The proposed location for the Northern Regional Prison "looks like an excellent site", according to the Northern Tasmania Development Corporation.
NTDC is owned by seven Northern councils, including the Meander Valley Council, the municipality in which the prison is proposed to be built.
The state government last week announced the planned site for the prison would be adjacent to the Valley Central Industrial Precinct at Westbury.
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NTDC chief executive Maree Tetlow said it was understandable that Westbury residents would initially be "confronted" by a new large-scale development like this.
"Once all the facts are understood, I hope [residents'] concerns will be eased," Ms Tetlow said. "I congratulate Meander Valley Council on their resolve and working to support new industries in the area."
Ms Tetlow said Stage 1 of the prison's construction alone would bring roughly $160 million in economic output to the Meander Valley area and would provide 733 jobs.
She said this was based on the NTDC's own economic modelling.
On concerns the prison could put downward pressure on house prices in Westbury, Ms Tetlow said it was more likely prices would go up.
"House prices are a result of a range of factors, including access to jobs and services," Ms Tetlow said.
"The increase of construction workers, prison employees, prison service providers, and the additional workers supporting new jobs in hospitality, shops, service stations and so on is likely to be an upward push on house prices.
"Westbury is so beautiful [that] I would suggest people that can access a job will jump at the chance to live in the area."