The first quarter of 2024 saw the continued rise of office vacancy in the Madison market, according to a report by Chris Caulum, vice president of commercial brokerage at Oakbrook Corp.
Overall office vacancy rose to 13.5% (up from 13.1% at year’s end) but remains far below the national average; however, the availability rate — which measures space that is being marketed as available but isn’t yet vacant — is at 18%, suggesting that vacancy could eventually eclipse the highest rate recorded after the last recession.
There’s a dichotomy in classes at play between vacancy and availability. Class A buildings have the lowest vacancy rate at just 10.6% vacancy, but they have the highest availability rate at 20.4%, indicating that a wave of Class A downsizings and expirations is on the horizon.
Meanwhile, that dynamic in Class A buildings will also create an opportunity for companies wanting to upgrade their spaces during downturns, often referred to as a flight to quality.
Absorption for the first quarter was almost even (negative 4,800 square feet), and new construction is nonexistent.
The average asking rate increased again, but negotiated effective rates are coming down due to increased concessions and more competition.
