USA – ALABAMA Trends and Developments Contributed by: Adam J. Sigman, Crystal H. Walls, Nathan Stotser, Katie Sinclair and Courtney Bradshaw, Dentons
for lenders. Being based on overnight transac - tions, SOFR relies entirely on transaction data, whereas LIBOR was based partially on expert estimations. 2024 has seen rates stay consist - ently high, causing the cost of construction and permanent financing to be a big challenge for commercial real estate transactions. Overall, the US direct lending volume doubled in 2024, with refinancings making up 44%. Ultimately, many construction loans were not paid off (exercising extensions or amending loans to provide them), and there was less desire in the market for con - struction loans in general. Suburbs In general, suburban, garden-style development (for multifamily, office and retail) continues to be the leading commercial real estate development trend. In 2024, the seller’s market maintained its momentum, especially in the suburbs. Home prices remained high due to a combination of low supply and high demand in popular sub - urban areas. Meanwhile, mortgage rates finally began to slowly steady to an average of 6.66% after seeing some of the highest rates in dec - ades during 2023; however, for many, rates are still not low enough compared to wages, and even homes that have been listed for sale are remaining on the market for long periods of time due to affordability. Even as Gen Z joins the workforce, millenni - als are still considered a vital source of talent and remain the focus of HR professionals. They also remain the largest group in the workplace, with the power to set and maintain trends and to request change, particularly accommodation for work-from-home flexibility and co-working solutions. Millennials’ homebuying decisions are disproportionately based on convenience and proximity to work; in other words, the decision
on where to purchase a home relates directly to the job location. Office Alabama’s office market remains slow, as expected, but not as troubled as other markets across the USA (especially those with large cit - ies). Since Alabama’s “peaks” for office devel - opment are not very high, the “valleys” are not as low (compared to other markets). Alabama’s job growth and corporate attractions are mod - est, ergo many new office developments (and re-tenanting of existing office projects) require pulling existing employer-tenants from other buildings, with new, suburban offices being the most successful sub-markets. The movement of office properties on the market in 2024 contin - ued to be fairly minimal throughout the year, and nationally, office buildings as assets were still higher risk. However, while reaching pre- pan - demic norms is unlikely any time soon, towards the end of 2024 a steady movement back to the office began, due largely to many major corpo - rations implementing return-to-office policies. JPMorgan, Apple, BlackRock, Dell, Starbucks, Amazon, AT&T, Goldman Sachs and many more have turned away from permanent remote work as a general policy, and many remote and hybrid workers are feeling the pressure to return to office as other companies enact these policies. In Alabama, many workers have fully returned to the office ahead of the trend in the national landscape, and organisations and companies moving to Alabama cities such as Huntsville and Birmingham suggest that entities, not just individuals, may be looking to transition to more affordable places for central hubs. Even so, Birmingham continues to be an attractive destination for businesses. Brasfield & Gorrie announced plans to invest USD18.9 million to expand its national headquarters in the Lakeview
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