What does the concept of net absorption reflect about the commercial real estate market?

The concept of net absorption directly measures the net gain or loss of occupied space in the commercial real estate market over a specific period. This metric signifies the total square footage of space that has been leased or absorbed by tenants minus the space that has been vacated. A positive net absorption indicates a growing demand for commercial space, suggesting that more tenants are moving in than moving out, while a negative figure reflects an excess of vacant properties and can signify weakening demand.

Understanding net absorption is crucial for landlords, investors, and analysts because it provides insights into market trends, tenant demand, and potential revenue generation. By focusing on the changes in occupied space, stakeholders can better gauge the health of the commercial real estate market and make informed decisions regarding investments, development, and property management.