How does 'building land' fit into economic modeling?
Land would fit into production functions or many economic models the same/similar way as other factors of production.

An example of general Cobb-Douglas function with land would be:

$$Y(K,L,T) = A K^{\alpha}L^{\beta}T^{1-\alpha-\beta}$$

Where $K$ is capital, $L$ labor, and $T$ land. Into most economic models land can be integrated rather easily as the example above shows. The land improvements necessary to clear land for building can be in principle modeled as capital accumulation with depreciation but for some general production functions there is not that much difference made between the inputs.