I often hear people say things like:<\/p>\n
\u201cReal estate development just makes developers rich \u2013 it doesn\u2019t do anything to help our economy,\u201d or<\/p>\n
\u201cI understand why we need to bring more employers to Montgomery County, but building more housing just adds to the overcrowding of our schools \u2013 we should be pushing for more office projects,\u201d or<\/p>\n
\u201cI\u2019m not against growth but we shouldn\u2019t allow more development until we have the infrastructure to support it.\u201d<\/p>\n
If you\u2019ve read the previous posts in this series, you have some idea why I think these statements reflect mistaken premises about the relationship between real estate development and Montgomery County\u2019s ability to attract high-quality jobs and the workers to fill them. The basic argument goes like this:<\/p>\n
That\u2019s why real estate development is essential to what most people think of as economic development, i.e., the ability to encourage employers to bring high quality jobs to Montgomery County. Housing is only part of the equation \u2013 employers also look for office space that suits the needs of their businesses and their employees, and Bethesda, Tysons Corner and downtown Washington continue to see construction of new office buildings even as vacancy rates in suburban office parks remain elevated – but I have emphasized housing because I have observed a huge gap between perception (that new housing is getting built at a rapid clip) and reality (that housing starts have been anemic), with serious consequences for affordability and in turn for our economic competitiveness.<\/p>\n
The point is that real estate development is infrastructure.<\/strong><\/p>\n Whether it involves construction of housing, office buildings, or for that matter retail space, real estate development supports economic activity directly and indirectly by serving basic human needs, i.e., creating places for people to live and work (not to mention to get a haircut, visit a doctor, have their clothes dry cleaned or put their kids in day care).<\/p>\n Of course, as people start occupying and using the new buildings constructed by real estate developers, other infrastructure such as roads, rail and bus lines, schools, and water and sewer pipes are also required. The main difference between infrastructure in the form of roads and schools and infrastructure in the form of houses and office buildings is that the former is built by the government while the latter is constructed by private firms. This difference does not change the fact that the buildings themselves are a form of infrastructure.<\/p>\n Some of you are probably thinking, \u201cWait a minute \u2013 why should we be encouraging more people and more growth? Even if real estate development is infrastructure, allowing this kind of infrastructure to be built just draws more people to our community, where they will add to the overcrowding of our schools and the congestion on our roads. Don\u2019t build it and they won\u2019t come!\u201d<\/p>\n As I\u2019ve discussed in previous posts, people have continued to move to Montgomery County and to the Washington area despite the low rate of new housing construction. Housing production doesn’t drive population growth; it’s a response to it.<\/p>\n Luckily, our region has added jobs (albeit with weak wage growth) and people move here to take them. In an earlier post, I showed that while our growth rate has slowed, we are still projected to add 200,000 residents by 2040, a 40 percent increase in worker households:<\/p>\n