A rate usually expressed in square feet (or its metric equivalent), referring to the total amount of space that has been leased or sold within a specified period.

Commercial brokerages often express absorption in terms of ratios or rates. The most common reference involves an absorption rate that describes the relationship between amount of vacant space consumed and total space available for a particular property type. Absorption, together with total available space, provides a useful indicator of activity within a specific segment of the marketplace, e.g., office, retail, and industrial space. Absorption rates are also referenced in residential real estate, particularly relating to new homes.

Example 1 Absorption Rate

The City of NY has a current office space inventory of 52,068,985 sq. ft. The supply of new office space, included in that total, was 4,432,000 sq. ft. during the preceding 12-month period, with a corresponding absorption of 3,187,719 sq. ft. for the same period. Accordingly, the absorption rate for office space during that period was:

3,187,719 ÷ 4,432,000 = .7193 or 71.93%

Example 2 Absorption Rate

Builder Anderson forecasts total construction of single-family residential homes at 1,247 units for the upcoming year with an absorption of 950 for the same period. Accordingly, he is estimating an absorption rate of .7618 or 76.18%. If he builds 50 homes, Anderson expects that approximately 38 (50 x 76.18% = 38.09) of those homes will sell during the period based on the estimated absorption rate.