Things are looking “golden” for the city’s office market, according to a commercial real estate expert.

With the U.S. Space Command moving to Redstone Arsenal and associated work on Golden Dome and drones, “companies are being more aggressive to being here to defend the world,” said Kyle Collins, senior vice president and principal at Colliers International – Alabama.

Huntsville’s office market continues to benefit from one of the strongest economic foundations in the Southeast, supported by sustained population growth, a highly educated workforce, and expanding defense, aerospace, and technology sectors, according to Colliers’ most recent report on the Huntsville office market.

“In regards to office space and the economy in general, we are in the golden years,” Collins said. “In the last seven to 10 years, we have become a target for investors.”

The city’s population has grown nearly 16% over the past five years, driven by significant employment investments, including the relocation of Space Command, the expansion of the FBI at Redstone Arsenal, and continued growth throughout Cummings Research Park, the report said.

“Redstone Gateway is tailoring construction with the needs of the market,” Collins said.

Major employers such as NASA, Boeing, Northrop Grumman, Toyota, GE Aerospace, and the U.S. Army remain key drivers of long-term office demand, while the region’s low 2.34% unemployment rate and 2.25% real GDP growth underscore Huntsville’s economic resilience.

The office market remains fundamentally healthy despite recent new supply.

“There’s a ton of activity,” Collins said. “We’re all busy.”

Vacancy stands at 10.4%, increasing only slightly over the past year after approximately 230,000 square feet of new deliveries and 173,000 square feet of net absorption.

With only 221,000 square feet of office space under construction, the development pipeline has effectively slowed, allowing the market time to absorb recently completed inventory while limiting future competitive supply.

“The impediment to new construction is pricing,” Collins said.

Collins does foresee growth in local office construction over the next decade.

“Over the next five to 10 years, I see more in (Cummings) Research Park,” he said. “At some time, we are going to see it grow west – out to Madison and beyond.”

Asking rents have climbed to an average of $22.30 per square foot, reflecting 1.7% annual growth, and vacancy is forecast to decline to 9.7% by year-end as continued job creation and corporate investment support future leasing activity, the report said.

Companies are also urging their employees to return to the office after teleworking from home since the COVID pandemic in 2020-21.

“It’s kind of trickling back,” Collins said. “Return-to-office is becoming more prevalent. They would like for their employees to be less remote.”

Overall, Huntsville remains one of the Southeast’s strongest long-term office markets, backed by a diversified economy and a robust pipeline of employment growth.

Collins compared Huntsville’s office growth outlook to Nashville of a few years ago.

“About 25 years ago, there wasn’t anything between here and Franklin on I-65, just the shopping mall,” he said. “Now, there are offices nearly as far south as Columbia.

“You’re going to see Huntsville, at some time in the future, like Nashville. It’s on the radar.”