Absorption is the rate at which available space is taken up over a period: units leased, net of units given back. It answers how long it takes a market to digest what is offered to it, which is the question behind every lease-up schedule and every projection that assumes a building fills.
- Net, not gross. Space handed back counts, which is why a market can lease steadily and absorb nothing.
- It is measured over an area and a period, so both have to be stated before the number means anything.
- Concessions distort it. Units taken with three months free were absorbed on terms the next building has to match.
- For one small building the market rate matters less than the competing supply delivering the same quarter.
A forty-unit building delivering into a submarket that has been taking six units a month.
Seven months of partial rent, carried by whoever owns the loan. Absorption is not a market statistic here, it is a line in the budget.
Related terms
All termsVacancy Rate
The vacancy rate is the share of units, or of rentable area, sitting empty at a point in time.
MarketsSubmarket
A submarket is the smallest area within which properties genuinely compete for the same tenant and the same buyer.
MarketsTransaction Volume
Transaction volume is how much actually traded in a market over a period, counted in deals, in units, or in dollars.
Terms arrive with the writing.
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