Q2 2023 Madison Office Market Report

Madison tenants are gravitating toward smaller, higher-quality office spaces, weakening demand. While the number of lease transactions has nearly recovered to pre pandemic levels, leasing volume in 2022 was more than 20 percent below pre-pandemic averages.

Madison’s pipeline of projects presents limited concern to the market. Currently, only 570,000 square feet of space is under construction, just 1.5 percent of the total inventory in the market. Although current vacancies in Madison’s office market of 6 percent are trending nearly 150 basis points above pre-pandemic levels, the market is notably outperforming the national average. Diverse users, such as healthcare, biotech, and government, have been some of the most active in the market.

While the second half of 2022 enjoyed a late rise of investment activity, with buyers closing on over $100 million in acquisitions, first quarter 2023 numbers portray a very different investment picture. At the end of the first quarter, less than $7 million in total sales transacted, with quarterly deal volume dropping by more than 70 percent.

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