What does an absorption study analyze?

An absorption study is focused on assessing the amount of space that has been leased versus what remains vacant over a specified period. This analysis provides critical insights into the demand for real estate within a particular market or area. By measuring the lease-up rate of properties and understanding how quickly available space is being occupied, stakeholders can gauge the health of the real estate market, make informed decisions about development, pricing, and investment, and predict future demand trends.

Understanding the dynamics of leased and vacant spaces helps real estate professionals and investors determine whether a market is strong or weak, which influences strategic planning and resource allocation. The study serves as a vital tool for both developers and investors in identifying opportunities and mitigating risks associated with market fluctuations.