The Xceligent Madison Office Market Trends for Q3 2014 were mostly positive. There was a 35,696 SF positive absorption for the quarter, which adds to almost 315,000 SF of positive absorption over the past year. This compares to 16.6 Million SF nationally which is the sixth straight quarter the U.S. saw positive absorption above 14 Million SF.
In Madison, the suburban markets experienced 34,809 SF absorption while the Central Business District had a relatively flat quarter with only 887 SF absorbed. This varies strongly from the National Q3 results where Downtown Office Markets (8.7 Million SF) realized a higher absorption than Suburban Office Markets (7.9 Million SF). Of course, Madison is a unique city being on an isthmus. This creates limited availability for new office space. As we have witnessed over the last few years, most land and redevelopment opportunities have focused on the multifamily apartment sector.
Between property classes in Madison, Class B office was the only category to see a positive absorption. Both Class A and Class C witnessed decreases (-11,339 SF and -8,908 SF respectively) The average asking rate for these Class B buildings was $18.95/SF (FSG) with a range from $10-27/SF (FSG).
Madison Office Vacancy Rate is the lowest it has been in the last 4 quarters, dropping from 14.5% to 14.2%. Part of that contribution is noted to Dean Health Plan Inc.’s purchase of a 83,500 SF two story, 25 year old general use office building in the ‘Far West’ Sub-Market. Madison’s vacancy runs higher than the National 13.46% vacancy rate in Q3.
However, as you can see from the following chart, Madison’s absorption rate is outpacing the national average significantly in Q3 2014.
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