Huntsville Commercial Office Space for Rent

Q4 2025

Huntsville Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Huntsville commercial real estate (CRE) market is closing 2025 on solid footing, fueled by its robust defense and aerospace sectors and steady population growth [6]. The Office market is outperforming national trends with stable vacancy and consistent demand for Class A space, particularly in Research Park [1, 2]. Industrial markets remain tight, with strong leasing activity from government contractors and advanced manufacturing tenants [3, 4]. Retail continues to thrive, with high occupancy and new developments in Madison and downtown Huntsville drawing national brands [5]. Multifamily is stabilizing as the market absorbs a recent wave of deliveries, with rent growth moderating but remaining positive [7].

TenantBase Proprietary Data [8] highlights the distribution of active tenant demand over the last 90 days (147 total deals):

  • Retail/Storefront led market activity with 52.38% of all searches [8].
  • Office was the second most active sector at 36.73% [8].
  • Warehouse accounted for 10.88% of total search volume [8].

Office Market

Market Overview Huntsville's office market remains one of the strongest in the Southeast, buoyed by the consistent needs of the defense and technology sectors. Unlike other metros, Huntsville has largely avoided a severe vacancy crisis.

  • Vacancy & Availability: The office vacancy rate held steady at approximately 8.5%, significantly lower than the national average [1]. Cummings Research Park remains the epicenter of activity, with Class A vacancy near 6% [2].
  • Net Absorption: Positive net absorption continued in Q3 2025, driven by expansions from engineering firms and government agencies [1].
  • Rental Rates: Asking rents are trending upward, with Class A space averaging $24.50 per SF full service [2].
  • Market Drivers: TenantBase data shows significant office demand, accounting for over a third of all searches, with a strong preference for shorter lease terms as contractors align with project cycles [8].

TenantBase Activity [8]

  • Demand Share: Office accounted for 36.73% of total search volume [8].
  • Lease Term Preference: Demand is heavily skewed toward short-term flexibility, aligning with government contract cycles:
    • Less than one year: 50.00% of deals [8].
    • 3-5 Years: 20.37% of deals [8].
    • 2-3 Years: 18.52% of deals [8].
  • Size Requirements: Tenants seeking short-term leases have an average lower size requirement of 786 SF, while those committing to 3-5 Years need significantly more space, averaging 3,278 SF [8].

Industrial & Warehouse Market

Market Overview The Huntsville industrial market is characterized by steady demand and limited availability of modern product, keeping fundamentals tight.

  • Vacancy & Rent: Vacancy remains low at 4.2%, with limited speculative construction keeping supply in check [3]. Rents have risen to $8.75 per SF (NNN) for flex/R&D space, reflecting strong competition [3].
  • Demand & Supply: Leasing activity is driven by advanced manufacturing and aerospace suppliers [4]. The market is seeing a "flight to quality" as tenants seek modern facilities with higher clear heights and power capacity [4].
  • Leasing Highlights: TenantBase data shows a preference for mid-term leases, with 3-5 Years being the most popular term for warehouse users [8].

TenantBase Activity [8]

  • Demand Share: Warehouse accounted for 10.88% of total search volume [8].
  • Lease Term Preference: Demand is strongest for mid-term commitments:
    • 3-5 Years: 71.43% of deals [8].
    • 1-2 Years: 28.57% of deals [8].
  • Size Requirements: The average lower size requirement for warehouse space is 5,260 SF for 3-5 year terms [8].

Retail Market

Market Overview Huntsville's retail sector is vibrant, supported by high disposable incomes and a growing population base.

  • Vacancy & Availability: Retail vacancy is extremely tight at 3.1%, with prime corridors in Madison and Jones Valley boasting near-full occupancy [5].
  • Rental Rates: Rents are climbing, with new construction in lifestyle centers commanding upwards of $32.00 per SF [5].
  • Construction: Development is active but focused on mixed-use projects and grocery-anchored centers to serve new residential communities [5].

TenantBase Activity [8]

  • Demand Share: Retail/Storefront activity dominated with 52.38% of all search volume [8].
  • Lease Term Preference: Retail tenants show a preference for longer-term stability:
    • 5+ Years: 38.46% of deals [8].
    • Less than one year: 20.51% of deals [8].
    • 2-3 Years: 17.95% of deals [8].
  • Top Locations: Tenant interest is concentrated in Downtown (33 deals), Jetplex/Madison (23 deals), and Huntsville (14 deals) [8].

Multifamily Market

Market Overview The multifamily market is stabilizing after a period of rapid supply growth, with demand remaining healthy due to job creation.

  • Vacancy & Occupancy: Vacancy has ticked up to 7.5% as new units deliver, but absorption remains positive [7].
  • Rents: Rent growth has moderated to 1.5% year-over-year, averaging $1,350 per unit [7].
  • Construction: The pipeline is active, with over 3,000 units under construction, but starts have slowed, which will help balance the market by late 2026 [7].
  • Investment: Investor interest remains strong, driven by Huntsville's long-term economic stability and population growth projections [7].

2026 Outlook

Looking ahead to 2026, Huntsville is positioned for continued economic expansion and CRE stability.

  • Office Resilience: The unique presence of Redstone Arsenal and FBI expansion will continue to insulate the office market from broader national downturns [1, 2].
  • Retail Growth: As the population grows, retail demand will intensify, driving further development in suburban corridors [5].
  • Industrial Tightening: Limited land availability for industrial development may lead to further rent increases and lower vacancy rates [3].

Sources

  1. Cushman & Wakefield: Huntsville Office MarketBeat Q3 2025
  2. NAI Chase Commercial: Huntsville Office Market Report Q3 2025
  3. Cushman & Wakefield: Huntsville Industrial MarketBeat Q3 2025
  4. Graham & Company: Huntsville Industrial Market Report 2025
  5. Cushman & Wakefield: Huntsville Retail MarketBeat Q3 2025
  6. Huntsville/Madison County Chamber: 2025 Economic Update
  7. Berkadia: Huntsville Multifamily Report Q3 2025
  8. TenantBase Proprietary Market Data (Huntsville - Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.