What absorption rate measures, and why Riyadh does not publish one

Absorption rate is the pace at which empty space in a market is let or sold over a given period. A vacancy figure is a snapshot. Absorption turns it into a flow, and that is what tells you whether a market is tightening or loosening.

Gross and net absorption

The word is used in two ways, and the difference matters.

Gross absorption is all the space let or sold in the period. It counts every deal and ignores space that emptied out.
Net absorption is the change in occupied space. That is space taken up, minus space vacated when tenants leave, leases expire or new buildings complete empty. It can be negative even while deals are being signed.

Net absorption is the better measure of demand. When someone says a market "absorbed 200,000 sqm last quarter", they should mean net.

The formula

Two calculations do most of the work:

Net absorption  = occupied space (end)  −  occupied space (start)

Months of supply = available (vacant) space  ÷  average monthly net absorption

Months of supply is the easier one to picture. At the current pace of take-up, how many months until the empty space is gone? A low figure favours landlords. A high one favours tenants.

A worked example (illustrative figures)

These are round, made-up numbers to show how it works. They are not market data. Take a submarket with 1,000,000 sqm of office stock and 100,000 sqm vacant at the start of the quarter. Over three months, tenants take 60,000 sqm and hand back 15,000 sqm.

Net absorption = 60,000 − 15,000 = 45,000 sqm for the quarter, or 15,000 sqm/month.
Months of supply = 100,000 ÷ 15,000 = ≈ 6.7 months.

At that pace the vacant space is gone in a little over two quarters, which is a tight market. Halve net absorption and it takes well over a year.

Why Riyadh's absorption rate is not published

No Saudi government body, exchange filing or developer publishes a city-wide net absorption figure for Riyadh offices. The private brokers that track it building by building keep it in paid reports. So anyone quoting "Riyadh net absorption = X sqm" is citing a proprietary survey.

The public record does hold real take-up evidence, and it points the same way. At King Abdullah Financial District, more than 580,000 sqm of office space has been leased of a 900,000+ sqm footprint (KAFD, Aug 2025). That is roughly two-thirds of the district.

Nationally, Ejar, the government lease registry, recorded over 6,600 new office units in a single month, up 26% year-on-year (REGA / Ejar, Jan 2024). Read this one with care. It counts lease registrations, not square metres, and the push to make registration mandatory inflates it. It shows momentum, not absorption.

Occupancy says Riyadh's best buildings are full today. KAFD's leasing and the Ejar registrations say demand is still coming. Neither gives the net square metres taken up each quarter, which is the figure a feasibility model needs.

FAQ

What is a good absorption rate? There is no single answer. It depends on the market and the asset class. Compare months of supply over time: a falling figure means faster take-up and more pricing power for landlords.

What is the difference between absorption and vacancy? Vacancy is the empty space at one moment. Absorption is the space taken up, net of space handed back, over a period. A market can have low vacancy and slowing absorption at the same time.

Can net absorption be negative? Yes. If more space is vacated, or completed and left empty, than is taken up, net absorption is negative even though deals are still being signed.

What is the absorption rate for Riyadh offices? No public source publishes a city-wide quarterly figure. It exists only in private broker models. Public evidence, such as KAFD's 580,000 sqm leased and 6,600+ Ejar office registrations in a month, shows strong demand, but it is not a net absorption rate.

Sources

KAFD, 580,000 sqm of 900,000+ leased (via Argaam): link
REGA / Ejar, 6,600+ office units registered in a month, +26% YoY: link