The Madison office market may be finding its footing, according to a report by Chris Caulum, vice president of commercial brokerage at Oakbrook Corp. While the trend of shedding space continues, and key indicators remain negative, the pace of decline has slowed.
Overall vacancy in the market rose very slightly from 14.7% to 14.8%. As usual, the Madison market is doing better than Milwaukee (at 18.6%) and Minneapolis (at 19.2%). Madison’s availability dropped to 17.4%.
Absorption was slightly negative at -4,300 square feet, while sublease absorption was positive at 24,000 square feet. Inventory dropped by a few thousand square feet.
Asking rental rates have been stagnant over the past year. However, real rates are falling slightly due to concessions such as free rent and elevated tenant improvement allowances.
Class A buildings remain a concern. Direct vacancy rose from 9.5% to 10.6% during the quarter. Overall Class A vacancy (including sublease space) rose to 17.3%, and Class A buildings account for 78% of the available sublease space.
The eastern submarkets improved significantly, with 96,500 square feet of positive absorption for the quarter. Stevens Construction was a major contributor, leasing 26,000 square feet at 10 Terrace Court in The American Center. Conversely, the western submarkets worsened, with almost 78,000 square feet of negative absorption led by Humana vacating over 41,000 square feet in Middleton.
