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Negative Absorption


The state of absorption in which leased space is less than vacant space in a market/ submarket during a period. By definition, absorption (whether measured by building or by entire markets) denotes how commercial real estate investors measure tenant demand (expressed in square footage). Total absorption is the total new square footage leased (taken up on lease) by tenants. For example, if a building has 50,000 square feet of new leases in 2019, its total absorption is 50,000 in that specific year.

However, net absorption is more relevant than total absorption. It means the total new square footage leased less the total square footage of tenants that have left their units in a given time period. If a building had 50,000 square feet of new leases in 2019 and 55,000 square feet of tenants leaving, its net absorption would be negative (negative absorption): 5,000 square feet.



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