Absorption vs. Delivery

Through the first 11 months of 2024, 404,000 multifamily units were absorbed nationally, according to Yardi Matrix, while 442,000 units were completed. Both of those numbers are high by historical standards. While relatively balanced overall, the numbers mask a regional divergence.

Metro-level divergence was even wider. Some metros that stood out include:

• Suburban Chicago, where 3,000 units were absorbed and only 900 completed, producing 3.9% advertised rent growth;
• Central New Jersey (4,400 units absorbed, 1,600 completed, 2.5% rents); Detroit (3,000 units absorbed, 1,400 completed, 3.0% rents);
• Connecticut (4,100 absorbed, 2,400 completed, 5.3% rents);
• Omaha (4,200 absorbed, 2,900 completed, 3.0% rents);
• Boise (2,100 units absorbed, 1,400 completed, 4.9% rents);
• and Northern New Jersey (10,100 absorbed, 7,300 completed, 2.7% rents).

Metros where completions outnumbered absorption include

• San Antonio, where 3,300 units were absorbed and 8,800 units completed, producing -1.5% advertised rent growth;
• the Southwest Florida Coast (2,800 absorbed, 5,700 completed, -4.0% rents); Nashville (5,900 absorbed, 10,100 completed, -1.1% rents);
• Austin (12,300 absorbed, 21,000 completed, -4.9% rents);
• Denver (11,000 absorbed, 17,000 completed, -1.3% rents);
• and Jacksonville (4,100 absorbed, 6,300 completed, -2.6% rents).

Why Does Absorption Matter in Multifamily Real Estate?

Absorption is a critical metric in the multifamily real estate world because it measures how many newly available units are being occupied over a given period. In simple terms, it’s the rate at which a market “absorbs” or leases up its inventory. When absorption is high, demand outpaces supply, often driving rent growth and stabilizing occupancy rates. When absorption is low, supply outpaces demand, which can lead to downward pressure on rents and increased vacancy.