Economy
Madison, Wisconsin's State Capitol and home to the University of Wisconsin-Madison, has an economy historically based on government and education. The rapidly growing Dane County region has seen significant growth in biotechnology, information and health technology, agribusiness/food, and precision manufacturing. Metro Madison’s unemployment rate increased by 20 basis points (bps) year-over-year (YOY) to 2.7%, while overall employment in the region decreased by 0.4% YOY.
Market Overview
Madison's office market softened modestly during the third quarter, with overall vacancy increasing 30 bps quarter-over-quarter to 9.1%. Net absorption totaled negative 42,179 square feet (sf), with occupancy losses across four of the seven tracked submarkets. Northwest/Middleton led occupancy gains with 73,076 sf of positive absorption and a 150 bp QOQ decline in vacancy to 16.8%.
Year-to-date leasing activity totaled 346,453 sf, with Northwest/Middleton accounting for approximately 31% of market volume. Notable third-quarter commitments included Cyclomedia Technology’s 24,183-sf lease at 8401 Greenway Boulevard and FAC Services, LLC’s 23,380-sf lease at 525 Junction Road. An additional 12,000-sf lease at 2758 Dairy Drive contributed to activity in the Southeast submarket. These transactions reflect continued demand for midsized office space, though leasing activity has yet to produce sustained market-wide occupancy gains.
Overall asking rents averaged $22.87 per square foot (psf), down from $23.82 psf in the prior quarter, while Class A asking rents averaged $24.01 psf. The CBD maintained its pricing premium, with Class A asking rents averaging $31.40 psf.
