For the second consecutive quarter, Madison industrial vacancy rose slightly and absorption was negative, according to a report by Chris Caulum, vice president of commercial brokerage at Oakbrook Corp. Vacancy rose by 0.3 percentage points to 3.2%, and quarterly absorption declined by 171,100 square feet.
The negative absorption was led by O’Mara Moving Systems vacating 95,000 square feet on West Badger Road in a consolidation of its local operations; however, Madison’s vacancy percentage is still very low, and absorption is still positive year to date.
Total market inventory is 61.9 million square feet, but construction activity was recently bolstered by the fifth largest industrial building currently under construction in North America. Amazon’s five-story, $200 million, 3.4 million-square-foot distribution center north of Interstate 94 in Cottage Grove has broken ground and will increase the market inventory by 5.5%.
Deforest has 600,000 square feet currently under construction. Kwik Trip is going vertical on its 280,000 square foot regional distribution center within the triangle of I-39/90, U.S. Highway 51, and state Highway 19. Dickman Development is building a 182,000-square-foot Class A building to house Porter Pipe in the DeForest Industrial Park, and Likewise Partners is nearing shell completion on its 138,000 square foot Class A spec building on Daentl Road with interstate visibility.
Warehouse Distribution buildings have shown the largest rise in vacancy over the last year, going from 4.6% to 6.8%. Sierra Space decided to offer a sublease on 266,000 square feet of space at the former American Girl campus in Middleton, and HSA completed a 272,000-square-foot Class A spec building on land near the GE Healthcare campus on the southeast side of Madison.
Leasing activity has been muted over the past two quarters but is expected to turn positive over the next two quarters.
