AL Multifamily Market Stabilization

Multifamily Market Stabilization in Alabama

Alabama's multifamily sector mirrors national stabilization trends, featuring steady vacancy rates near 6.5%, absorption increasingly matching new supply, and investment activity approaching pre-pandemic peaks, especially in booming markets like Birmingham and Huntsville.

Birmingham's Balanced Recovery
Birmingham has seen vacancies stabilize around 6.8% through late 2025, supported by robust job growth in healthcare and finance sectors absorbing 2,500+ units quarterly against moderated deliveries of 1,800 units. With 5,000 units under construction tapering off, rents average $1,350 per month with 2-3% projected growth into 2026, drawing investors to value-add opportunities in uptown submarkets.

Huntsville's Tech-Driven Momentum
Huntsville benefits from aerospace and defense expansion, maintaining vacancies at 5.5-6% as net absorption outpaces supply by 10-15%, fueled by a young professional influx. Forecasts show 3,000 new units in 2026, with rents climbing 4% to $1,450 averages, positioning it as a top Sun Belt performer amid controlled development.

Investment Appeal and Headwinds
Investment volumes are rebounding to $500M+ annually, attracted by Alabama's 1.2% population gains and cap rates of 6-6.5%, particularly for Class B assets in secondary markets like Mobile. Developers face challenges from rising insurance costs and labor shortages, but opportunities abound in mixed-use projects blending residential with retail to enhance yields.

Check out Multifamily Outlook in 2026

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