Tourism in downtown Madison is rebounding, the report said

The number of pedestrians on State Street last year was almost up to 3.27 million in 2019 before COVID-19 shut everything down. And visitor spending rose from $178 million in 2021 to $278 million last year.

“Madison is an attraction destination,” said Rob Gard, director of communications and public affairs for Destination Madison. “We are a destination of authenticity. Having this vibrant, resident-driven downtown — that brings in the restaurants, art, music and other institutions.”

But some problems remain. Hybrid and remote work are largely responsible for the 16.7% office vacancy rate, and more people downtown spend a third or more of their income on housing than in other parts of the city. Downtown residents have a lower per capita income than the rest of the city.

The 2023 State of Downtown Madison report paints a picture of a vibrant downtown that needs to increase housing availability and find a way to lure workers back.

Jason Illstrup, president of Downtown Madison Inc., which released the report, said the number of Downtown visitors in the report was higher than expected and likely to grow even more in the coming years.

His organization plans to hire a director of placemaking and economic development and work with the city to form a strategic plan to ensure Downtown welcomes both residents and visitors. The strategic plan would ideally encourage a mix of businesses and restaurants to come downtown, he said.

“People are coming back and that creates vibrancy,” he said, adding that Downtown Madison offers amenities people want, such as summer events and festivals, restaurants, shopping opportunities and music venues.

“We know that younger people are more likely to move downtown — where the action is,” he said. More than 84 percent of downtown residents are under 35 and only 3.3 percent have children, according to the report. They are also likely to have a lower income than the average Madison resident.

The downtown population grew to 33,931, about 1,000 more than in 2020. The report points to some highlights of downtown life, including 22 downtown parks and six beaches on lakes with the lowest phosphorus concentration of a decade.

About 87% of downtown residences are apartments. More apartments are being built downtown to ease the housing crisis, but Ilstrup said “we’re not building enough.”

There were 11,129 apartments in downtown Madison in 2023, compared to 7,423 in 2011, a 50% increase.

Downtown Madison needs to attract more businesses Downtown and address office vacancy rates, according to the report.

Destination Madison’s Gard said a factor preventing more businesses from opening Downtown is the large share of workers who left the hospitality industry during the pandemic.

The State of Downtown Madison Report states that in 2020, there were 380 businesses in the downtown Madison Business Improvement District, with 42% restaurants, 20% retail, and 38% services. In 2023, there were 363 downtown businesses, 45% of them restaurants, 18% retail, and 37% services.

Paul Strong, owner of a trio of Jazzman stores on State Street, said Downtown has a lot of restaurants but not enough retail.

“The cost of doing business here is higher than in other parts of the city,” Strong said.

John Hayes, owner of Goodman’s Jewelers, which has been Downtown for 90 years, said the store faces challenges in hiring staff. The jeweler has eight employees and could hire two more, Hayes said, but there are few people willing to come in for interviews or even submit resumes, he said.

Downtown Madison residents pay an average of $2,032 in rent for an average 838-square-foot city apartment, according to the report. For the entire city of Madison, that median rent is just under $1,600 for the same apartment size. The report compared Downtown Madison to six other U.S. metros, and all but Austin, Texas, had lower rents.

Homeowners in downtown Madison also had a median home value of $539,946 in 2023. In 2020, that median home value was $393,925.

Illstrup said factors contributing to rising home prices in Madison include high costs of building materials, high interest rates and “it can take a while for projects to come through the city.”