MADISON, WI—As reported earlier this week in GlobeSt.com, 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. But the transaction may have a significance that transcends the state's office market. It also marks the first time the Winnipeg, Canada-based REIT has made a purchase in Madison, and could show other Canadian investors, a huge source of foreign capital for the US, that smaller markets provide tremendous opportunities. “This is a big jump for them,” Steven Buss , a Minneapolis-based executive vice president of CBRE , tells GlobeSt.com. “We brought them into the US about six years ago,” but Artis concentrated on buying properties in Minneapolis, Phoenix, Denver, and TX cities such as Houston, Austin and Dallas. “There is a shortage of assets in Canada,” he adds, and cap rates tend to remain low. But the trust got this portfolio at a cap rate of 7.75%. “They like the growth rate in the US, and coming to Madison gives Artis a real yield advantage.” Still, it did take some work on the part of CBRE to convince Artis that Madison deserved such a significant investment. For one thing, the major commercial real estate firms typically did not track vacancy rates in the city's office market, and local brokers did not do so consistently. “When you don't have high-quality information on a market, that's an impediment for any investor,” says Buss. “So we had to do something for Madison that we take for granted elsewhere.” CBRE cleaned up the data and then produced a comprehensive market report on the Madison area. And what the firm found boded well for investors. The vacancy rate in the 16.1 million square foot multi-tenant market was just 8.4% in the first quarter and declining. Furthermore, there was 145,568 square feet of net positive absorption and some of the class A spaces were commanding around $30 per square foot. Buss and his team also escorted Artis' board of directors around the metro area. And Madison holds some surprises. “It's a bigger city than people realize,” Buss says. The total office market, including multi-tenant, government and corporate-owned facilities, is 32 million square feet. And the metro area, including adjacent counties, has a population of about one million. The region is also home to firms that have become national players, many nurtured by the University of Wisconsin, one of the great research universities in the US. Epic Systems Corp. , for example, is a leading medical software company that employs about 10,000 people in the western portion of the metro area, and with the recent changes to the country's healthcare system, experts believe it will continue to show strong growth. “It's the Google of Madison,” says Buss. “It's significant to get a foreign investor to take this big of a position in Madison,” Buss concludes. “You'll be surprised who you can attract if you roll up your sleeves and do the work. And I believe people will become more open-minded about smaller markets. This will definitely open some eyes.” MADISON, WI—As reported earlier this week in GlobeSt.com, 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. But the transaction may have a significance that transcends the state's office market. It also marks the first time the Winnipeg, Canada-based REIT has made a purchase in Madison, and could show other Canadian investors, a huge source of foreign capital for the US, that smaller markets provide tremendous opportunities. “This is a big jump for them,” Steven Buss , a Minneapolis-based executive vice president of CBRE , tells GlobeSt.com. “We brought them into the US about six years ago,” but Artis concentrated on buying properties in Minneapolis, Phoenix, Denver, and TX cities such as Houston, Austin and Dallas. “There is a shortage of assets in Canada,” he adds, and cap rates tend to remain low. But the trust got this portfolio at a cap rate of 7.75%. “They like the growth rate in the US, and coming to Madison gives Artis a real yield advantage.” Still, it did take some work on the part of CBRE to convince Artis that Madison deserved such a significant investment. For one thing, the major commercial real estate firms typically did not track vacancy rates in the city's office market, and local brokers did not do so consistently. “When you don't have high-quality information on a market, that's an impediment for any investor,” says Buss. “So we had to do something for Madison that we take for granted elsewhere.” CBRE cleaned up the data and then produced a comprehensive market report on the Madison area. And what the firm found boded well for investors. The vacancy rate in the 16.1 million square foot multi-tenant market was just 8.4% in the first quarter and declining. Furthermore, there was 145,568 square feet of net positive absorption and some of the class A spaces were commanding around $30 per square foot. Buss and his team also escorted Artis' board of directors around the metro area. And Madison holds some surprises. “It's a bigger city than people realize,” Buss says. The total office market, including multi-tenant, government and corporate-owned facilities, is 32 million square feet. And the metro area, including adjacent counties, has a population of about one million. The region is also home to firms that have become national players, many nurtured by the University of Wisconsin, one of the great research universities in the US. Epic Systems Corp. , for example, is a leading medical software company that employs about 10,000 people in the western portion of the metro area, and with the recent changes to the country's healthcare system, experts believe it will continue to show strong growth. “It's the Google of Madison,” says Buss. “It's significant to get a foreign investor to take this big of a position in Madison,” Buss concludes. “You'll be surprised who you can attract if you roll up your sleeves and do the work. And I believe people will become more open-minded about smaller markets. This will definitely open some eyes.”