Absorption Rate

Category: science

The rate at which available commercial space is leased or sold in a specific real estate market over a given period.

Absorption is the "market speed limit." "Net Absorption" measures total square feet leased minus total square feet vacated. Positive absorption means the market is tight (rents go up). Negative absorption means empty space is piling up (rents drop).

Common Examples

• The city’s industrial sector showed massive positive absorption this quarter as e-commerce companies swallowed up available warehouse space.
• A slowing absorption rate is often the first leading indicator of a coming recession in the commercial real estate sector.