Lack of office space said threat to downtown Huntsville

HUNTSVILLE – A study commissioned by Downtown Huntsville Inc. exposed market concerns that are now being addressed by the organization whose mission statement is to create a vibrant, diverse and economically sustainable district in the heart of the city.

The study was done by Value Tech Realty Services, which was hired by DHI in May. With the results in hand, DHI released the details, saying it is prioritizing office market growth after the study showed “tight vacancies and other challenges could be a threat to downtown Huntsville’s current market.”

Value Tech’s analysis of the downtown market included interviews with stakeholders, such as business owners, developers, employers, and city officials. DHI said Value Tech used the information to pinpoint setbacks and determine incentives that could make downtown office space more attractive. 

“The office report helped us identify what those incentives could be, and now we’re working on finding ways and best practices that we can try to implement in downtown,” said Rob Buddo, president and CEO of DHI. “We’re looking at things like parking strategies, different signage options, ways to leverage programs, and different ways to incentivize office growth.”

The report revealed there is only a 5.1% vacancy rate of office space in downtown Huntsville, which is significantly lower than the national average. According to DHI, a healthy office vacancy rate is around 10% to allow room for businesses to grow. In the current market, businesses could face challenges when trying to expand or move their offices to downtown.

Office space is a major driver of economic development in downtowns across the country. It attracts businesses and jobs, which in turn generates tax revenue and supports other businesses in the area, such as restaurants, retail stores, and service providers.

A lack of people visiting downtown businesses during the day could lead to challenges for retail business owners, which rely on support from daytime customers. 

DHI stated it wants to be proactive for potential problems so businesses can continue to grow and thrive downtown. The study’s goal was to understand the demand for more office space in downtown, identify potential tenants, estimate construction cost, and develop strategies and incentives to offset potential challenges.

DHI’s next steps include conversations with developers and brokers to encourage office development, advocating for city incentives for downtown office projects, modeling different incentive options to determine their effectiveness and feasibility, and researching case studies and other programs that could be modeled to encourage office development.

“We have a lot of work to do following this report, but it helped provide the roadmap of how much space we need, what those rental rates would potentially look like, and what steps we can take to make office space downtown more enticing,” Buddo said.

The report can be viewed at https://www.downtownhuntsville.org/reports.