Birmingham & Huntsville Multifamily Market Report
Birmingham Market Overview
The Birmingham, AL, market is diverse, with a thriving cultural scene encompassing art, music, and culinary experiences. Over the last 12 months, Birmingham’s multifamily market has seen a notable surge in demand alongside a substantial increase in new supply. As of Q1 2024, the net absorption in Birmingham amounted to 822 units. The demand has remained positive for four consecutive quarters, rebounding from two-quarters of negative absorption. The majority of this new supply has been concentrated in Shelby County and downtown Birmingham.
Birmingham Market Performance
The vacancy rate in Birmingham stands at 11.3%, significantly surpassing the national average of 7.6%. It is anticipated that Birmingham’s vacancy rate will continue to rise in the short term, given the ongoing construction of 2,100 units in the market. The average asking rent for apartments in Birmingham is $1,190 per month. Rent growth in Birmingham has been relatively stagnant over the past 12 months, experiencing a minimal change of -0.1%.
Over the last year, the transaction volume in Birmingham totaled $92.2 million, well below the market’s historical average. This decline is attributed to high interest rates and economic uncertainty. Due to the decrease in sales volume, the market price per unit in Birmingham has also fallen, accompanied by increased cap rates.
By The Numbers | Last 12 Months | Source: CoStar Group
- Vacancy Rate: 11.3%
- Rent Growth: -0.1%
- Delivered Units: 1,577
- Absorbed Units: 822
- Sales Volume: $92.2M
Huntsville Market Overview
Innovative developments and groundbreaking projects were crucial drivers in Huntsville’s overwhelming growth in 2022 and 2023, and the market is nowhere near slowing down. The market continues to have a booming economy and rising employment as businesses are currently investing billions in the area. As for the multifamily sector, new supply continues to outpace demand, which has resulted in rising vacancies.
Huntsville Market Performance
Huntsville has witnessed a continuous positive trend in net absorption for 16 consecutive quarters, with annual net absorption reaching 3,408 units—triple the market’s historical average. The demand in Huntsville is fueled by domestic migration and robust job growth. Areas like Madison/Airport and University/Research Park have observed the highest net absorption in the past 12 months, indicating a strong demand outlook for the market in the long term. Despite the high demand, Huntsville has experienced even higher levels of new supply, with net deliveries totaling 5,609 units over the past year—more than three times the market’s 10-year annual average. Madison/Airport, Limestone County, and University/Research Park have received the majority of this new inventory.
The vacancy rate in Huntsville has been on a steady rise over the past two years due to the abundant new supply surpassing demand. The current vacancy rate of 17% is a record high for the market, significantly exceeding the U.S. vacancy rate, which has also been increasing, albeit at a slower pace. While Huntsville’s construction pipeline has decreased over the past year, it remains elevated, with 5,400 units currently under construction. As vacancy rates continue to climb, annual rent growth in Huntsville has turned negative, experiencing a decrease of 3% over the past year.
Transaction volume in Huntsville has amounted to $41.2 million over the past year. Out-of-state investors are notably active on the buyer side, and average pricing has seen a decline in recent quarters.
By The Numbers | Last 12 Months | Source: CoStar Group
- Vacancy Rate: 17%
- Rent Growth: -3%
- Delivered Units: 5,609
- Absorbed Units: 3,408
- Sales Volume: $41.2M
