The Defense Department’s ongoing Base Realignment and Closure (BRAC) program has the potential to be an economic bonanza for markets whose military installations are expanding. But builders wonder how many potential home buyers BRAC might bring them, and when.

Over six years ending in 2011, 182 military bases and support facilities nationwide will be closed. As a result of BRAC, 126 others are expanding. Fort Benning in Georgia, for example, is receiving a $3.5 billion overhaul to handle the addition of 11,000 military and civilian jobs. When spouses and children are included, some 28,000 people could descend on towns around the base by the time BRAC is completed.

“This isn’t just a military thing; it’s an economic engine for our entire 10-county region,” says Michael Gaymon, president of the Greater Columbus Chamber of Commerce in Columbus, Ga., Fort Benning’s hometown. And some builders are gearing up for the influx, such as H&H Homes in Fayetteville, N.C., home of Fort Bragg, which is receiving 3,000 troop members and civilian personnel from Atlanta.

Greg West, H&H’s chief of staff, says his company initially planned to market homes priced above $300,000 to relocating senior-level officers, government employees, and contractors. The builder realized, though, that many Atlantans have lost considerable equity in their homes during the recession, so H&H is building more homes priced in the mid-$200,000 range.

Toll Brothers’ region president Bill Gilligan would neither confirm nor deny a recent news report that Toll had purchased 125 acres in Harford, Md., to build 300 homes near Aberdeen Proving Ground, which is absorbing personnel from New Jersey’s Fort Monmouth. The realignment could bring as many as 15,000 jobs to the area and create the need for more than 9,600 new homes. But Gilligan admits Toll is “concerned” that projections about transfers and relocations might turn out to be less than advertised, especially about contractors. “Until you see the buyer in your sales office, it’s all speculative,” he says.

Builders staggered by their industry’s recession are understandably wary, especially those familiar with the fiasco in Georgia that left developers stranded after the Defense Department changed its mind about relocating a brigade to Fort Stewart.

In 2007, Fort Stewart’s commander, Maj. Gen. Anthony Cucolo, reportedly implored local developers to build thousands of new homes to meet the demand he foresaw from 10,000 troop members, personnel, and their families coming into Hinesville, Ga., as part of a fifth brigade being added to the base. (This move was not part of BRAC.) The Army’s “highest level of assurance” about this movement convinced reluctant banks to make AD&C loans, according to Clay Sikes, a developer who secured permits for 10,800 homes on 2,700 acres he controlled.

But in April 2009, the Defense Department, without explanation, decided against relocating the brigade. By then, developers had invested at least $100 million in land and infrastructure, says Sikes, who alone lost $20 million. Lamar Smith, another local developer, says he spent $600,000 just to master plan 1,200 acres he controlled between Savannah and Fort Stewart. “Fortunately, the Army pulled the plug before we closed on the land.” Other developers weren’t so lucky; their businesses collapsed.

Sikes has another, unrelated project along Georgia’s coast, with 3,300 acres and 4,400 homesites, that’s also struggling. “I can live with that because it’s my decision. But this other thing has been hard to take.”

Learn more about markets featured in this article: Atlanta, GA.