Absorption is the net change in occupied multifamily units in a submarket over a time period. Positive absorption means demand exceeds new supply; negative means supply exceeds demand.
Calculate as occupied units at end of period minus occupied units at start, typically measured quarterly or annually. A submarket absorbing 500 units per quarter with 1,000 new units delivered has negative net absorption, which pressures rents and vacancy downward.
Absorption data is what drives rent forecasting in institutional multifamily underwriting.
LA metro absorbed roughly 5,600 units over the trailing year per Newmark 2026 estimates — a three-year high. Compared to 14,563 units delivered in 2025, this means supply exceeded absorption, pressuring rent growth. 2026 deliveries of ~11,000 units with continued absorption should moderate the supply-demand imbalance.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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