Madison Industrial Market Update Q2 2026: Vacancy Falls to 3.3%
Madison’s industrial market tightened again in the second quarter of 2026.
Overall vacancy fell to 3.3%, down from a revised 3.7% in Q1. The market recorded 323,700 square feet of positive net absorption, bringing year-to-date absorption to nearly 392,000 square feet.
Madison remains much tighter than Minneapolis at 6.7%, Milwaukee at 5.3%, and the national industrial market at roughly 7.0%.
For companies looking for 20,000 to 100,000 square feet, the realistic list is smaller than the vacancy rate suggests. Available buildings still have to match the user’s requirements for power, loading, clear height, parking, truck circulation, zoning, office buildout, location, and timing.
Strong Absorption Pulled Vacancy Lower
The Madison industrial market includes approximately 63.6 million square feet across Dane County. About 2.13 million square feet was vacant at the end of Q2.
More than half of the vacancy was warehouse and distribution space. Manufacturing vacancy was only 2.0%, warehouse/office was 1.9%, and flex/R&D was 2.6%.
The quarter’s largest occupancy gain came from RenewAire’s purchase of 150 Business Park Drive in Sun Prairie. The 179,500-square-foot manufacturing building accounted for more than half of Q2’s positive absorption.
Leasing Volume Was Mediocre
Madison recorded 19 industrial leases totaling 173,600 square feet during Q2.
The transaction count received an unusual boost after baseball-sized hail hit the area in mid-April. Hail repair companies leased about a dozen small spaces on short-term deals. Long-term leasing activity was softer than the transaction count suggests.
Mechanical and electrical contractors supporting data center construction in Beaver Dam and elsewhere have leased approximately 150,000 square feet in the Madison area during the last few quarters.
Two large Class A leases were signed in early Q3. Once occupied, those spaces should reduce vacancy further and add substantial positive absorption.
Realta Fusion’s selection of OM Station for its headquarters and research facility adds another industrial demand driver. Its effect on the market statistics will depend on construction and occupancy timing.
Vacant Buildings for Sale Are Also Scarce
Twenty-one industrial properties sold during Q2, totaling approximately 601,000 square feet and $52.5 million.
Oakbrook represented the seller of 150 Business Park Drive, which RenewAire purchased for $11.7 million. It was the largest Madison-area industrial sale of 2026 by both price and square footage.
RenewAire needed more production capacity. The building offered the power, footprint, and proximity to its existing Waunakee and Dane facilities that made the acquisition work.
We also advised the seller of 1102 Lumbermans Trail on an offer from its tenant, which ultimately purchased the building.
Many Madison-area companies would prefer to own their facilities, but few vacant buildings fit an operating business. Buyers often face three imperfect choices: adapt an existing building, wait through a development process, or remain in leased space. Likewise, owners considering selling should understand current market timing before listing their property.
Asking Rents Rose 7.4%
The average industrial asking rate increased to $8.53 per square foot NNN, up from $7.94 one year earlier.
Actual pricing varies based on age, condition, clear height, loading, power, office finish, and location. Owners of functional buildings have leverage as leases roll over. Tenants should compare renewal, relocation, purchase, and construction options before an approaching expiration compresses the timeline.
Construction Is Still Not Providing Many Options
Only 87,500 square feet was completed during the first half of 2026.
Seven projects totaling approximately 3.7 million square feet were under construction at the end of Q2. Almost all of that total comes from Amazon’s 3.4 million-square-foot facility in Cottage Grove and Royle Printing’s 175,000-square-foot expansion in Sun Prairie.
Both are expected to be completed in 2027, and neither will add space for lease to the general market.
Three Class A speculative buildings totaling approximately 465,000 square feet are likely to start construction by the end of 2026. Expected deliveries run from spring through fall 2027, which does little for users that need space sooner.
Vacancy by Property Type
|
Property type
|
Q2 2026
|
Q1 2026
|
|---|---|---|
|
Manufacturing
|
2.0%
|
2.7%
|
|
Warehouse/Distribution
|
7.3%
|
7.7%
|
|
Flex/R&D
|
2.6%
|
2.8%
|
|
Warehouse/Office
|
1.9%
|
2.1%
|
Vacancy by Submarket
|
Southeast
|
0.9%
|
1.1%
|
|
East
|
2.5%
|
2.4%
|
|
Northeast
|
2.2%
|
3.3%
|
|
Northwest
|
3.5%
|
3.4%
|
|
West
|
5.9%
|
6.2%
|
|
Southwest
|
2.2%
|
1.9%
|
|
Central
|
24.8%
|
25.2%
|
Central Madison is a statistical outlier. A few large vacancies sit within a relatively small submarket, while every other submarket ended Q2 below 6%. Southeast Madison was below 1%.
What Owners and Users Should Do Next
Users with an upcoming lease expiration, expansion, or acquisition requirement should start early. Larger requirements may need 12 to 18 months to compare renewal, relocation, acquisition, and new construction without losing leverage.
Owners considering a sale or approaching a lease rollover should establish current rent, likely buyer demand, building deficiencies, and capital needs before a decision is forced. Low vacancy supports pricing, but buyers and tenants still discount inadequate power, poor loading, deferred maintenance, difficult layouts, and limited expansion potential.
Oakbrook’s industrial team tracks major Madison-area sales, leases, construction projects, available buildings, and active user requirements. During Q2, we represented the seller in the market’s largest industrial sale. Oakbrook was also named Madison’s Top Sales Firm and Top Leasing Firm for 2025 by CoStar.
If you are planning an industrial lease, purchase, sale, or expansion, contact us to discuss how current vacancy, pricing, and construction timing affect your options.
Madison Industrial Market Q2 2026 FAQs
What was Madison’s industrial vacancy rate in Q2 2026?
The vacancy rate was 3.3%, down from a revised 3.7% in Q1.
How much industrial space was absorbed during Q2?
Madison recorded approximately 323,700 square feet of positive net absorption. Year-to-date absorption reached approximately 391,800 square feet.
What was the average industrial asking rent?
The average asking rate was $8.53 per square foot NNN, up 7.4% from one year earlier.
Which submarket had the lowest vacancy?
Southeast Madison had the lowest vacancy at 0.9%. Northeast and Southwest were both at 2.2%.
Will new construction increase available space soon?
Three speculative Class A buildings totaling approximately 465,000 square feet may begin construction by the end of 2026, but expected deliveries run from spring through fall 2027.
Chris Caulum, SIOR
Vice President of Commercial Brokerage
Chris specializes in industrial and office real estate throughout Madison and South-Central Wisconsin, helping owners, investors, and businesses make informed commercial real estate decisions.
608-443-1040
ccaulum@oakbrookcorp.com