USA – ALABAMA Trends and Developments Contributed by: Adam J. Sigman, Crystal H. Walls, Nathan Stotser, Katie Sinclair and Courtney Bradshaw, Dentons
to lose its economic incentives (Ala. Code Sec - tion 25-7-37). Conclusion: Looking Ahead in 2025 The commercial real estate market in 2024 was marked by challenges but demonstrated growth and resiliency across many sectors. Rising con - struction pricing and interest rates slowed new project acquisitions and debt/equity closings, and stricter loan-to-cost and loan-to-value requirements have dampened transaction flow. For private equity, dictated by equity investors, there continues to be a surge towards preferred equity over common equity with more sponsor guaranties being required. While preferred equity offers investors return opportunities with fewer downsides than common equity, a developer’s/ sponsor’s other source of funds (equity) has also become more challenging in today’s environment. These factors are affecting all market segments of development, including multifamily, indus - trial and retail. Alabama has felt the effects but has showed resiliency through the periods of extremely high interest rates, and has maintained
its above-average status in the homeownership market and its below-average unemployment rate. The Alabama Commercial Real Estate Index is a quarterly survey of brokers, lenders, developers, owners, investors and other profes - sionals in real estate to measure expectations in the market for the next quarter. The survey for the first quarter of 2025 registered its highest score since the third quarter of 2023. While there are still headwinds in the sector, the profession - als surveyed expressed a confidence not shown through all of 2024 that the state’s real estate market would expand and grow to start the year. While the Federal Reserve still claims to provide several more rate decreases in 2025, there is still concern about whether such decreases will occur and when. Many in the industry anticipate a large number of transactions towards the end of the year in 2025 due to this delay in market participation. When rates do go down and per - manent refinancing goes up, the authors believe that construction credit will become more avail - able, and this will drive further development going forward.
1154 CHAMBERS.COM
Powered by FlippingBook