In addition, Buss says, a strong cross-section of established tech companies such as Epic Systems Corp. and Raven Software hold significant presence in the market. Therefore, although Google has not yet occupied a large amount of space here, the Madison region does attract a demographic quite similar to that of other tech-heavy office markets like Chicago.

“There are many, many young people coming to town to work for Epic,” Buss says. The leading medical software company employs about 10,000 people in the western portion of the metro area, and has a national recruitment effort. New arrivals find a city that is far more affordable than New York, Chicago or Silicon Valley, but, due to the university, has comparable cultural, restaurant and entertainment scenes.

Postweiler adds that even though tech has become a key driver, “if you take a step back and look at the whole of Madison's economy, you'll see it's very diverse.” As a state capital, for example, the city is strong in government, and the university, obviously, also occupies a vast amount of space.

The market's overall office vacancy rate now sits at 9.3%, but some submarkets have seen vacancy rates fall as low as 3% for class A space, some of which commands around $30 per square foot.

However, “it's still viewed as a tertiary market,” Postweiler says, “and the investor base has to get educated.”

There are a few signs that things are changing. As reported in GlobeSt.com, Winnipeg, Canada-based Artis REIT recently bought a 1.7 million square foot office portfolio on the west side of Madison, WI, for $260 million, the largest dollar volume office transaction in the state's history.

It's significant that such a major investor, and a foreign one at that, “was comfortable writing a check for $260 million,” says Buss. And “they expect to be there a very long time.”

“We are getting attention from groups that are not local,” adds Postweiler, “that do understand what Madison has to offer.”

CHICAGO, MADISON, WI—The competition for assets in the US office investment market has gotten quite intense, and JLL believes it's time for investors to take a look at small but robust cities like Madison, WI. And although it only has about 15.7 million square feet of office inventory, compared to Chicago's 234.5 million square feet, the home of the University of Wisconsin's flagship campus is a dynamic region that investors have begun to notice.

“They are pleasantly surprised by the amount of growth in this market,” Steve Buss of Chicago-based JLL's capital markets group, tells GlobeSt.com. Furthermore, many are also surprised that the city and surrounding area are home to about one million people. And the $1.1 billion that the university spends on research each year fuels the vibrant tech sector that undergirds the office economy.

That tech sector is a bit different than ones found in many other tech-heavy markets. Jim Postweiler, managing director with JLL's capital markets, says the influence of the university has fostered a strong agricultural technology sector, as well as one focused on genetics.

Startups have found success via private and public sector entities due to the state's 25% tax credit to local angel investors who support new startups. According to JLL's most recent US Technology Outlook report, the local tech sector received $39 million in venture capital funding from the third quarter of 2015 to this year's second quarter.

In addition, Buss says, a strong cross-section of established tech companies such as Epic Systems Corp. and Raven Software hold significant presence in the market. Therefore, although Google has not yet occupied a large amount of space here, the Madison region does attract a demographic quite similar to that of other tech-heavy office markets like Chicago.

“There are many, many young people coming to town to work for Epic,” Buss says. The leading medical software company employs about 10,000 people in the western portion of the metro area, and has a national recruitment effort. New arrivals find a city that is far more affordable than New York, Chicago or Silicon Valley, but, due to the university, has comparable cultural, restaurant and entertainment scenes.

Postweiler adds that even though tech has become a key driver, “if you take a step back and look at the whole of Madison's economy, you'll see it's very diverse.” As a state capital, for example, the city is strong in government, and the university, obviously, also occupies a vast amount of space.

The market's overall office vacancy rate now sits at 9.3%, but some submarkets have seen vacancy rates fall as low as 3% for class A space, some of which commands around $30 per square foot.

However, “it's still viewed as a tertiary market,” Postweiler says, “and the investor base has to get educated.”

There are a few signs that things are changing. As reported in GlobeSt.com, Winnipeg, Canada-based Artis REIT recently bought a 1.7 million square foot office portfolio on the west side of Madison, WI, for $260 million, the largest dollar volume office transaction in the state's history.

It's significant that such a major investor, and a foreign one at that, “was comfortable writing a check for $260 million,” says Buss. And “they expect to be there a very long time.”

“We are getting attention from groups that are not local,” adds Postweiler, “that do understand what Madison has to offer.”