Economy
Madison has an economy historically based on government and education, with the rapidly growing region experiencing growth in biotechnology, information and health technology, agribusiness/food, and precision manufacturing. Metro Madison’s unemployment rate increased by 20 basis points (bps) year-over-year (YOY) to 2.7%, while overall employment in the region decreased by 0.4% YOY.
Market Overview
Madison's industrial market tightened further in Q32026, recording 167,455 square feet (sf) of positive net absorption and lowering the overall vacancy rate 10 basis points (bps) quarter-over-quarter to 1.9%. Year-to-date, absorption reached 594,338 sf, reflecting continued occupancy growth in a market where vacancy has remained below 3.0% since mid-2020.
Dane County East remained the primary drive of demand, posting 205,565 sf of positive net absorption as vacancy declined to 1.2% from 1.6% in Q2. Activity was anchored by two transactions in DeForest, where Oakhouse Bakery leased the entire 138,012-sf Likewise building at 4410 Daentl Road, while North American Mechanical expanded by 40,000 sf at 4940 Cake Parkway, bringing its total footprint at the property to 92,000 sf. Together, these transactions generated over 175,000 sf of Class A absorption, demonstrating continued tenant demand for new industrial product.
Conditions varied across the broader market. Dane County West recorded a modest 2,709 sf of negative absorption, while Rock County posted 35,401 sf of occupancy losses and ended the quarter at 2.6% vacancy. These results partially offset gains in Dane County East, though vacant space remained limited across the region.
Approximately 4.3 million square feet (msf) remains under construction across the market, although build-to-suit and committed projects account for nearly 95% of the pipeline. Amazon’s 3.42-msf fulfillment center in Cottage Grove represents the largest share and is schedule for completion by the end of the year. Speculative construction totals 232,000 sf, comprised of Dickman’s 182,000-sf DeForest V facility and McAllen’s 50,000-sf building at McAllen 120. Both projects are anticipated to deliver in Q2 2027, providing additional Class A options in the supply-constrained Dane County East submarket.
The next wave of speculative development is taking shape, reflecting developer confidence in the market’s longer-term demand. Egan Gardner Development’s 145,600 sf Tradesman II facility is schedule to break ground in October, with delivery targeted for Q12027, adding new industrial space in the supply-constrained Dane County East submarket.
