Madison Office Vacancy Rates Reach Historic Low
Madison's current office vacancy rate is at 5.6%, besting 2006's pre-recession rate of 6.2%
Madison, WI, October 19, 2016 --(PR.com)-- Madison’s office market just hit the historically low vacancy rate of 5.6%. The last time rates were near this low was in 2006, when the vacancy rate was 6.2%, according to a report by CoStar Reality Information. Across the nation vacancy rates are tightening, a sign of a strong economy. Madison’s vacancy rate is lower than New York and Washington, D.C., the two major metropolitan areas considered to have the tightest markets. New York and Washington each have vacancy rates of 9.1%.
Locally, third quarter net absorption was 507,282 square feet. To put this into perspective, the third quarter rate of absorption – the amount of change in occupied space - was greater in the quarter alone than any of the last ten years. The first two quarters of 2016 combined also outpace each of the last ten years.
In spite of shrinking availability, rental rates are actually dropping slightly. Average office rental rates were $15.06 per square foot, down by 0.3% from $15.11 in the second quarter.
Rates and vacancies vary across all building classes, but all classes are experiencing tightening of available space, greater positive absorption rates, and lower or effectively unchanged rents.
Class A office sector average quoted rental rates were $17.64 at the end of the third quarter, up slightly from $17.59, while Class A vacancies dropped to 4.8% from 5.1% in the second quarter. Class B average quoted rental rates were $14.97, down from $15.00 even though vacancy rates dropped from 6.7% to 5.6%. Class C average quoted rental rates were $10.59, down from $11.30, with vacancy rates dropping to 7.0% from 7.2%.
“Commercial tenants are still fortunate that we haven’t seen an inflationary influence on average rental rates,” says Ross Rikkers of Cresa Madison, a commercial real estate firm that represents only tenants and buyers. “But we are seeing landlords asking for longer lease terms, and some of the concessions they were offering in a looser market, things like free rent, early occupancy and expansion or contraction rights, aren’t being offered as standard during negotiations. Tenants are really looking to future development and build-to-suit opportunities.”
About Cresa Madison
As Madison’s only tenant brokers, Cresa Madison prides itself on successfully negotiating new leasing agreements or building purchases with the tenants’ best interests in mind. Unlike other brokers, Cresa Madison never represents landlords or sellers, so there is never a conflict of interest or a limited restriction on the number of properties available to our clients. Cresa Madison’s knowledge of the Madison Commercial Real Estate market is second to none and our team of tenant brokers uses this knowledge to provide our clients with the information they need to make solid real estate decisions with confidence. For more information, visit http://www.cresa.com/madison
About CoStar Realty Information
More information about CoStar Realty Information can be found at http://www.costar.com
Locally, third quarter net absorption was 507,282 square feet. To put this into perspective, the third quarter rate of absorption – the amount of change in occupied space - was greater in the quarter alone than any of the last ten years. The first two quarters of 2016 combined also outpace each of the last ten years.
In spite of shrinking availability, rental rates are actually dropping slightly. Average office rental rates were $15.06 per square foot, down by 0.3% from $15.11 in the second quarter.
Rates and vacancies vary across all building classes, but all classes are experiencing tightening of available space, greater positive absorption rates, and lower or effectively unchanged rents.
Class A office sector average quoted rental rates were $17.64 at the end of the third quarter, up slightly from $17.59, while Class A vacancies dropped to 4.8% from 5.1% in the second quarter. Class B average quoted rental rates were $14.97, down from $15.00 even though vacancy rates dropped from 6.7% to 5.6%. Class C average quoted rental rates were $10.59, down from $11.30, with vacancy rates dropping to 7.0% from 7.2%.
“Commercial tenants are still fortunate that we haven’t seen an inflationary influence on average rental rates,” says Ross Rikkers of Cresa Madison, a commercial real estate firm that represents only tenants and buyers. “But we are seeing landlords asking for longer lease terms, and some of the concessions they were offering in a looser market, things like free rent, early occupancy and expansion or contraction rights, aren’t being offered as standard during negotiations. Tenants are really looking to future development and build-to-suit opportunities.”
About Cresa Madison
As Madison’s only tenant brokers, Cresa Madison prides itself on successfully negotiating new leasing agreements or building purchases with the tenants’ best interests in mind. Unlike other brokers, Cresa Madison never represents landlords or sellers, so there is never a conflict of interest or a limited restriction on the number of properties available to our clients. Cresa Madison’s knowledge of the Madison Commercial Real Estate market is second to none and our team of tenant brokers uses this knowledge to provide our clients with the information they need to make solid real estate decisions with confidence. For more information, visit http://www.cresa.com/madison
About CoStar Realty Information
More information about CoStar Realty Information can be found at http://www.costar.com
Contact
Cresa Madison
Kristi Warriner
608.467.0720
www.cresa.com/madison
Kristi Warriner
608.467.0720
www.cresa.com/madison
Contact
Categories