How do developers estimate absorption and lease-up for a new building?

Developers estimate absorption from how quickly similar new buildings nearby actually leased: units or square feet leased per month from opening to stabilization. They then adjust for the pipeline of competing projects opening at the same time and for the rent level they plan to charge. The result sets the lease-up period, the carry cost and the stabilization date. Step by step 1. Find comparable deliveries: similar product, opened in the last two to three years, in the same submarket. 2. Measure their pace: units leased per month, or square feet per quarter for commercial space. 3. Adjust for concessions: a fast lease-up bought with two months of free rent is slower at full price. 4. Check the pipeline: buildings under construction that will open alongside yours split the same demand. 5. Check demand drivers: job growth, household growth and income in the trade area. 6. Set the plan: months to 90 to 95 percent occupancy, with a slower downside case. Why it matters to the numbers - Every month of lease-up adds interest, operating cost and lost rent. - Lenders size construction loans and interest reserves on the lease-up period. - The exit value depends on reaching stabilized income on schedule. Common mistakes - Using the best-performing comparable as the base case. - Ignoring competing deliveries. - Assuming market rents from older buildings apply to new product, or the reverse. How Titleman helps Titleman assembles absorption, concessions and rent comps for the trade area from the record, each comp cited, and runs the lease-up into your feasibility model with base and downside cases. See how Deal Review works: https://titleman.ai/products/deal-review