How is Net Absorption rate calculated Commercial Real Estate?
It appears that JLL, CBRE, REIS provide data on net absorption, however, I am looking to calculate the rate of absorption in the market? Has anyone done this calculation? How did they define Net Absorption rate? 

Some references: 

[https://www.us.jll.com/en/trends-and-insights/cities/how-is-net-absorption-calculated](https://www.us.jll.com/en/trends-and-insights/cities/how-is-net-absorption-calculated)

[https://www.investopedia.com/terms/a/absorption-rate.asp](https://www.investopedia.com/terms/a/absorption-rate.asp)
[{"id": "gf9hflq", "text": "Rate of absorption is net absorption / total inventory in the market. If rate of absorption is positive (2%), that means tenants are taking available space in the market and the vacancy rate is either falling, or staying constant.\n\nOr at least that\u2019s how I understand it.", "replies": [{"id": "gf9ii8l", "text": "Right, that makes sense. However, total inventory = vacant inventory or inventory available in the market. So, then net absorption is defined as space leased / space in market.", "replies": [{"id": "gf9lqj2", "text": "Not exactly, and that\u2019s what is unique about absorption and why it\u2019s important. Space leased and net absorption aren\u2019t the same. If a massive office tenant moves out of half a tower in a small market, and goes to another tower, leaving the space behind vacant, there is a big \u201cleases space\u201d number for that year, but absorption doesn\u2019t change.\n\nAlso as an FYI, in market reports total inventory means total space in the market, occupied and vacant. Available inventory is vacant space.", "replies": [{"id": "gf9mj40", "text": "Yep, correct, net absorption wouldn't change as it is calculated as new space leased - old vacant space, as in this case. So, net absorption rate would be calculated as Net Absorption / Vacant Qty for the time period.", "replies": [{"id": "gf9nada", "text": "Right. It\u2019s a great way to tell how long the existing stock of available space will take to lease up at the current rate.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gfa8fyg", "text": "I work as a research analyst at one of the big shops and when we are calculating net absorption, we rarely look at it as a %. Instead, it is usually in terms of square footage. \n\nFor my firm, net absorption is the difference between tenants physically occupying their space and tenants vacating space. For example, if you have a 100k SF office (with some vacant space) building and a tenant vacates 50k sf, but then a new tenant comes along and physically absorbs 75k sf during the same time period, then you would have positive 25k sf of Net absorption. \n\nAlso, avaible and vacant space are slightly different. You can have a 25k space that is being marketed as available for lease - maybe the current tenants lease is up in a few months and the owner wants to have a tenant lined up in advance or another reason - but that same space isn\u2019t actually vacant. So you would actually have 25k sf of available, not vacant space. It would look like this:\n- Available space = 25k\n- Vacant Space = 0K\n\nOn the other hand if that same 25k space is available AND vacant, but a tenant comes along and leases it, but doesnt move in for another 5 months then that space is no longer available and vacant. It is just vacant. Would look like this:\n- Available SF = 0 SF\n- Vacant SF = 25,000 SF \n\nIt would be this way because now that space is encumbered by a lease and no longer available, but the tenant hasn\u2019t physically occupied for another 5 months making it still vacant. \n\nI hope this helps!", "replies": [{"id": "gfahy7l", "text": "Thanks. That's an important distinction you make between available and vacant space. \n\nI am trying to capture the market velocity and obtain a measure of how long it takes to lease a space in current market conditions. I am thinking a rate would make sense to measure market velocity as opposed to total expressing net absorption as square footage. \n\nIf we were to calculate a rate, do you think net absorption (sq.ft)/vacant (sq.ft) would capture this? or any other ideas on how you would do it.", "replies": [{"id": "gfam7vu", "text": "You\u2019re welcome. I was a little confused by the concept of availability vs. vacancy at first, but am glad I know the distinction now. \n\nI think the method you already have in mind sounds about right, however, bare in mind that market conditions right now are a more volatile given the pandemic. I would just make sure you model this rate with a worst, base and best case scenario.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]