Absorption is one of the most commonly cited metrics in CRE market reports, and one of the most commonly misread. The figure appears in quarterly research publications from JLL Research, CBRE Research, Cushman & Wakefield Research, and Newmark Research with a consistency that suggests broad agreement on what it measures. In practice, how absorption is defined, which transactions count toward the figure, and what submarket boundaries are used can produce meaningfully different numbers — and different conclusions — for the same market in the same period.
For regional CRE teams relying on absorption data to counsel clients, understanding the metric's construction is as important as knowing the number itself.
Gross absorption versus net absorption: Not the same thing
The fundamental distinction that gets elided most frequently in casual market conversation is the difference between gross absorption and net absorption.
Gross absorption measures the total square footage of space leased in a given submarket over a defined period — the sum of all new leases, renewals, and expansions. It's a measure of leasing activity volume, not market tightening or loosening. A submarket with high gross absorption is a submarket where a lot of deals got done. It says nothing about whether that activity outpaced the rate at which other space became vacant.
Net absorption measures the change in occupied space over the same period — total space leased minus total space vacated. Positive net absorption means that occupied space increased: more square footage got absorbed by tenants than became vacant through expirations, move-outs, or tenant contractions. Negative net absorption means the reverse — more space became vacant than was absorbed, regardless of how many transactions occurred.
A submarket can have high gross absorption — meaning active leasing — while simultaneously posting negative net absorption if the volume of vacated space exceeds the new leasing activity. This happened in segments of the Dallas CBD office market during the 2022–2023 period when several large tenants reduced footprints despite an active leasing market for smaller requirements. Reporting gross absorption in that context as a positive market signal was technically accurate but directionally misleading.
How submarket boundary definitions affect the numbers
CoStar, JLL, CBRE, Cushman & Wakefield, and individual market participants do not always use identical submarket boundary definitions. In the DFW office market, Uptown Dallas, the Arts District, and the Oak Lawn area are sometimes aggregated into a single submarket by one data provider and split into distinct submarkets by another. Legacy West in Plano is treated by some providers as part of a broader "North Dallas/Frisco" aggregation and by others as a distinct submarket node.
Why does this matter for absorption figures? Because a building that sits on the boundary of two provider-defined submarkets may appear in one provider's submarket and not another's. When a large tenant moves into that building, one provider records the positive absorption in Submarket A; the other records it in Submarket B. Both are factually describing the same transaction but attributing it differently.
More consequentially, absorption rates are expressed as a percentage of total inventory. A submarket with a small inventory base will show more dramatic percentage swings from the same transaction than a large submarket. If a data provider draws Uptown Dallas as a 10 million SF submarket and another draws it as a 15 million SF submarket (by including adjacent buildings), the same 200,000 SF of net absorption produces different absorption rate percentages. Comparing those figures across providers without understanding the inventory denominator produces an apples-to-oranges result.
The building universe problem
A related issue is which buildings are included in a provider's tracked inventory for a given submarket. Buildings below a certain size threshold (commonly 10,000 SF or 20,000 SF, depending on the provider and market) are sometimes excluded from the tracked universe. Small professional office buildings, flex space used for office purposes, and medical office product are treated inconsistently across providers.
For a regional brokerage specializing in small-to-midsize office requirements — the 2,000–12,000 SF range that accounts for a large portion of regional brokerage deal flow — the tracked submarket inventory and absorption figures may not fully represent the supply and demand dynamics in the segment they actually work. A vacancy rate and absorption figure for a submarket's tracked inventory of 50,000+ SF buildings doesn't directly translate to market conditions for 5,000 SF requirements in smaller buildings in the same geography.
This is not a criticism of the major research providers. Their methodology choices are made for consistency across a large reporting universe. It's a calibration point for how regional CRE teams use market reports in client conversations.
Timing and lag in reported absorption data
Published quarterly absorption figures are inherently backward-looking. A Q3 absorption report published in October is describing transactions that closed in July, August, and September — with some additional reporting lag for transactions that haven't yet been confirmed and recorded. For a fast-moving leasing market, this lag means that the published figures may not reflect conditions on the ground at the time the report is read.
In practice, for stable or slowly-changing markets, this lag is not highly consequential. For a market that has seen significant supply deliveries or demand shifts within a quarter, the lag matters. The best practice for regional CRE teams is to use published absorption data as a baseline and supplement it with real-time transaction information from active CoStar monitoring of lease commencements and vacancy changes in their specific target submarkets.
What to tell clients when the absorption numbers seem contradictory
The scenario that comes up regularly: a client reads a headline saying Dallas office market absorption was positive in Q2, while simultaneously seeing more available space in the specific submarket they're interested in and getting stronger concession packages from landlords than the "positive absorption" framing would suggest. How do you reconcile that?
The honest answer involves all of the above: positive net absorption at the market or metro level can coexist with negative net absorption in specific submarkets. Gross absorption can be active while net absorption is negative. The buildings your client is looking at may be in a subset of the market that doesn't track with the market-level headline. And the headline figure may be dominated by a single large transaction — one corporate campus deal that added 500,000 SF of positive absorption in a northern submarket has a different character than broad-based leasing activity distributed across multiple deals and submarkets.
We're not saying that market absorption reports are unreliable. JLL, CBRE, Cushman & Wakefield, and Newmark publish rigorous research, and their quarterly figures are the most consistent benchmarks available for tracking long-term market direction. What we're saying is that headline figures require local context to be useful in specific leasing decisions. A regional broker who understands the construction of the metric can have that context conversation; one who treats the headline as the whole story cannot.
The ability to run your own absorption analysis at the submarket level — pulling from CoStar transaction data against a specific building set and time window — gives regional teams the ability to supplement published research with the precision that individual client situations require. Request a demo to see how Cremdeal structures submarket-level absorption analysis against your active deal geography.
