#317 – Inside Our Industry – Where Construction Investment Goes, Economic Growth Follows
Posted on | Inside Our Industry
Last week we shared why skilled trades in the construction industry are key to getting AI, advanced manufacturing and infrastructure projects operational. Below, in part, is a report from AreaDevelopment.com that looks at the construction industry’s multiplier effect.
Where Construction Investment Goes, Economic Growth Follows
Scott Canada, President, Mission Critical Team, McCarthy Building Companies, Inc., Q3 2026
Understanding the construction industry’s multiplier effect — and the workforce infrastructure behind it — can sharpen site selection and economic development decisions.
When the Bureau of Labor Statistics tallies its latest data, construction adds more than $16,000 per person annually to the U.S. economy. For site selectors and economic developers evaluating where to land a project, that number is more than a headline — it’s a signal about what a community can absorb, sustain, and grow.
Commercial real estate construction — everything outside residential and multifamily — generated an estimated $5.6 trillion in economic activity in 2024 on $2.19 trillion in direct spending, accounting for roughly one-fifth of total U.S. GDP. The local impact of that activity averages $1.5 trillion annually, with the economic multiplier translating to more than $1.6 billion per year for a mid-sized city of 100,000 people, and upwards of $128 million for a small city of 8,000.
These aren’t abstract figures. They represent the flows — wages, materials, subcontractor spend, tax revenue — that determine whether a location can support a major new facility over the long term.
The Multiplier in Practice
Each dollar spent on construction returns roughly three dollars to the local economy. Because commercial construction spend flows heavily into wages, materials, and local subcontractors rather than out-of-market procurement, that return is largely captured at the community level.
The relevant question isn’t whether construction activity is temporary—it’s whether the built asset creates long-term value.
The common objection — that construction’s economic impact is temporary — misses what the activity creates. Brookings Institution research is consistent on this point: construction is the initial phase of infrastructure investment, and sustained growth comes from the mobility, productivity, and secondary development that infrastructure makes possible.
A manufacturing facility, hospital, research campus, or energy installation doesn’t stop contributing when the last worker leaves the site. It generates permanent jobs, sustained tax base, and ancillary development that compounds over time. For EDOs and site selectors, the relevant question isn’t whether construction activity is temporary — it’s whether the built asset and the community around it are positioned to capture long-term value.
Energy Investment and Rural Communities
The geography of construction investment is shifting. Rural communities across the country are absorbing significant capital through energy infrastructure — solar generation, battery storage, grid upgrades — that brings both immediate project spend and longer-term workforce and tax implications.
$5.6T – Estimated economic activity generated by commercial construction in 2024.
These projects deliver more than kilowatts. Solar and storage facilities create property tax revenue in areas where the tax base has historically been constrained, and they create a construction workforce footprint that, with intentional training programs attached, can seed a skilled labor pipeline for future industrial attraction. Water treatment plants, power plants, and similar utility infrastructure follow the same pattern: the presence of reliable, modern resources — and the workforce to maintain them — is itself a site selection differentiator that attracts additional business investment over time.
Data Centers and the Workforce Demand Surge
The data center sector illustrates the scale of what’s ahead. CBRE projects more than $150 billion in data center construction currently underway or in advanced development — nearly five times the estimated $50 billion spent in 2024 — with an anticipated economic impact approaching $405 billion across national and local economies. At an average construction cost of $1,750 per square foot and an economic impact of nearly $5,000 per square foot, these facilities represent some of the highest-multiplier projects in the current development pipeline.
The constraint isn’t capital. It’s labor.
The activity currently supports an estimated 975,000 jobs in and around data center facilities. The constraint isn’t capital — it’s labor. Thousands of electricians and skilled craft workers are needed to build these facilities, and the communities best positioned to attract and retain this investment are those with the training infrastructure to supply that workforce.
The Infrastructure Underneath the Infrastructure
Construction investment creates the built environment that economic activity requires. But the communities that capture the most durable benefit from that investment are those that treat workforce development as infrastructure in its own right — built intentionally, maintained continuously, and aligned with the industries they want to attract.
For site selectors, a community’s training ecosystem is a leading indicator — not just of available labor today, but of a location’s capacity to grow with an operation over time. The $1.5 trillion that construction puts into local economies every year doesn’t flow evenly. It concentrates in places prepared to receive it.