Madison’s office market is shifting in the post-pandemic era, according to Chris Caulum, vice president of commercial brokerage at Oakbrook Corp.
Overall vacancy rose slightly to end the year 2023 at 13.1%. This continues the gradual rise since before the pandemic. The vacancy rate is 36% higher than the pre-pandemic 9.6% but is nowhere near the vacancy peak in 2009 following the Great Recession (17.3%).
Madison’s office market still compares favorably to the national average (19.6%) along with other Midwest markets like Milwaukee (17.7%) and Minneapolis (17.1%).
Absorption was negative in 2020 and 2021, then bounced back to be highly positive in 2022. For 2023, absorption went negative again (82,000 square feet).
The amount of sublease space has come way down, but over 400,000 square feet remains available, and 162,000 square feet is vacant.
Coworking spaces seem to be surging nationwide as some employers offer a coworking membership option in lieu of maintaining a traditional local office.
For the year, total Madison office inventory came down by 376,500 square feet to 17.84 million square feet, a 2% drop. New construction has all but ceased, and inventory will continue to fall as some buildings get demolished or converted to other uses.
