Another solid quarter. That’s what the industrial sector enjoyed in the Madison, Wisconsin, market this year.
Cushman & Wakefield|Boerke reported that the metropolitan Madison industrial market reported 377,253 square feet of positive net absorption in the second quarter of this year.
At the same time, the Madison industrial sector enjoyed a low vacancy rate of 2.8%. That’s low, but still represents an increase of 40 basis points since the first quarter of the year, according to Boerke.
New leasing activity in the sector during the second quarter totaled 526,213 square feet. Year-to-date overall leasing activity increased by 5.5% on a year-over-year basis. The Dane County East submarket has been especially strong, accounting for 68% of the overall Madison industrial market’s year-to-date leasing activity.
The low vacancy rate is causing some challenges for tenants. Boerke reported that the market for high-quality Class-A space near the city of Madison remains tight. There was only one Class-A industrial building in Dane County that offered more than 50,000 square feet of available space in the second quarter, according to Boerke.
Of two speculative industrial facilities under construction — for a total of 320,012 square feet — one property is already fully pre-leased, Boerke reported.
One downside? Overall market asking rental rates have dropped by 6.1% on a year-over-year basis to $5.67 triple-net per square foot. Boerke says that this is largely because of a significant decrease in asking rents for owner-user properties. On the investor-owned side, though, Class-A properties have seen an increase of 15.6% year-over-year in asking rents to $8.71 a square foot. Class-B properties recorded a decrease of 1.7% on a year-over-year basis to $5.38 a square foot.
