USA – ALABAMA Trends and Developments Contributed by: Adam J. Sigman, Crystal H. Walls, Nathan Stotser, Katie Sinclair and Courtney Bradshaw, Dentons
in Baldwin County grew, offering attractive loca - tions near the state’s desired beaches. There were multiple lawsuits against the National Association of Realtors (NAR) in 2023 focused on the commissions paid by homeowner sellers in residential transactions, with these commissions generally being divided among brokers for both buyer and seller in such transactions. In early 2024, the NAR agreed to a settlement resulting in the elimination of these commissions, with over USD400 million in damages being paid to groups of homeowner sellers. However, Redfin reported in early 2025 that buyer-agent com - missions have barely changed since August 2024, when the real estate commission rules took effect. It remains to be seen if a noticeable decrease will take place the longer the commis - sion rules are in effect. Multifamily Most markets have seen a record supply of mul - tifamily projects and units as new construction projects – which started 18 months to two years ago during a peak in multifamily development – are now being completed and delivered. This supply also coincides with the end of a span of several years of aggressive rent growth, caus - ing that rent growth to stall and, in some cases, recede. This has subsequently triggered a slow - down in project starts in 2024, which is expected to impact early 2025, especially with high interest rates. These high interest rates have also affect - ed investor offers purchasing newly completed assets, triggering a slowdown of multifamily transactions. Regardless, and as a testament to the multifamily sector’s ability to withstand vari - ous economic factors, rental demand in certain metropolitan statistical areas and markets con - tinues to be on the rise, with pressure on rent rates to decrease due to increased volume. This is likely connected to what is happening on the
home ownership front. As shown in previous years, multifamily properties have proven to be resilient assets despite high construction costs, with many industry experts expecting eventual rate decreases to lead to more projects getting into the pipeline, transacting first in the limited markets referenced above and then expanding to more metropolitan statistical areas as these start to see rent growth. Throughout Alabama (and nationally), certain markets and sub-markets remained active in multifamily. Huntsville remained a target for mul - tifamily investment and is commonly identified as a great market for rental property. Huntsville’s population continued to grow, in part driven by the technology and aerospace sectors attracting large employers to the state. One of the many reasons for such growth is the movement of FBI employees to its facility in the Redstone Arse - nal. This, among other large projects, has cre - ated a competitive and fast-paced market in the Huntsville-Madison area. Repurposing retail properties into multifamily and mixed-use projects continued through 2024. This can be challenging, however, due to con - struction costs and many zoning laws that lack provisions contemplating adaptive reuse, cou - pled with a push to prioritise multifamily housing with moderate tier rents. These redevelopments have triggered an uptick in zoning/entitlements work, disputes (or threatened disputes) with neighbours and municipalities, and private title declarations and easement agreements. Lending The transition from the London Interbank Offered Rate (LIBOR) finalised in September 2024, when the final synthetic USD LIBOR was published. The Secured Overnight Financing Rate (SOFR) remains the preferred replacement
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