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Originally published: January 2023 | Updated: October 2025
Huntsville’s commercial real estate market is undergoing a significant transformation as the city solidifies its position as a major hub for technology and aerospace.
The 2025 outlook appears strong, with new office spaces, retail centers, and industrial parks on the horizon, all driven by significant expansions from big tech and federal defense contracts.
The market right now has solid fundamentals, and economic growth is expected to outpace both state and national averages through 2027.
Manufacturing is humming along, and federal investments keep pouring into the region.
Big projects, such as MidCity, Town Madison, Clift Farm, and Hays Farm, are reshaping the commercial landscape and opening new doors in every asset class.
The multifamily market outlook is especially bright when considering the current development pipeline and projections through 2028.
Huntsville’s industrial market is going through a correction after a wild run in 2023 and early 2024.
Negative absorption and fresh supply are creating some temporary bumps, and submarkets aren’t all moving in lockstep.
The Huntsville industrial market is adjusting quickly. Net absorption declined to -220,000 square feet over the past year, marking a significant shift from the positive momentum observed previously.
Developers delivered 1.3 million square feet of new space, or almost 3% of the market’s total inventory. That big jump in supply explains a lot of the negative absorption.
At the end of 2023, Huntsville’s industrial vacancy rate was 5.64%, a tick down from 5.94% in 2022. That’s actually an improvement, even with the market softening in 2024.
| Metric | 2022 | 2023 | 2024 |
| Vacancy Rate | 5.94% | 5.64% | Data pending |
| Net Absorption | Positive | Positive | -220,000 sq ft |
| New Deliveries | Lower | Moderate | 1.3M sq ft |
Large-format industrial facilities continue to drive most leasing activity in Huntsville.
This market tends to favor distribution centers and manufacturing facilities instead of smaller warehouse spaces.
E-commerce fulfillment demand is steady, but oversupply is causing some headwinds.
Companies seem to prefer spaces exceeding 100,000 square feet, featuring modern loading facilities and close proximity to transportation.
Small-bay industrial construction is pretty quiet. The existing spaces serve local contractors, service businesses, and light manufacturers just fine.
Rent premiums are paid for large-format properties due to their efficiency and tenant stability. Small-bay properties get higher per-square-foot rates, but leases are usually shorter.
Jetplex Industrial Park had a banner year in 2023 for leasing. Old manufacturing plants, totaling approximately 2.5 million square feet, have attracted new tenants, including spaces formerly occupied by Remington, Navistar, and Cinram.
The I-565 Corridor wins big on location, with direct interstate access and Huntsville International Airport close by. Logistics and advanced manufacturing companies are drawn to that connectivity.
Madison County industrial zones have mixed results. The closer you get to Research Park, the more premium the rates, thanks to all the aerospace and defense contractors nearby.
Chase Industrial Park also landed some big leases, just like Jetplex, and now both have very little large-format space left to offer. Expansion inventory is tight for now.
Submarkets with better transportation access tend to outperform, possibly even more so than those with lower utility costs or tax benefits.
Huntsville’s office market is following the national script, with vacancy rates holding around 14%. Tenants are shifting their focus toward premium amenities and flexible spaces, and honestly, who can blame them?
Companies now prioritize quality over quantity.
The U.S. office market is stabilizing after several years of turmoil. Huntsville’s vacancy rate is hovering right around the national average.
Current Market Conditions:
The office market appears to be at a fork in the road, with leasing activity inching upward. Still, economic uncertainty is making tenants take their time with decisions.
Hybrid Work Impact:
Huntsville’s tech and defense sectors are the main drivers of office demand. These industries still need more space than traditional sectors, so they’re holding up the market—at least for now.
Modern tenants seek buildings with top-notch amenities and spaces that they can move into immediately. The commercial office space market is evolving now, revolving around hybrid work and a focus on quality.
High-Demand Amenities:
Spec suites are catching on fast because companies want to move in quickly. Pre-built spaces help them reduce improvement costs and expedite the timeline.
Spec Suite Features:
Huntsville landlords continue to invest inpull in quality tenants. When properties lack modern amenities, they usually can’t keep occupancy above 75%.
Landlords now view tech integration as essential for keeping tenants satisfied. Smart building features—such as mobile access control and energy management—also enable them to charge higher rents.
The flight-to-quality trend continues to gain momentum as companies reduce their office footprints and focus on higher-grade buildings. Huntsville’s Class A properties are definitely getting the biggest boost from this shift.
Quality Building Characteristics:
Class B and C properties are in a tough spot. A lot of owners are converting underperforming offices into residential or mixed-use spaces instead.
Rent Premiums by Class:
| Building Class | Average Rent/SF | Occupancy Rate |
| Class A | $22-28 | 85-90% |
| Class B | $16-22 | 70-80% |
| Class C | $12-18 | 60-75% |
Defense contractors and tech companies in Huntsville are driving the need for premium office space. They require specialized infrastructure and security that older buildings cannot deliver.
Owner-occupied properties usually perform better than traditional leased spaces. Companies that buy their own buildings get more control and stability for their teams.
Discover how Dean Commercial Real Estate simplifies site selection in Huntsville. Find the right location for growth and long-term value. Start planning your next move today—contact us.
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Huntsville’s retail and hospitality sectors are on the upswing, thanks to a jump in city permitting and changing consumer tastes.
Retail leasing activity increased by 13% in Q1 2025 as businesses shifted their focus to experiential shopping and smaller-format stores.
The city continues to approve permits for new retail and hospitality projects in large developments. Places like MidCity, Town Madison, Clift Farm, and Hays Farm are fueling most of the permit activity.
Restaurant permits are up, especially in the suburbs. Mixed-use projects now make up about 40% of new hospitality permits in 2025.
Hotel construction permits climbed 25% over last year. Extended-stay and boutique hotel concepts are leading the pack in new applications.
Popular permit categories include:
Permits for standard retail spaces usually take 45-60 days. For a complicated hospitality project, expect a duration of 90-120 days.
Retailers are shrinking their store sizes and adding more interactive features. The average new retail space has dropped from 3,500 to 2,800 square feet.
Trending experiential concepts:
Small-format grocery stores are popping up in neighborhoods. These 8,000-to 12,000-square-foot stores are a good fit for local markets.
Retail establishments with an entertainment focus—such as axe throwing, escape rooms, or interactive dining—draw in younger crowds.
Tech upgrades are everywhere. Augmented reality fitting rooms and mobile checkout are quickly becoming the norm.
Local entrepreneurs prefer smaller spaces because leases are generally more affordable. This shift is making Huntsville’s neighborhoods more diverse and interesting from a retail perspective.
People in Huntsville are spending more on services than goods these days. Dining and entertainment are taking a bigger chunk of discretionary income.
Key spending patterns:
Inflation, at about 2.5% per year, shapes how people shop. Value-oriented and discount stores are getting more attention from price-conscious shoppers.
Most hospitality revenue comes in from Thursday to Sunday. Entertainment districts stay packed on weekends—no surprise there.
People often check out products online first, but for certain items, they still prefer to visit a store before making a purchase.
Spending peaks in spring and fall. The holiday season stretches out longer, but shoppers spend less per transaction on average.
Young professionals aged 25-40 are the biggest spenders. They care more about convenience and unique experiences than old-school retail.
Huntsville’s multifamily sector is on a roll, with seven properties now pre-leasing and construction activity picking up all over.
The Huntsville multifamily outlook remains extremely positive through 2027 and 2028, and that’s likely to have a ripple effect on office, retail, and industrial markets.
The multifamily pipeline covers several major projects at different stages. Seven properties are already pre-leasing, indicating that developers are confident about market demand.
The largest project, Front Row, is still in its early stages of construction but is expected to add a significant number of units over the next two years. That’ll shake things up for sure.
Current Pipeline Status:
A wave of new, high-quality housing is set to open in 2025. After that, construction may slow down as development costs and financing hurdles become more challenging.
Absorption rates indicate that Huntsville’s economy and population continue to grow. The small multifamily investment market is seeing valuation growth and stable cap rates in Q2 2025, which gives investors confidence.
Homes are sitting on the market about ten days longer than last year. Still, pending sales are up 6.2% in April, so demand hasn’t gone away.
Rental growth looks steady and healthy. Cap rates have stabilized, so investors view the market as more stable and less risky than before.
The Huntsville real estate market is showing signs of momentum,, and home prices are likely to rise in 2025. As houses get pricier, more folks will look to rent instead.
Multifamily growth increases demand for retail and office space by attracting more people to the area. New residential projects mean more need for ground-floor retail and nearby commercial services.
Office markets also receive a boost, as young professionals prefer to live, work, and play in the same neighborhood. Mixed-use developments that combine residential and commercial space are gaining popularity among tenants and investors.
Industrial demand rises for last-mile delivery and storage. More people nearby means logistics and distribution centers need to keep up.
CRE Impact Areas:
The CREMI score improved to -1.5 for Huntsville in Q2 2025. That points to stronger fundamentals across the board in commercial real estate.
Huntsville’s commercial real estate market is driven by two major engines: a fast-growing tech workforce that’s putting the city on the map, and a rock-solid aerospace/defense sector built on federal contracts.
These industries keep creating demand for office space, R&D facilities, and specialized commercial properties.
Huntsville ranked number one on CBRE’s list of emerging North American tech talent markets in their annual Scoring Tech Talent report.
This recognition puts Huntsville ahead of 74 other U.S. and Canadian cities.
The city’s tech employment sector grew by 17.9% over the past five years.
Tech wages jumped 19.6% during the same period, making Huntsville an increasingly attractive destination for skilled workers.
Huntsville’s total tech workforce hit 25,910 employees as of 2024.
This growth drives demand for modern office buildings and collaborative workspaces across the metro area.
The Rocket City’s tech-driven job market creates opportunities in multiple sectors.
Tech companies need flexible lease terms and scalable facilities to keep up with rapid growth.
Huntsville’s aerospace and defense industries form the backbone of the city’s commercial real estate market.
These established sectors maintain steady tenant demand for industrial and office properties.
Major aerospace companies need specialized facilities with security clearance requirements.
These properties command premium rents due to their unique specifications and limited supply.
The defense contractor ecosystem covers both large corporations and smaller specialized firms.
This creates a wide range of real estate needs, from high-tech research labs to manufacturing facilities.
NASA’s Marshall Space Flight Center anchors the local aerospace cluster.
Private contractors supporting NASA help maintain strong demand for nearby commercial space.
Federal defense budgets provide long-term stability for Huntsville’s commercial real estate market.
Government contracts typically span multiple years, allowing property owners to enjoy predictable tenant revenue streams.
Defense spending stays a national priority, which shields Huntsville from economic swings.
This stability attracts real estate investors seeking consistent returns.
Federal agencies and contractors like multi-year lease agreements.
These longer commitments help commercial property owners and developers avoid vacancy risks.
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If you’re ready to get started, call us now!
Huntsville’s commercial development faces real bottlenecks in zoning approvals and land availability.
Major corridor projects and bypass routes will reshape commercial accessibility through 2027.
The Northern Bypass extension stands out as Huntsville’s largest infrastructure investment, impacting commercial real estate.
This project will connect Highway 72 to Interstate 565, creating new commercial nodes along the route.
Key Corridor Developments:
These improvements aim to alleviate traffic congestion and unlock previously undeveloped commercial land.
The Northern Bypass alone will create about 15 miles of new commercial frontage.
Madison Pike corridor improvements will boost access to existing commercial properties.
Property values along these upgraded routes usually rise 12-18% within two years of completion.
Commercial developers are already securing land near planned interchanges.
Early positioning allows them to navigate approval processes before the infrastructure wraps up.
Available commercial land in core Huntsville areas has dropped to historic lows.
Prime retail and office sites now take 18-24 months for entitlement approval, up from 12-15 months in 2022.
Current Constraints:
Huntsville’s growing population keeps demand high, while supply remains scarce. Developers increasingly chase infill projects and redevelopment opportunities.
Land banking has become a go-to move among commercial developers. If you can secure entitled land, you have a significant edge in Huntsville’s tight market.
The city’s streamlined approval process for mixed-use developments offers quicker paths forward.
These projects combine retail, office, and residential components on single sites.
Three major zoning cases will set the tone for future commercial development.
The Research Park expansion seeks approval for 2.8 million square feet of mixed-use space.
Critical Pending Applications:
Public hearings for these cases happen monthly through early 2025.
Approval outcomes will shape commercial development patterns citywide.
Opposition groups have popped up around several high-profile cases.
Traffic concerns and infrastructure capacity drive most objections to large-scale commercial projects.
The Planning Commission has approved 78% of commercial rezoning requests in 2024.
This rate aligns with historical averages, even with more applications expected to come in.
Fast-track zoning exists for technology and aerospace-related commercial projects.
These developments get priority review, which supports Huntsville’s economic development goals.
Different types of commercial real estate face their own unique challenges and benefits in Huntsville’s evolving market.
The breakdown below provides investors with an understanding of what to expect across the major asset classes.
| Asset Type | Key Opportunities | Primary Risks |
| Office | Tech sector growth, defense contractor expansion | Remote work trends, higher vacancy rates |
| Industrial | Strong logistics demand, manufacturing growth | Supply chain disruptions, construction costs |
| Retail | Population growth, consumer spending increases | E-commerce competition, changing shopping habits |
| Multifamily | Housing demand from job growth, rental market strength | Interest rate impacts, construction delays |
Office properties get a boost from Huntsville’s expanding tech and aerospace industries.
Still, flexible work arrangements keep putting pressure on traditional office demand.
Industrial assets appear to be the strongest, thanks to Alabama’s manufacturing boom.
Warehouse and distribution facilities, especially those with regional logistics needs, benefit greatly.
Retail spaces face mixed conditions.
Population growth supports consumer-facing businesses, but online shopping keeps reshaping retail demand.
Multifamily developments stay attractive due to steady population increases and job creation.
Rising construction costs and tough financing present ongoing headaches.
The commercial real estate market outlook indicates a mixed performance across various asset types.
Market fundamentals seem to favor industrial and multifamily properties over traditional office and retail formats.
Investors really need to evaluate each asset class based on local market conditions—not just national trends.
Smart investors need clear action steps for Huntsville’s evolving market. Commercial real estate site selection involves thoroughly examining every property to identify the best business opportunities.
Key Location Factors:
These site selection strategies can significantly impact the outcome of any project. Developers typically focus on locations that align with their specific goals, weighing each factor slightly differently.
Tenant Evaluation Checklist:
| Factor | Weight | Assessment Method |
| Credit Score | High | Financial statements review |
| Business History | High | Track record analysis |
| Industry Stability | Medium | Market trend research |
| Lease Terms | Medium | Cash flow projection |
Property owners need to carefully consider the tenant mix before making a decision. Choosing the right tenants involves evaluating their credit, business history, and the performance of their other locations.
Immediate Action Items:
Timeline matters in competitive markets. It helps to set clear objectives and nail down your criteria before diving into property searches; otherwise, things can get messy quickly.
At DeanCRE, we combine deep Huntsville market knowledge with responsive client service to help you make the right commercial real estate decisions.
Ready to move forward? Contact DeanCRE today to discuss your project, request our quarterly Huntsville CRE KPI brief, or get a custom shortlist of on- and off-market properties that fit your needs.
What are the current commercial real estate trends in Huntsville?
Huntsville’s CRE market is led by strong industrial performance, resilient retail permitting, and selective office demand in Class A spaces. Multifamily development supports the growth of retail and industrial sectors. Investors should watch vacancy normalization and rising rents in logistics corridors.
Is Huntsville’s industrial real estate market still strong?
Yes. Huntsville commands some of the Southeast’s highest industrial asking rents despite modest vacancy increases from new deliveries. Defense, aerospace, and e-commerce continue driving demand, especially in small-bay and logistics-focused submarkets.
How is hybrid work impacting Huntsville’s office market?
Hybrid work has shifted demand toward amenity-rich, flexible Class A office space, while legacy properties face higher vacancy. Huntsville’s large base of owner-occupied properties provides stability, but speculative landlords must reposition their assets to attract tech and defense tenants.
Arethe retail and hospitality sectors growing in Huntsville?
Yes. City permitting data indicate continued expansion of retail and hospitality sectors, particularly near new residential developments and employment hubs. Experiential retail, dining, and mixed-use projects are outperforming traditional strip centers.
What makes Huntsville attractive to commercial real estate investors?
Huntsville ranks #1 among emerging tech-talent markets and benefits from a stable aerospace and defense economy. Combined with population growth and federal investment, these drivers create consistent demand across industrial, office, and retail assets.
What risks should investors consider in Huntsville CRE?
Key risks include rising interest rates affecting cap rates, potential overbuilding in multifamily, and hybrid work reducing demand for outdated office space. Investors should underwrite conservatively and prioritize properties with flexible terms and strong tenant credit.
Where are the best submarkets for commercial real estate in Huntsville?
Prime submarkets include the I-565 corridor for industrial use, Research Park for office and R&D, and Madison for mixed-use retail and multifamily development. Each offers strong population growth, infrastructure investment, and proximity to major employers.
How can DeanCRE help with Huntsville commercial real estate?
Dean Commercial Real Estate provides market research, site selection, leasing, and investment advisory services. With local expertise and client-first responsiveness, DeanCRE helps investors, tenants, and developers secure properties that align with their financial and operational objectives.
