Net Absorption Example
Market Size 10,000,000 SF
Beginning Occupied Space 9,000,000 SF or 90%
Beginning Vacant Space 1,000,000 SF or 10%
Built Space 450,000 SF
250,000 built for a new Tenant end user.
200,000 built on spec.
Leases Signed 700,000 SF
300,000 SF moved from one building to another.
400,000 SF New to market, includes 250K SF for new end user
Vacated Space 350,000 SF
Beginning of Year Occupancy 90%
Beginning of Year 10,000,000 SF
(+) Plus all new Built Space 450,000 SF
(=) End of Year Market Size 10,450,000 SF
Beginning Occupied Space 9,000,000 SF (90%)
(+) Plus Leases Signed + 700,000 SF
(-) Less Space Vacated - 350,000 SF
(=) End of Year Occupancy 9,350,000 SF
9,350,000 / 10,450,000 = 89.47%
The Net Absorption is negative even though more space was occupied since there is more space on the market now.
- The current market
-- Population, demographics, patterns, trends
- Total space inventory, rents, vacancy, & net absorption
- Similar & Proposed properties
- Competitor characteristics
-- Tenants, amenities, space, rent,
- Consider existing SF to population & households
- Estimate amount of sales captured by the existing &
- Many analysts compile their own data - construction,