Huntsville, Alabama has been the most aggressive market for apartment development since 2022 and continues to remain in that position. In the past five years, Huntsville has experienced a surge in supply, outpacing the growth in demand as the number of existing units in the area increased, leading to a rise in vacancies. Despite its relatively small size compared to other Alabama markets like Birmingham and Mobile/Daphne, Huntsville boasts approximately 42,900 existing units and is conveniently situated about two to three hours away from both Nashville and Atlanta.
In Q1, roughly 5,900 units finished construction in Huntsville, expanding inventory by 15.9%. Additionally, there are construction plans for 9,985 units amounting to 23% of existing units. Roughly 6,900 of those units are projected to be complete by the end of Q1 2025, pushing inventory growth in the small market another 16.2%. This ratio ranks as the #1 rate for under construction inventory growth across the country, outperforming larger markets like Dallas, Houston and Atlanta. Huntsville’s inventory growth continues to increase and isn’t expected to peak until the end of 2024.
Annual new supply in Huntsville averaged 2,164 units over the last 5 years. Annual inventory growth averaged 6.5%. Those numbers exceed the historical average annual delivery load of 1,500 units over the last decade, resulting in average inventory growth of 4.6%.
In Huntsville, occupancy rates have maintained a steady increase just below capacity for the past 19 months, averaging at 94.3%. However, in April 2024, this metric saw a marginal decline to 93.7%, dropping 270 basis points below the five-year average and 120 basis points below Huntsville's 10-year average, though still slightly under the U.S. norm by 40 basis points.
Despite a notable influx of new residential units, demand in Huntsville has broadly aligned with supply dynamics. Over the past year, approximately 5,110 units were absorbed into the market, closely paralleling the delivery of 5,885 units. However, this period also saw a slight 10 basis points decrease in occupancy rates. Consequently, effective asking rents observed a 3.3% year-over-year decline in April 2024, marking the 11th consecutive month of such reductions. Nevertheless, Huntsville's economic strength, underscored by robust job and population growth, sets it apart from comparable markets in terms of resilience and opportunity.
In the year-ending 2024, Huntsville added 8,200 jobs which expanded its employment base 3%, more than double the U.S. average (1.3%). As of April 2024, Huntsville had 32,500 more jobs than they had in February 2020, right before the COVID-19 pandemic.
Huntsville’s job market is driven by the professional and business services sector followed by government accounting for roughly 45% of total employment in Huntsville. Huntsville is home to the U.S. Army’s Redstone Arsenal, NASA’s Marshall Space Flight center and also companies such as The Boeing Co., Northrop Grumman, Dynetics and Science Applications International Corp. They’re also home to multiple colleges, the largest of those is The University of Alabama in Huntsville with around 9,600 students enrolled.
Based on 2023 estimates from the U.S. Census Bureau, the population of the Huntsville, AL metro area has surged to 527,254 people, marking a notable increase from the 494,706 individuals recorded in 2020, representing a growth of 6.6%.
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