What Is An Absorption Schedule?
An absorption schedule is the timeline over which available space or property will be leased, occupied, or acquired. It is a forecast of rental or sales revenue for a given property over a specific period of time.
Why Is an Absorption Schedule Important?
An absorption schedule is a useful tool to help developers, investors, and financial institutions forecast sales transactions of a property or market. An absorption schedule helps time investments, structure financing, and project anticipated cash flows for a given project. The measurement can also be applied to the real estate market to estimate the depth and activity in the market.
Absorption Versus Net Absorption
At the market level, where absorption is generally considered to be the total amount of available space leased up in a given market, net absorption is the net change of available space in a given market over a specific period of time.
Net absorption deducts space vacated and put back on the market from the total amount of space acquired. Net absorption is a key indicator of the balance of supply and demand in commercial real estate markets.