Tremendous Growth Expected in Huntsville in 2023

Innovative developments and groundbreaking projects were crucial drivers in Huntsville’s overwhelming growth this past year, and the city is nowhere near slowing down. The real estate market in Huntsville is projected to grow even more in 2023 due to the city’s robust job and population growth, low cost of living, and development opportunities. Nicknamed ‘The Rocket City’ because of early rocket development for the U.S. Army in 1950, which was used to put the first satellite in orbit, the first American in space, and transported the first astronauts to the Moon. The city continues to have a booming economy, and rising employment as businesses are currently investing billions in the area.

In 2021, Huntsville led the U.S. in economic growth, which contributed to notable growth patterns for the following 2022 fiscal year. First, household income in the Huntsville region is now $20,000 higher than 20 years ago and is expected to increase even further due to inflation and job market competition. Next, Huntsville experienced a 2.04 percent increase in population in 2022 versus 2021. Third, employment climbed by an additional 260,000 jobs, an increase of five percent. Lastly, according to Real Estate U.S. News, Huntsville was ranked the #1 place to live in the U.S. in 2022-2023, factoring in housing affordability, the job market, crime rate, quality of life, net migration, college readiness among high school students, resident’s well-being, commute time, access to quality health care and air quality.

High Growth Areas

• Meridianville
  • New businesses are opening throughout the market, allowing for several additional job opportunities for the county. Residents are worried that the market’s infrastructure is not equipped to handle the growth at the current rate. Residents are questioning officials about whether annexation into Huntsville is the correct answer.
  • Job market increase – 3.6%

• Madison
  • With a population of approximately 61,000, it is the 9^th largest city in the state. Madison is growing at a rate of 2.34 percent annually, and its population has increased by 7.38 percent since the last consensus.
  • Job market increase – 3.6%

• Athens
  • The Athens city council approved a wave of new retail and restaurant developments to enable further city growth. The developments are expected to generate more than 300 new jobs and more than $28 million in annual sales.
  • Job market increase – 3.5%

Unemployment and the Job Market

Huntsville has an unemployment rate of 3.1 percent, way below the U.S. average of six percent. The city also ranks seventh-highest for income growth between professionals aged 25 to 44 and those aged 45 to 64 (25.85 percent). Huntsville has seen the job market increase by 3.6 percent over the last year, and the city ranked in the top 10 for best places for career opportunities in 2022.

Huntsville’s most significant job sectors in Huntsville are Aerospace and defense, with NASA’s Marshall Space Flight Center and the U.S. Army’s Redstone Arsenal being two of the area’s largest employers. There are also many private sector opportunities for residents working in science, technology, engineering, and math, at companies including Boeing, SAIC, and Northrop Grumman. A Toyota manufacturing plant also provides many area jobs. Huntsville is considered the technology hub for the greater Southeast, a title that has contributed significantly to the city’s overwhelming growth rate.

So What Does This Growth Mean for Commercial Real Estate?

Huntsville’s population growth is driving unprecedented commercial, residential, and industrial construction totaling $1.5 billion. CityCentre at Big Spring plans to enlarge its downtown footprint and introduce two more phases. A food court, a Moxy Hotel, and a parking deck are all part of Phase 2. Mixed-use commercial, office, and residential space will be included in Phase 3. In 2023, Phases 2 and 3 will both be under construction.

The retail sector in Huntsville has shown to be resilient. The metro’s vacancy rate, 2.8 percent, has been stable and is significantly lower than the 4.6 percent 10-year average. Rent growth has also improved steadily over the previous few quarters. Additionally, investors have consistently expressed interest in Huntsville retail over the last few quarters. Transaction activity significantly increased in the second half of 2022, and $293M in real estate traded hands in 2022. Pricing continues to rise, but assets still come at a significant discount to Nashville and Atlanta.

Retail Key Fundamentals:

• Low vacancy rate of 2.8 percent.
• Rent growth steadily increased by 5.7 percent over the past 12 months.
• 560,000 square feet under construction.
• Average Cap Rate of 5.2%.
• Sales volume of $301M in the past 12 months.

Economic Development Projects

2022 was a notable year for Huntsville’s growth. Not only did the city continue to grow by more than 450 new residents per month, commercial and residential development worked to close the gap between supply and demand as well. Huntsville’s Inspections Department granted more Certificates of Occupancy in 2022 than any other year since the department kept data in 1983, emphasizing the tremendous growth that occurred in the city in 2022 alone.

2022-2023 Economic Developments

• The opening of the Orion Amphitheater in May was a transformative project. The venue attracted more than 150,000 people in its first season and was praised by artists who performed there, including Stevie Nicks, Jason Isbell, Dave Matthews Bands, and My Morning Jacket.
• The $110 million Anthem House project, which includes 330 residential units, 20,000 square feet of office space, and 30,000 square feet of retail space, broke ground in September.
• In developments like Jaguar Hills, which provided brand-new single-family homes at previously unheard-of price points, residential expansion flourished in 2022. More housing complexes are being built along the Bob Wade Lane, Pulaski Pike, and Blue Springs corridors.
• The historic downtown of Huntsville is undergoing a growth boom unlike any other city area. The Von Braun Center had improvements this past year, and the Autograph by Marriott, a new hotel, is being built close to Big Spring Park.
• It is anticipated that work will start on the 11-acre mixed-use Front Row Huntsville development in the spring of 2023 at the former Big Springs Bottling facility. The project will be the most extensive downtown makeover, consisting of numerous eateries, shops, offices, residences in the loft style, and a hotel.
• Toyota Manufacturing announced a $222 million investment in a Huntsville facility to develop a new line of four-cylinder engines.

Sports Developments

With more than 52,000 hotel rooms booked, sports are expected to have an economic impact on Huntsville of more than $32 million. That economic impact is generating an additional $2.4 million in taxes and raising the prominence of a community with over 220,000 residents keen to continue growing.

• Toyota Field – The project was a construction of a baseball stadium and multi-use venue. The field will hold various other entertainment events, including sports and concerts, in addition to baseball. The first football game at Toyota Field was deemed a success with a $1 million economic effect, a mention on ESPN’s “GameDay,” and an attendance of about 10,000 people.

• Joe Davis Stadium – Huntsville’s Joe Davis Stadium is in the middle of a $28 million extreme makeover. Once the 14-month renovation is complete, a new sports complex will be built to host city sports clinics, special events, and high school football, lacrosse, and soccer games. The city also plans to host a minor league soccer team at this new venue.