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What is Absorption Rate in Real Estate?

Welcome to my channel and in today’s video, I am going to answer the question "What is Absorption Rate in Real Estate?". ▶️ Visit to know more: https://www.raphaelcollazo.com/ Each week, I answer questions asked by our viewers on topics pertaining to commercial real estate. If you're interested in having your question answered, feel free to email me. ▶️ raphael@grisantigroup.com ▶ With the subject line of "Weekly CRE Question" In this video, I explain what the absorption rate is in real estate and how investors and developers use this metric to make better decisions. Absorption is the amount of inventory or units of a specific commercial property type that becomes occupied during a specified time period (usually a year) in a given market, typically reported as the absorption rate. The calculation for absorption rate is as follows: Leased SF /Total Available Inventory For example, if the absorption of office space within a market during a calendar year was 200,000 SF and the total available inventory is 1,000,000, the absorption rate would be 20%. Investors and developers use this metric to determine how long it will take them to lease up space once they acquire and/or develop a building. For example, if the absorption rate in the market is 200,000 and the total available inventory is 600,000, it will take 3 years to fill all the vacant space in the market (if no new development occurs). Depending on whether the market is over or under-supplied, you can determine your projected lease-up timeframe and if it makes sense to pursue the opportunity. If you like the video, please SUBSCRIBE, and don't forget to press the bell 🔔, 👍like, comment and share. Stay safe and Love all. --------------------------------------- ▶️ If you're interested in leasing, buying, and/or selling commercial property in the Louisville metro area, I would love to help! ▶️ Check out my Website: https://www.raphaelcollazo.com/ ▶️ Email me: raphael@grisantigroup.com ▶️ Call/Text me: 502-536-7315 ------------------------------------------ ▶️ FREE REAL ESTATE GUIDES: https://linktr.ee/raphaelcollazocre ------------------------------------------ ▶️ Follow me on: • Meetup: https://www.meetup.com/Commercial-Rea... • Instagram:   / recollaz   • Facebook:   / raphaelcrelouisville   • LinkedIn:   / raphaelcollazo   --------------------------------------------------- ▶️ Other Videos: • Top 4 thing to consider (retail property):    • Top 4 Things To Consider When Purchasing/L...   • How to purchase investment property:    • How to buy your first commercial investmen...   • Rookie to Real Estate Rockstar:    • From Rookie to Real Estate Rockstar w/ Fel...   • Finding and Funding Great Deals:    • Finding and Funding Great Real Estate Deal...   ----------------------------------------------------- ▶️ Commercial Real Estate Investment Analysis: To watch a great video on how to analyze commercial investment deals, check out the link provided here: https://bit.ly/2GwuSXX #commercialproperty #commercialrealestate #commercialdeals #commercialrealestatedeals #RaphaelCollazo #absorption #absorptionrate #absorptionrealestate #absorptionrateinrealestate #absorptionrealestatemarket #realestatemarket #absorptionrateincommercialrealestate #absorptioncommercial #absorptioncommercialrealestate #absorptioncre #relaestateabsorption #Louisvillecommercialrealestate #louisvilleky #louisville