USA – ALABAMA Trends and Developments Contributed by: Adam J. Sigman, Crystal H. Walls, Nathan Stotser, Katie Sinclair and Courtney Dow, Dentons
Dentons 2311 Highland Avenue South Suite 500 Birmingham, Alabama 35205 USA
Tel: +1 205 930 5100 Fax: +1 205 930 5101 Email: marketing.us.dsp@dentons.com Web: www.dentons.com
Introduction In the year leading up to 2026, the real estate market adapted and showed optimism despite lingering chal - lenges, including inflation and delays on many real estate projects, in part due to tariffs. While the past several years have been marked with high interest rates and lower levels of lender activity, there was an increase in real estate activity during the second half of 2025. Specifically, 2025 was another year of surplus in the multifamily market, but renter demand was still on the rise as the cost of home ownership remained high. In retail, the secondary market of discount retailers allowed for small improvements in the sector over the course of the year. Also, with a decreasing per - centage of the population driving the majority of con - sumerism, the classic shopping segment of retail has fallen out of popularity as consumers look for new, innovative places to shop and find entertainment. The surging demand for data centres increased dur - ing the year, with every major artificial intelligence (AI) industry leader seeking desirable real estate to meet this demand. Across all sectors, real estate develop - ers were under intense pressure to deliver projects and meet deadlines and, due to tariffs and a short supply of industry professionals, new techniques and processes have become popular to meet growing demand (such as modular construction). In the legal arena, a primary trend and development across all markets was creativity in structuring capital for acqui - sitions and developments, with the main challenges being enticing equity investment and managing the increased cost of loan funds.
These market trends were reflected in Alabama’s major cities, with many new, exciting projects com - mencing during the year as developers and investors targeted desirable real estate in the state. This chap - ter will summarise the past year’s general real estate trends and how they will shape the market in Alabama for the future. Multifamily The multifamily market continued to face an elevat - ed supply of rental units during 2025. This surplus subsequently slowed multifamily construction starts and new permits at the beginning of the year. How - ever, many in the industry see the supply once again drying up as cap rate spreads remain stretched thin, indicating normalised rent growth. As renter demand continues due to high homeownership costs, experts are forecasting a reduction in apartment vacancies. In Birmingham, Alabama, multifamily development continued in many areas of the city including the highly anticipated Star Uptown redevelopment of a 52-acre hospital campus, bringing new cottages and town homes with thoughtfully planned locations for retail, office and entertainment in the Magic City. Larg - er mall complexes were also targeted for new mul - tifamily development all around the state, including the Galleria located in Birmingham. Once the state’s largest and most popular indoor mall, the Galleria is now being considered by city officials and develop - ers for redevelopment into one of the state’s largest multifamily and commercial living centres. In Hunts - ville, Alabama, the multifamily market played a major role in Alabama’s real estate development during the year, with 19 apartment complexes completed and 14
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