and induced effects
When a regional input-output model is used, explain the three categories so readers can see how the total was built:
- Direct: activity at the project, such as construction work or jobs at businesses operating there.
- Indirect: activity at suppliers serving the project or its businesses.
- Induced: activity associated with workers spending some of their income in the modeled economy.
Name the model and version if available, the geographic area represented, key inputs, and important assumptions. A multiplier is a model result tied to those choices, not a fixed amount of local activity that can be transferred unchanged to another proposal. Canadian federal guidance recommends describing these effect categories rather than reporting only one aggregate total.
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Adjust gross activity to estimate what is genuinely additional
Gross spending or modeled output does not show how much activity the proposal creates for the city as a whole. Consider the following deductions and overlaps; explain which are material and how they were estimated.
- Deadweight: activity that would have occurred without the project.
- Displacement: activity or jobs drawn from other local businesses or sites rather than added to the local economy.
- Substitution: a change in the type of worker or activity, where one replaces another rather than increasing the total.
- Leakage: wages, profits, purchases, or other benefits that flow outside the study area.
- Opportunity cost: the value of the land, public funds, infrastructure capacity, or other resources in their best realistic alternative use.
- Double counting: benefits counted in more than one measure—for example, adding an external impact separately when it is already reflected in a land-value estimate.
Do not present uncertain adjustments as precise facts. If additionality is difficult to estimate, show plausible ranges and test how the conclusion changes when important assumptions change. The MHCLG technical annex for England specifically warns that ex-ante additionality can be difficult to quantify and calls for rigorous sensitivity analysis.
Calculate municipal finances as a separate result
Economic output is not city revenue, and additional revenue is not automatically a fiscal surplus. Estimate the public budget effect by comparing incremental receipts with the city’s incremental costs over a disclosed period.
Estimate revenues
Identify relevant recurring and one-time receipts under the local rules, such as property-related revenues or fees where applicable. Subtract revenue already associated with the site in the counterfactual. State whether amounts are annual, cumulative, nominal, or adjusted for inflation.
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Estimate public costs
Include the city’s expected costs for services and infrastructure attributable to the development over the same period and on a consistent price basis. The relevant categories and rates depend on local conditions; a conclusion for a particular city requires its tax rules, service costs, infrastructure needs, and planning requirements.
Show the revenue and cost estimates separately before presenting their net difference. A city can experience substantial construction activity or business output while also facing service costs that reduce or outweigh the budget benefit.
Examine effects beyond the project boundary
A project can affect people and businesses that do not occupy it. Select effects that are material to the proposal and place, explain who benefits and who bears costs, and avoid counting an effect twice.
- Local businesses and employment: consider changes in business turnover, wages, productivity, job quantity and quality, and whether activity is new to the area or shifted from nearby firms.
- Transport and infrastructure: assess relevant demands or benefits for travel and public facilities.
- Environment, amenities, and culture: include effects that matter locally, rather than treating all development as having the same impacts.
- Health, education, and agglomeration: assess these where the project plausibly changes access, service demand, or the advantages of businesses locating near one another.
- Distribution: identify how effects differ across existing residents, workers, firms, and other affected groups, instead of relying only on a citywide total.
The MHCLG Appraisal Guide says, “An economic appraisal should seek to capture all costs and benefits of an intervention.” Its fourth edition, updated 18 February 2026, is guidance for England. Its distinction between effects on occupants and firms and external effects on the wider area is useful elsewhere, but it is not automatically the governing method in another jurisdiction.
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Use consistent assumptions to compare proposals
When comparing two or more projects, use the same study area, time horizon, price basis, counterfactual standard, and definitions of effects. Otherwise, a larger total may reflect a broader boundary or longer period rather than a stronger proposal.
Compare the proposals across the measures that matter to the decision:
- net additional economic activity and how much is retained locally;
- construction effects separately from ongoing jobs and business activity;
- job quantity and quality, with the assumptions stated;
- municipal revenues against service and infrastructure costs; and
- material external costs, benefits, and their distribution.
This is a practical comparison framework, not a universally prescribed scorecard. Make uncertainty visible by showing ranges or sensitivity results for assumptions that could change the ranking.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What a published case study can—and cannot—tell you
IMPLAN’s Hawthorne, California case study illustrates how a mixed-use proposal can be assessed across construction, operations, and city finances. The project described includes 274 proposed market-rate apartments, 2,600 square feet of restaurant use, and a 177,000-square-foot parking garage. The page does not state its publication year.
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| Reported figure | What it represents | Qualification |
|---|---|---|
| 608 jobs | Modeled construction employment across direct, indirect, and induced effects | IMPLAN case-study estimate for the Hawthorne proposal; not a forecast for another project |
| Approximately $405,000 | Net general-fund revenue impact in the first stabilized year | Case-specific estimate after accounting for existing site property-tax revenue; the page does not state a publication year |
| Approximately $10.8 million nominal, or about $4.5 million in constant 2017 dollars | Net municipal revenue over 2017–2040 | Figures and period as stated in the case study; not a general benchmark |
These figures demonstrate reporting choices, not typical outcomes. The case’s modeled jobs, revenue assumptions, location, and project mix cannot be treated as expected results for a different city or development. No broad citywide benchmark follows from this example.
Make the assessment auditable
A useful report lets a resident, decision-maker, or competing analyst understand how the conclusion was reached. Include:
- the decision, proposal, study geography, affected groups, period, and counterfactual;
- data sources, model and version where relevant, and assumptions behind each estimate;
- separate construction and operating results, plus direct, indirect, and induced effects where modeled;
- treatment of deadweight, displacement, substitution, leakage, opportunity cost, and possible double counting;
- municipal revenues and costs as distinct components; and
- ranges, sensitivity tests, and limitations that could materially affect the result.
For place-specific conclusions, verify local property-tax rules, fees, service and infrastructure costs, labor-market geography, planning requirements, and available data. The UK government’s 2019 commercial-property study, for example, examines offices, manufacturing, and warehousing and analyzes employment, turnover, wages, and productivity; it excludes sector-specific sites such as farms and retail outlets, so its scope should not be generalized to every development. Historical HUD Urban Development Action Grant findings are likewise program-specific, not a current forecast for a new project.
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