MARKET SNAPSHOT

2025 Birmingham Forecast

2024

FORECASTED ANNUAL CHANGE

2025

$1,217

Q4 AVG. EFFECTIVE RENT

2.1%

FORECASTED ANNUAL CHANGE

$1,243

Q4 Avg. Effective Rent

89.5%

Q4 AVG. OCCUPANCY

0 BPS

FORECASTED ANNUAL CHANGE

89.5%

Q4 Avg. Occupancy

978

2024 COMPLETIONS

777

10 Yr. Avg. Annual Completions

660

2025 COMPLETIONS

1,124

2024 NET ABSORPTION

612

10 Yr. Avg. Annual Net Absorption

656

2025 NET ABSORPTION

Source: CoStar
Key Market Themes for 2025
  • UNIT COMPLETIONS EXPECTED TO NEARLY 50% IN 2025

    New unit completions are also projected to decline by nearly 50% in 2025. This lower pace of development is expected to persist, as apartment starts—a leading indicator of future deliveries—fell by 49%, with developers breaking ground on just 1,478 units in 2024 across the metro.

  • ABOVE AVERAGE RENT GROWTH TO PERSIST THIS YEAR

    Healthy annual rent growth is projected to continue in 2025, peaking at 3.2% in Q3 before easing to 2.9% by year-end, with the average monthly rental rate settling at $1,439.

  • BIRMINGHAM RANKS AMONG TOP 6 MARKETS FOR HIGHEST OCCUPANCY LEVEL

    As of Q4 2024, Birmingham's occupancy rate of 95.9% ranked sixth nationally among major markets. This rate is projected to improve modestly in 2025, ensuring Birmingham remains one of the top markets for occupancy this year.

2025 SUPPLY TRENDS

MULTIFAMILY STARTS DECREASED IN 2024

MULTIFAMILY STARTS DECREASED IN 2024

2023: 575 units > 2024: 270 units

Annual Increase of 1,055 units or -79%

10 Yr. Historical Annual Average: 951 units

UNITS UNDER CONSTRUCTION TRENDING IN LINE WITH THE 10 YEAR AVERAGE

UNITS UNDER CONSTRUCTION TRENDING IN LINE WITH THE 10 YEAR AVERAGE

1,408 units under construction as of December 31st 2024

10 Yr. Historical Annual Average Units UC: 1,394

1% Higher than historical average

UNIT COMPLETIONS PROJECTED TO DECREASE IN 2025

UNIT COMPLETIONS PROJECTED TO DECREASE IN 2025

2024: 951 units > 2025: 656 units

Annual Decrease of 291 units or 30%

10 Yr. Avg. Annual Completions: 775 units

The construction pipeline in Birmingham has significantly contracted, dropping from a peak of over 3,000 units at the end of 2022 to 1,400 units as of January 2025. This reduction marks a return to the average annual activity levels observed over the past decade. Additionally, new construction activity has slowed considerably, with only 270 multifamily units breaking ground in 2024, according to CoStar data. This decline in new development is expected to tighten market conditions toward the end of 2025 and into 2026. As demand continues to outpace supply, property owners are likely to regain pricing power, creating favorable conditions for rent increases and improved market stability.

Downtown Birmingham remains the focal point of development activity, fueled by strong demand for urban living in a revitalized community that continues to attract residents with its expanding restaurant and retail scene and a growing employment base. Meanwhile, suburban submarkets such as Outlying Jefferson County and Bessemer/Fairfield are experiencing increased development activity, driven by demand for high-end and mid-range rental options. Rising home prices and elevated financing costs have encouraged many potential buyers to turn to rental housing in these areas, particularly in communities with strong school districts that appeal to families and professionals alike.

2025 RENT & OCCUPANCY TRENDS
ANNUAL RENT GROWTH & OCCUPANCY
OCCUPANCY TRENDS

In 2024, absorption in the Birmingham multifamily market gained momentum, with demand outpacing new supply for the first time in over six quarters. This surge exceeded the annual completion rate and led to an increase in occupancy. Although the occupancy growth was modest—10 basis points—it marks a positive development for Birmingham’s multifamily property owners and operators, indicating improving conditions that may support more substantial rent increases this year.

Looking ahead to 2025, occupancy is expected to remain steady for much of the year. As new construction slows and demand remains consistent, occupancy levels are projected to trend upward into 2026, fostering a more balanced and sustainable market environment.

RENT TRENDS

Over the past 18 months, owners and operators in the Birmingham multifamily market faced significant challenges as an influx of new construction heightened competition and eroded pricing power. During this period, annual rent growth consistently hovered below 1% each quarter. However, as supply pressures began to ease, the market experienced a 1.3% uptick in rents in the final quarter of 2024—a welcome sign of recovery.

Looking ahead to 2025, this positive rental momentum is expected to continue, with average rents projected to increase from $1,217 to $1,243 by year-end, reflecting a 2.1% annual growth rate. This sustained improvement highlights the gradual rebalancing of supply and demand, providing a more favorable outlook for property owners and operators this year.

Submarket Rent & Occupancy

2024 INCOME & EXPENSE ANALYSIS

12-month period ending November 2024

CLICK TO VIEW FORECAST DATA

INCOME

INCOME
Income AssumptionsValue / UnitYear Change (%)
Occupancy (%)90.80%0.4%
Rental Income / Occupied Unit$1,147.242.8%
Recoverable Expenses / Occupied Unit$99.2715.8%
Other Income / Occupied Unit$79.828.7%
Total Income / Occupied Unit$1,326.334.0%
Operating Income
Rental Income$1,043.573.2%
Recoverable Expenses$90.3016.2%
Other Income$72.639.1%
Total Income$1,206.504.4%

EXPENSES

EXPENSES
Operating ExpensesValue / UnitYear Change (%)
Payroll$135.683.4%
Marketing & Advertising$19.2813.5%
Repairs & Maintenance$92.88-1.7%
Administrative$44.6211.9%
Management Fees$38.261.5%
Utilities$113.653.1%
Real Estate & Other Taxes$120.156.4%
Insurance$59.3213.8%
Other Operating Expensees$1.95
Total Operating Expense$625.784.8%
Net Operating Income$580.734.0%
Please note that the income and expense data presented in this section is sourced from trusted third-party data providers and does not reflect the entire market. While we strive for accuracy, our firm does not provide any warranty or guarantee regarding the reliability or precision of this information. We recommend users exercise discretion and professional judgment when interpreting and utilizing this data.
MARKET OUTLOOK

The Birmingham multifamily market is poised for gradual stabilization in 2025, supported by improving demand fundamentals and a slowdown in new supply. In 2024, net absorption outpaced new deliveries for the first time in over six quarters, leading to a modest increase in occupancy. While the current occupancy rate of 89.5% remains below the national benchmark, the contraction of the development pipeline is expected to create a more balanced market environment. Rent growth is projected to continue its upward trajectory, with average rents anticipated to rise by 2.1% by year-end, reflecting the improving supply-demand dynamics.

Looking ahead, sustained population growth and a resilient local economy will further support multifamily demand in Birmingham. Downtown remains a focal point for development, while suburban submarkets such as Outlying Jefferson County and Bessemer/Fairfield are attracting renters seeking affordability and high-quality living options. As construction activity continues to slow and demand remains steady, occupancy levels are expected to improve, positioning Birmingham for steady long-term growth.

Disclaimer: This multifamily forecast incorporates data from reputable third-party sources, including Costar, Yardi Matrix, the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, and ESRI. While we make every effort to ensure accuracy, we cannot guarantee the reliability of the projections provided. Forecasts are inherently subject to change due to evolving market conditions, economic factors, and unforeseen events. We strongly encourage users to conduct independent due diligence and consult with an MMG Advisor before making any investment decisions based on this information.

Featured Birmingham Research Reports:

To gain further insights into the Birmingham market, contact our team:

Alex_Blagojevich

Alex Blagojevich

Executive Managing Director / Co-Founder
Michael-Sullivan

Michael Sullivan

Executive Managing Director / Co-Founder
Brett

Brett Meinzer

Managing Director
Thomas

Thomas Skevington

Senior Advisor
Kyle

Kyle Winston

Senior Advisor
Jake Sullivan_2023

Jake Sullivan

Associate Advisor

Have a question?
Send us a message!