The net amount of absorption during a given period. It constitutes the net change in occupancy of commercial real estate between the current measurement period and the previous measurement 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 (gross 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 (net absorption can be either positive or negative). 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 10,000 square feet of tenants leaving, its net absorption would be positive (positive absorption): 40,000 square feet. And 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.

In calculation, pre-leasing activity is not part of net absorption because it does not result in any change in occupancy. Net absorption includes the case where the pre-leasing tenant occupies its new space (positive absorption) and vacates its current space (negative absorption). The calculation of net absorption takes into consideration transactions that take place in direct lease space and in sublease space.