Q1 2024 Madison Office Report

Madison’s pipeline of new construction presents little concern to the market. Currently, only 190,000 square feet of space is under construction, representing just 0.5 percent of the total inventory in the market. While development has heavily leaned toward-owner occupied and build-to-suit developments, a small increase in speculative projects has been observed.

While leasing activity has improved following the decade low annual total of just 720,000 square feet leased in 2020, office demand levels remain considerably below pre-pandemic averages. Between 2015 and 2019, Madison’s office market averaged more than 1.2 million square feet in annual leases. At the end of 2022, total leasing volume reached close to 950,000 square feet, or more than 20 percent below prepandemic levels.

The relative stability of Madison’s office market has proven advantageous to property owners in the area, providing leverage setting lease rates since the onset of the pandemic, compared to the national average. The delta in annual rent growth reached its widest point in the first quarter of 2022, when Madison’s growth rate of 3.8 percent outpaced the national average by 230 basis points. Current annual rent growth of 0.6 percent continues to outpace the national picture, but that delta has shrunk considerably, as rent growth trends decelerate. 

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