In the second quarter of 2025, Madison office vacancy fell to 15.7% from 16.1% in the first quarter, according to a report by Chris Caulum, vice president of commercial brokerage at Oakbrook Corp.
Vacancy was just 8.8% in late 2019 but rose to 12.2% by late 2021, past 14% by mid-2024, and up to 16.1% earlier this year.
Class A space drove much of that rise — from 5.5% vacancy in Q4 2019 to 18.9% in Q1 2025, easing slightly to 18.3% this quarter.
Class B was 11.8% pre-pandemic and is now 14.4%. Class C was 11.1% and is now 13.3%.
Leasing activity slowed from Q1 but stayed healthy, with 41 leases totaling 149,000 square feet in Q2.
Average asking rents ticked up slightly to $22.13 per square foot on a full service gross basis. That’s up 12% since late 2019, even with much higher vacancy — largely due to elevated buildout and remodeling costs.
After six straight quarters of negative absorption, Q2 posted a gain of +67,600 square feet. Class A, Class B, and sublease space all saw improvement, and four of six submarkets posted positive absorption — a sign that demand is spread across the market.
No speculative office projects are under construction; only medical or owner-occupied buildings that won’t change inventory. Thus any positive absorption moving forward will cause vacancy to decline, Caulum said.
