Q3 2023 Madison Office Market Report

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

Looking at Madison’s pipeline of projects, new construction presents very little concern to the market. Currently, only 530,000 square feet of space is under construction in the second quarter, representing just 1.4 percent of the total inventory in the market. While development has heavily leaned toward owner-occupied and build-to-suit developments in recent years, a small increase in spec projects has been observed.

Although current vacancies in Madison’s office market of 6.3 percent are trending nearly 150 basis points above pre-pandemic levels, Wisconsin’s state capital is notably outperforming the national average, which currently stands at 13.4 percent. Office users in these areas, namely healthcare, biotech, and government, have been some of the most active in the market.

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