Birmingham, Alabama, October 8, 2025
News Summary
Birmingham, Alabama is witnessing a significant rise in demand for multifamily housing, with record-high net absorption reported in the third quarter. The explosive growth in apartment construction, up nearly 200% from last year, positions Birmingham as a key player in the multifamily market. Despite the anticipated addition of 1,700 new units by 2025, concerns about potential vacancy rates remain as the market adapts to this rapid change. Analysts express cautious optimism amidst these developments.
Birmingham, Alabama has experienced a notable surge in demand for multifamily housing, with a record-high quarterly net absorption in the third quarter of 2024—the highest since 2021. This upward trend in housing demand has largely been positive since early 2023, indicating a robust market for apartment living in the area.
As demand rises, apartment construction in Birmingham has seen an explosive growth rate, skyrocketing nearly 200% compared to last year. A recent study predicts that by the end of 2025, Birmingham’s metro area is on track to nearly triple the number of new apartments built last year, reinforcing its status as a key player in the multifamily real estate market. Birmingham currently ranks second in the nation for year-over-year apartment construction.
Factors contributing to this significant growth include a vibrant downtown revitalization, stronger business incentives, a low cost of living, and an influx of new residents from neighboring states. Approximately 1,700 new apartment units are anticipated to be added in 2025, marking a 198% increase compared to last year. Doug Ressler from Yardi Systems attributes this growth primarily to migration patterns and the willingness of local organizations to adapt zoning and permitting regulations to foster development.
However, analysts remain cautious about the long-term sustainability of this growth trajectory. The Birmingham housing market may experience increased vacancy rates, especially with 800 new units expected to be delivered in early 2025. Although there is optimism that these new units will be quickly absorbed by renters, the overall demand has not kept pace with the influx of new units, leading to heightened vacancy rates and larger concessions to attract tenants.
Despite the existing challenges, Birmingham’s multifamily construction remains strong, with net deliveries totaling 850 units over the past year, which exceeds the 10-year annual average of 790 units. Although the construction pipeline has decreased from over 3,000 units last year to 1,900 units, this number is still above historical levels, even as construction starts have stalled.
Downtown Birmingham is currently leading in terms of units under construction. The area is capitalizing on several vacant office and industrial spaces that are suitable for conversions into multifamily residences. Key developments such as 20 Midtown Apartments, The Palmer Parkside, and Cortland Vesta command rents exceeding $2 per square foot, benefiting from recent improvements in the downtown area.
On the other hand, suburban areas such as Mountain Brook, Vestavia Hills, Homewood, and Hoover are facing planning challenges that hinder new multifamily projects. As a result, these existing projects are likely to gain more value in the respective submarkets. Despite challenges, rent growth in Birmingham has begun to rise, with the average asking rent now at $1,250, significantly lower than the nationwide average of $1,730.
In terms of multifamily sales, Birmingham recorded a sales volume of $545 million over the past year, which is below the annual average of $569 million, but it demonstrates a gradual increase since 2023. The buyer pool consists of various local and national companies, including Monarch, Tynes Development, Arlington Properties, and Hennsler.
Local observers are optimistic that the slowdown in construction starts will ultimately help in absorbing the existing units and reducing elevated vacancy rates over time, marking a hopeful outlook for Birmingham’s multifamily housing sector.
FAQ
What has contributed to the surge in multifamily housing demand in Birmingham, Alabama?
Factors contributing to this significant growth include a vibrant downtown revitalization, stronger business incentives, a low cost of living, and an influx of new residents from neighboring states.
How much has apartment construction increased in Birmingham year-over-year?
Apartment construction in Birmingham has skyrocketed nearly 200% compared to last year.
What is the projected increase in new apartment units in Birmingham by the end of 2025?
Approximately 1,700 new apartment units are expected to be added in 2025, marking a 198% increase over last year.
What are the concerns regarding vacancy rates in Birmingham’s housing market?
The Birmingham housing market may experience increased vacancy rates, with 800 new units expected to be delivered in early 2025.
What is the average rent in Birmingham compared to the national average?
The average asking rent in Birmingham is $1,250, significantly below the national average of $1,730.
Key Features of Birmingham’s Multifamily Construction Surge
| Feature | Details |
|---|---|
| Demand Increase | Strong demand with record-high quarterly net absorption. |
| Construction Growth | Apartment construction up nearly 200% from last year. |
| Projected New Units | 1,700 new units expected by end of 2025. |
| Market Ranking | Second in the nation for year-over-year apartment construction. |
| Rent | Average asking rent at $1,250, below nationwide average. |
| Vacancy Rates | Potential increase due to 800 new units in 2025. |
| Sales Volume | $545 million in multifamily sales over the past year. |
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Additional Resources
- CoStar: Birmingham Multifamily Rent Growth Turns Negative
- ABC3340: Birmingham Housing Market Sees 200% Surge in Apartment Construction
- Rebusiness Online: Limited Construction Starts Should Help Birmingham Absorb Available Apartments
- NorthMarq: Market Lofts Debt Transaction
- WVTM13: Birmingham Apartment Shooting at Woodaire Estates
- Wikipedia: Birmingham, Alabama
- Google Search: Birmingham Housing Market
- Google Scholar: Birmingham Multifamily Housing
- Encyclopedia Britannica: Birmingham, Alabama
- Google News: Birmingham Apartment Construction
Author: STAFF HERE BIRMINGHAM WRITER
The BIRMINGHAM STAFF WRITER represents the experienced team at HEREBirmingham.com, your go-to source for actionable local news and information in Birmingham, Jefferson County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Sidewalk Film Festival, Sloss Music & Arts Festival, Magic City Classic, and civil rights commemorations. Our coverage extends to key organizations like the Birmingham Business Alliance and the Birmingham Civil Rights Institute, plus leading businesses in healthcare, finance, and manufacturing that power the local economy such as UAB Medicine, Regions Bank, and Encompass Health. As part of the broader HERE network, including HEREHuntsville.com, we provide comprehensive, credible insights into Alabama's dynamic landscape.
