Huntsville Has Been the Nation’s Fastest-Growing Apartment Market Since 2022

Huntsville, AL remains the most aggressive market for apartment development since claiming that spot in 2022, hampering occupancy and rent growth performance.

The onslaught of supply has overshadowed demand over the last five years as Huntsville’s existing unit count climbed, and vacancies increased. This small market with about 42,900 existing units, sits about two to three hours from both Nashville and Atlanta and is, comparatively, smaller than fellow Alabama markets Birmingham (81,145 existing units) and Mobile/Daphne (43,559 units).

In the year-ending 1st quarter 2024, roughly 5,900 units wrapped up construction in Huntsville, expanding inventory a phenomenal 15.9%. Waiting in the wings are another 9,895 units in the construction pipeline, which amounts to 23% of existing units. About 6,900 of those units are projected to complete by the end of 1st quarter 2025, pushing inventory growth in the small market another 16.2%. That ratio ranks as the #1 rate for under construction inventory growth across the country, outpacing big markets like Dallas, Houston and Atlanta. Huntsville isn’t expected to see a peak in inventory growth until around the end of 2024.​

For additional perspective, annual new supply in Huntsville averaged 2,164 units over the past five years, and annual inventory growth averaged 6.5%. Those numbers surpass the historical average annual delivery load of about 1,500 units seen in the past decade, resulting in  average inventory growth of 4.6%.

With inventory expanding rapidly, occupancy has hovered below the essentially full mark for the last 19 months, averaging 94.3%. In April 2024, Huntsville’s occupancy rate landed at 93.7%, about 270 basis points (bps) below the five-year average as the market works to absorb deliveries. The April rate was also 120 basis points behind Huntsville’s 10-year average and roughly 40 bps below the U.S. norm (94.2%), according to data from RealPage Market Analytics.

Even with elevated supply volumes, Huntsville has seen demand relatively in balance with supply. Roughly 5,110 units were absorbed in the year-ending April, about even with deliveries of 5,885 units. Still, occupancy backtracked 10 bps over the 12-month period.

Under accelerated deliveries, operators cut effective asking rents 3.3% year-over-year in April 2024, the 11th consecutive month for cuts. That rate fell below the five-year monthly average of 6%.

What differentiates Huntsville from other small markets around its size like Spokane, Oxnard, Palm Bay, Fayetteville, Lansing and Syracuse is the local economy. Sustained development is supported by solid job and population growth across Huntsville, Alabama’s largest city (although smaller than the Birmingham metropolitan area).

In the year-ending April 2024, Huntsville added 8,200 jobs. Those additions expanded the employment base 3%, more than double the U.S. average (1.3%). As of April 2024, Huntsville had 32,500 more jobs than the market had in February 2020, before the COVID-19 pandemic downturn.

Huntsville’s job base is anchored by the Professional and Business Services sector followed by Government. Those sectors account for about 45% of total employment in Huntsville, generating a good bit of stability. Huntsville is home to the U.S. Army’s Redstone Arsenal and NASA’s Marshall Space Flight Center and companies like The Boeing Co., Northrop Grumman, Dynetics and Science Applications International Corp.

Huntsville is also home to multiple colleges, universities and satellite locations. The largest of those is The University of Alabama in Huntsville with an enrollment of around 9,600 students.

With a solid job base, population in the Huntsville, AL metro area has climbed to 527,254 people, up from 494,706 individuals in 2020, a 6.6% increase, based on 2023 estimates from the U.S. Census Bureau.