USA – ALABAMA Trends and Developments Contributed by: Adam J. Sigman, Crystal H. Walls, Nathan Stotser, Katie Sinclair and Courtney Dow, Dentons
Lending and Financing The Mortgage Bankers Association reported that new originations increased in the commercial real estate lending market during the first six months of 2025. The market remained resilient through the end of the year, including increases from the prior year in mortgage- backed securities and single-asset single-borrower transactions. While it was a challenging fundraising market, the end of the year saw some flexibility in capital causing a third and fourth quarter push in the number of closings and refinances. As many in the industry are aware, market volatility and liquidity constraints have caused many institu - tional allocators to pause funding for new real estate commitments, leading to hesitancy in the market. However, developers and investors were hopeful that interest rates would stabilise by the end of 2025, with cuts expected to continue into 2026, and experts are anticipating that commercial banks will increase lend - ing activity as the market experiences a return to more consistent investment activity. Mixed-Use Developments: The Future of Zoning for Real Estate Developers As real estate demands across the country contin - ue, many municipalities are taking the opportunity to reshape and adopt more flexible zoning to encourage residential growth and high-density housing near city centres. Most commonly, this is reflected in approv - als for changes from single-family dwelling zoning to mixed-use project zoning. Mixed-use developments allow for housing, entertainment and commercially useful spaces to efficiently cover areas. The downside is that the shifting interest to these developments can make the zoning process difficult with many areas of interest not originally intended for certain desired uses by developers. This shift also comes with advocates for sustainability and efficiency, and developers eye - ing high-interest areas and cities have been pushed more than ever to adapt to new demands from munici - palities. The authors encourage developers to con - duct extensive regulatory due diligence to confirm any strict building codes, compliance costs or regulatory obligations, as well as to contact a local attorney to gain more insight into the municipality’s decisions and trends towards more community-centred projects.
through Birmingham’s highly rated restaurant scene (with nearly a dozen Michelin-recognised restaurants) or the Huntsville-Madison area’s steady demand for new living communities and entertainment, Alabama’s retail market remained strong through 2025. Construction The continued short supply of skilled professionals including carpenters, electricians, equipment opera - tors and more was one of the key reasons for delays and constraints on project budgets during the year. To make up for this shortage, many in the industry have turned to robotics for concrete finishing, welding, demolition tasks, conversion of maps and projects, and drone data. Tariffs also played a large factor in rising costs of materials throughout the year, which impacted prices on aluminum, lumber and steel. This, combined with the variability of supply chain caused by shipping disruptions, delays, geopolitical tensions and more, has not deterred the ongoing demand for new construction. One area of construction that con - tinued to gain popularity in 2025 was modular con - struction, which involves constructing at least 60% of a building or structure at a location other than the site itself. This type of construction is one of the fastest growing areas in the industry, and is expected to reach USD140 billion by 2029. Experts expect that nearly every area of real estate will experience growth in this type of construction, including multifamily, office, data centres and lodging; in the southern United States, it has become a 4.4 billion-dollar market in lodging, pad retail, and housing specifically. In Alabama, Huntsville continues to be a hotbed for new construction as government sectors includ - ing the FBI and NASA expand in and transfer to the area. In response to this demand, Alabama’s govern - ment enacted a new law requiring approvals from the local government for construction of a structure that is 200+ feet tall within two miles of any military installation. While this new law applies throughout the state, it will most likely heavily impact construction in the Huntsville area. The authors encourage any of those interested in purchasing property in the state for either industrial, commercial or multifamily purposes to check with local authorities or attorneys to confirm the location of nearby military installations.
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