Madison Street Beat
A look at key metrics for Madison’s Office Space Market – Q3 2020
MADISON STREET BEAT–Q3 2020:
Strong demand for office space in early 2020 leveled off due to the pandemic, but occupancy rates remain slightly higher for Q3/2020 vs. Q3/2019, despite a negative 22.2K SF net space absorption in the market. The forecast for Madison’s office occupancy in the immediate future remains relatively stable as there are few new office projects coming to market.
Office space tenants remain in a “wait and see” holding pattern as they evaluate plans for future office space needs. While an increase in work-from-home practices will impact occupancy rates for office buildings, this will likely be offset by factors including economic growth, population growth, and office-using penetration. In Madison and across the nation, it’s expected that demand for the office will continue to grow over the next decade, despite the short-term impacts of the COVID-19 pandemic.
Sales volume for Madison’s office market in Q3/2020 has dipped dramatically and is currently less than 20 percent of what it was in Q3/2019. Low inventory combined with cautious investors and lenders has led to a limited number of transactions. Transactions may pick up in Q4 as owners and investors try to complete deals before year-end, but it will almost certainly remain well below normal levels.
